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CBSE Class 12 Sample Paper for 2023 Solutions - Economics

Question 1 [True False]

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Question 2 Important

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Question 3

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Question 4 [True False] Important

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Question 5 (Choice 1) [True False]

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Question 5 (Choice 2) Important

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Question 6 (Choice 1)

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Question 6 (Choice 2) Important

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Question 7 Important

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Question 8 (Choice 1)

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Question 8 (Choice 2) Important

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Question 9 [Assertion Reasoning] Important

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Question 10 [Assertion Reasoning] Important

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Question 11

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Question 12 (Choice 1)

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Question 12 (Choice 2) Important

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Question 13

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Question 14 Important

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Question 15 (Choice 1) Important

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Question 15 (Choice 2) left arrow to signify that you are on this page You are here

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Question 16 (a) Important

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Question 16 (b)

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Question 17 (Choice 1) - Part (a)

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Question 17 (Choice 1) - Part (b) Important

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Question 17 (Choice 2) - Part (a) Important

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Question 17 (Choice 2) - Part (b) Important

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Question 18

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Question 19 (Choice 1) Important

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Question 19 (Choice 2)

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Question 20 (Choice 1) Important

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Question 20 (Choice 2)

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Question 21

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Question 22 Important

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Question 23 [True False] Important

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Question 24 [True False] Important

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Question 25 (Choice 1)

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Question 25 (Choice 2)

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Question 26 [Assertion Reasoning] Important

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Question 27 [Assertion Reasoning] Important

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Question 28

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Question 29 (Choice 1)

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Question 29 (Choice 2) Important

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Question 30

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Question 31 (Choice 1) Important

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Question 31 (Choice 2)

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Question 32 Important

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Question 33 (Choice 1) - part a)

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Question 33 (Choice 1) - part b) Important

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Question 33 (Choice 1) - part c) Important

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Question 33 (Choice 2) - part a)

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Question 33 (Choice 2) - part b) Important

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Question 34 [Case Based] Important

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Economics Class 12
Solutions to CBSE Sample Paper - Economics Class 12
...

‘Reserve Ratio and Credit Creation are inversely related.’ Do you agree with the given statement? Justify your answer with a suitable numerical example.

 

Answer:

Yes, there exists an inverse relation between Reserve Ratio and Credit Creation in the economy.

We know that:

Money Multiplier = 1/π‘…π‘’π‘ π‘’π‘Ÿπ‘£π‘’ π‘…π‘Žπ‘‘π‘–π‘œ

Credit Creation = Initial Deposits x Money Multiplier

Assuming that the value of initial deposits is β‚Ή 10,000 crore. (All figure in β‚Ή crore)

Reserve Ratio Money Multiplier Initial Deposits

Credit Creation

(Initial Deposits x Money Multiplier)
10%

1/0.1 = 10

10,000 1,00,000
25%

1/0.25 = 4

10,000 40,000

From the above calculation, we can conclude that higher the reserve Ratio, lesser credit will be created by Commercial Banks in the economy.

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Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo