Text Book Solutions All Class

Previous Year Questions 2019

Q1: Which logo of quality is marked on the gold jewellery?     [Al 2019]

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Ans: Hallmark is an official mark on items made of gold.

Q2: How can consumers use their ‘Right to Seek Redressal’? Explain with example.     [Delhi 2019]

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Ans:  Consumers have Right to seek redressal against ; unfair trade practices and exploitation. If damage is done to the consumer, he or she has the right to get compensation depending on the degree of damage. One should go to the District forum if the claim of compensation amount is below 20 lakh with in thirty days of the dissatisfying event. One should go to the State i Commission if the compensation claim is between 20 lakh to one crore and to the National Commission if the claim is for more than one crore. For example, Ravi had bought a SUV, from a car dealer with 1 year warranty.
While driving it he found that it had no feature of SUV and its feature are all that of ordinary car. He filed a case in a district level consumer court in New Delhi as the car dealer agency did not respond to his repeated appeal for compensation and the claim amount was less than 20 lakh. The court verified his document. The court gave verdict i in his favour and awarded full compensation to him and framed charges against the car company for selling false j product.

Q3: Highlight any three rights of consumers.    [Al 2019]

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Ans: The three rights of consumers are as follows:

• Right to be informed: Consumers have the right to be informed about the particulars of goods and services they purchase. This includes information about the quality, quantity, price, ingredients, and any potential risks associated with the product. If the product proves to be defective or does not meet the advertised specifications, consumers can complain and seek compensation or replacement.
• Right to choose: Consumers have the right to choose a product or service according to their needs and preferences. They should not be coerced or forced into purchasing something they do not want. For example, if a gas supply dealer insists on selling a stove along with a new connection, the consumer can legally appeal against this practice.
• Right to seek redressal: Consumers have the right to seek redressal against unfair trade practices and exploitation. If a consumer suffers any damage or loss due to such practices, they have the right to seek compensation based on the degree of damage. Consumer courts or forums have been established to provide redressal to aggrieved consumers. These quasi-judicial bodies hear and resolve consumer complaints.

Previous Year Questions 2018

Q4: How can consumer awareness be spread among consumers to avoid exploitation in the market place ? Explain any three ways.    [CBSE 2018]

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Ans: (i) The government can spread awareness through posters about the legal process which people can use.
(ii) The government can spread awareness through advertisement on television channels. (iii) Consumers must be told to complain and ask for compensation or replacement if the product is found to be defective in any manner.
(iv) They must know about their rights i.e., Right to choose, Right to information, Right to seek redressal etc. They must exercise their right without any fear. If necessary the consumers must appeal in the consumer court for redressal of their grievances.

Q5: Create an advertisement for an online Consumer Awareness campaign to help consumers know their rights and save themselves from exploitation.    [CBSE Sample Paper 2018]

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Ans: An advertisement for an online Consumer Awareness campaign to help consumers know their rights and save themselves from exploitation is given below :

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Previous Year Questions 2017

Q6: Give an example of violation of consumer’s right to choose.    [AI 2017]

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Ans: Any consumer who buys goods or receives a service has the right to choose whether to buy the goods or the service. As an example, sometimes cooking gas supply dealers insist that you have to buy the stove from them when you take a new connection. Here one’s right to choose another stove from another shop is being violated.

Q7: How is the maximum retail price printed on packets beneficial for you?     [AI 2017]

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Ans: It is very beneficial, because of this the seller cannot sell the product at a higher price than the price printed on the pack.

Q8: Give any one example of consumer’s ‘right to choose.’    [Delhi 2017]

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Ans: Suppose I want to buy toothpaste and selects a particular brand but the shop owner says that he will sell the toothpaste only if I buy a toothbrush also; such proposal violates my right to choose. This is because if I do not need a toothbrush I am forced to buy it because I need toothpaste.

Q9: If you want to extract information about the functions of any government department, which right would you exercise?     [Delhi 2017]

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Ans: Right to Information (R.T.I.)

Q10: In what condition is the ‘Right to Seek Redressal’ exercised? Give an example.     [Foreign 2017]

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Ans: Consumers have the right to seek redressal against unfair trade practices and exploitation. If any damage is done to a consumer, she has the right to get compensation. Example: Mahesh had sent a money order to his village for his daughter’s marriage. The money did not reach his daughter at the time when she needed it nor did it reach months later. So, Mahesh filed a case in the district level consumer court and utilized the right to seek redressal.

Also watch: Audio Notes: Consumer Rights

Previous Year Questions 2016

Q11: If any damage is done to a consumer by a trader, under which consumer right one can move to consumer court to get compensation?    [Al 2016]

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Ans: Right to seek redressal

Q12: Suppose you have to buy a packed bottle for drinking water in your journey. Which logo will you like to see to be sure about its quality?     [Delhi 2016]

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Ans: ISI logo

Q13: If you are not interested to buy a brush with toothpaste but the shopkeeper denied to sell toothpaste only. In this case which consumer right is being violated by the seller?    [Foreign 2016]

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Ans: Consumer’s right to choose

Q14: What is the duty of a consumer?    [2016]

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Ans: Consumer should look for the desired information on the product and collect payment receipt.

Q15: Name the levels of consumer courts that are available to appeal.    [2016]

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Ans: Consumer courts are there at district, state, and national level.

Q16: Which logo will you like to see on the electric heater to be sure of its quality?   [Foreign 2016]

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Ans: ISI logo

Q17: What is COPRA? When was it introduced?      [Foreign 2016]

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Ans: COPRA stands for Consumer Protection Act. It came into effect in the year 1986.

Q18: If you are not interested to buy a brush with toothpaste but shopkeeper denied to sell toothpaste only. In this case which consumer right is being violated by the seller ?    [CBSE 2016]

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Ans: Right to choose is being violated

Q19: If any damage is done to a consumer by a trader, under which consumer right one can move to consumer court to get compensation ?    [CBSE 2016]

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Ans: Right to seek redressal.

Q20: Rules and regulations are required for the protection of the consumers in the market place.    [CBSE 2016]

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Ans: Rules and regulations are required in the market place due to the following reasons:
(i) The consumers are exploited by the shopkeepers and traders in different ways such as less weight or measurement, more price, adulterated and defective goods.
(ii) In case of a complaint, the shopkeeper or trader tries to avoid any responsibility and shifts all responsibility onto the buyer.
(iii) Big companies (MNCs) with huge wealth manipulate the market in their favour.
(iv) At times false information is passed on through the media, and other sources to attract consumers. For example, a company for years sold powder milk for babies all over the  world as the most scientific product claiming this to be better than mother’s milk. It took years of struggle before the company was forced to accept that it had been making false claims.
(v) A long battle was fought with the cigarette manufacturers to accept that their product (cigarette smoking) could cause cancer.

Q21: What type of duties should a consumer keep in mind under consumer awareness? Explain.   [2016]

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Ans:

• While purchasing, a consumer should consider the quality of the product, the marked price, and the guarantee or warranty period.
• It is advisable for consumers to purchase standardized products that bear the seal of ISI or Agmark or other standard marks.
• Consumers must be aware of their rights and duties.
• Consumers should form consumer awareness forums to have representation in various committees formed by the government.
• Consumers should know the methods to seek redressal in case of being cheated.

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Previous Year Questions 2015

Q22: Which logo would you like to see for purchasing electrical goods ?    [CBSE 2015]

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Ans: ISI mark.

Q23: Suppose your parents want to purchase gold jewellary along with you, then which logo will you look for on the jewellery ?    [CBSE 2015]

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Ans: Hallmark.

Q24: How do large companies manipulate the markets ?    [CBSE 2015]

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Ans: Rules and regulations are required in the market place due to the following reasons:
(i) The consumers are exploited by the shopkeepers and traders in different ways such as less weight or measurement, more price, adulterated and defective goods.
(ii) In case of a complaint, the shopkeeper or trader tries to avoid any responsibility and shifts all responsibility onto the buyer.
(iii) Big companies (MNCs) with huge wealth manipulate the market in their favour.
(iv) At times false information is passed on through the media, and other sources to attract consumers. For example, a company for years sold powder milk for babies all over the  world as the most scientific product claiming this to be better than mother’s milk. It took years of struggle before the company was forced to accept that it had been making false claims.
(v) A long battle was fought with the cigarette manufacturers to accept that their product (cigarette smoking) could cause cancer.

Q25: Explain with an example the impact of the Right to Information (R.T.I.).   [2015]

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Ans:

• In October 2005, the Government of India enacted the Right to Information Act (R.T.I.), which grants citizens access to information regarding the functioning of various government departments.
• With the R.T.I., affected citizens can monitor the progress of government schemes and policies.
• The R.T.I. creates pressure on government officials to deliver results within a specific timeframe.
• It has helped in curbing corruption.
• The R.T.I. can also expose flaws in the selection process for government jobs.

Also watch: Audio Notes: Consumer Rights

Previous Year Questions 2014

Q26: Explain with an example how one can exercise the “Right to Choose.”    [2014]

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Ans: The consumer has the right to choose, which ensures satisfactory quality, service, and fair pricing. Here is an example:

• Any consumer, regardless of age, gender, or the nature of service, has the right to choose whether to continue receiving a service.
• For instance, if a shop owner insists that you can only buy toothpaste if you also purchase a toothbrush, and you are not interested in buying the brush, your right to choose is denied. Similarly, gas supply dealers may force you to buy a stove from them when you apply for a new connection, leaving you with no choice.
• In such cases, consumers can seek recourse through the Consumer Court under the Consumer Protection Act (COPRA) passed in 1986.

Previous Year Questions 2025

Q1: How did the process of liberalisation initiated in India in the 1990s promote globalisation? Explain.  (2 Marks)

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Ans: Liberalisation in the 1990s removed many restrictions on foreign trade and foreign investment, allowing imports/exports to flow more freely and enabling foreign companies to set up factories and offices in India.
This increased foreign investment and trade, brought MNCs into India, raised competition and helped integrate Indian production and markets with the world — thereby promoting globalisation.

Q2: Two statements are given below. Read both the statements carefully and choose the correct option:   (1 Mark)
Statement I: Rapid improvement in technology has been one major factor to stimulate the globalisation process. 
Statement II: This has made much faster delivery of goods across long distances possible at lower costs.
(a) Both statements I and II are correct and statement II is the correct explanation of statement I. 
(b) Both statements I and II are correct, but statement II is not the correct explanation of statement I. 
(c) Statement I is correct, but statement II is incorrect. 
(d) Statement I is incorrect, but statement II is correct.

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Ans: (a) Both statements I and II are correct and statement II is the correct explanation of statement I.

Both statements are correct, and statement II correctly explains statement I — rapid improvements in technology, especially in transportation, have enabled faster and cheaper delivery of goods across long distances, which has stimulated the process of globalisation.

Q3: Two statements are given below. Read both the statements carefully and choose the correct option:  (1 Mark)
Statement I: Information and communication technology stimulate the process of globalisation. 
Statement II: It is used to contact each other, receive information instantly and communicate with remote areas.
(a) Both statements I and II are correct and statement II is the correct explanation of statement I. 
(b) Both statements I and II are correct, but statement II is not the correct explanation of statement I. 
(c) Statement I is correct, but statement II is incorrect. 
(d) Statement I is incorrect, but statement II is correct.

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Ans: (a) Both statements I and II are correct and statement II is the correct explanation of statement I.

Both statements are correct, and statement II correctly explains statement I — information and communication technology (like telecommunication, computers, and the Internet) enables instant contact and information exchange worldwide, which helps in spreading globalisation.

Q4: “Globalisation is the process of rapid integration and interconnection between countries.” Explain the statement with examples.  (2 Marks)

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Ans: Globalisation means growing interconnection and integration among countries through trade, investment, and information exchange.

• Goods and services produced in one country are now sold in many others, linking national economies.
• For example, Indian garments are exported to the USA, and foreign companies like Ford Motors and Coca-Cola operate in India, showing how production and markets are connected across the world.

Thus, globalisation has created a world where countries are economically and technologically interdependent.

Q5: Choose the correct option to fill in the blank:  
The process of removing barriers on foreign trade and investment by the government is known as  ____________  (1 Mark)
(a) Import Tax, 
(b) Export Tax, 
(c) Liberalisation, 
(d) Industrialisation.

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Ans: (c) Liberalisation.

Liberalisation refers to the process of removing or reducing government-imposed restrictions or barriers on foreign trade and investment, allowing goods and services to move more freely between countries.

Q6: What changes did the Government of India make in its economic policies in the beginning of 1991? Explain.  (2 Marks)

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Ans: In 1991, the Government of India introduced major economic reforms by removing barriers on foreign trade and foreign investment.
This meant that goods could be imported and exported more freely, and foreign companies were allowed to set up factories and offices in India.
These policy changes — known as liberalisation — aimed to make Indian producers more competitive globally and improve efficiency and quality through increased competition.

Q7: Explain any two benefits of globalisation.  (2 Marks)

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Ans: Two benefits of globalisation are:

• Increased Choice for Consumers:
  Globalisation has brought many foreign goods and brands into Indian markets, giving consumers a wider range of products with better quality at competitive prices.
• Growth of Investment and Employment:
  Many multinational companies (MNCs) have invested in India, creating new industries and job opportunities, especially in sectors like IT, automobiles, and services.

Q8: The growth of digital technology has greatly influenced globalization. Which of the following is its main benefit?  (1 Mark)
(a) Increased Communication Cost, 
(b) Limited Access to Information, 
(c) Enhanced Connectivity, 
(d) Slower Transaction Speed.

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Ans: (c) Enhanced Connectivity.

Digital technology — including the Internet, mobile phones, and computers — has greatly enhanced global connectivity, allowing instant communication, faster exchange of information, and smoother coordination of production and trade across countries, thus boosting globalisation.

Q9: How did the trade policy implemented in 1991 stimulate the globalization in India? Explain with example.  (3 Marks)

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Ans: The trade policy of 1991 stimulated globalisation in India by introducing liberalisation — removing barriers on foreign trade and foreign investment.

• Removal of Trade Barriers:
  The government reduced import taxes and allowed easier export and import of goods. This encouraged competition and integration with the world market.
• Attracting Foreign Investment:
  Foreign companies were allowed to set up factories and offices in India, leading to an increase in foreign investment and technology inflow.
• Example:
  Companies like Ford Motors and Cargill Foods invested in India — Ford set up a large automobile plant near Chennai, while Cargill took over Parakh Foods — showing how foreign investment linked Indian production with global markets.

Thus, the 1991 trade reforms made India an active participant in the global economy.

Q10: Two Statements are given below. Read both the statements and choose the correct option:  (1 Mark)
Statement I: In recent times technology in the areas of computer and internet has been changing rapidly. 
Statement II: Internet allows us to send instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible costs.
(a) Only I is false but II is true. 
(b) Only I is true but II is false. 
(c) Both I and II are true but II is not the correct explanation of I. 
(d) Both I and II are true and II is the correct explanation of I.

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Ans: (d) Both I and II are true and II is the correct explanation of I.

Both statements are correct — technology in computers and the Internet has advanced rapidly, and this has enabled instant, low-cost global communication through e-mail and voice-mail, which explains how such technological progress supports globalisation.

Q11: Explain the contribution of foreign trade as an important factor of globalization.  (2 Marks)

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Ans: Foreign trade plays a key role in promoting globalisation by connecting markets across countries.

• It allows producers to sell their goods not only in their own country but also in markets abroad, expanding business opportunities.
• It provides consumers with a wider variety of goods from different countries at competitive prices.

For example, the entry of Chinese toys into Indian markets gave buyers more choices at lower prices, showing how foreign trade integrates markets and promotes globalisation.

Q12: Read the following statements for stimulating the process of globalization and choose the correct options:  (1 Mark)
I. Government reduces trade barriers. 
II. Government reduces competition among producers. 
III. Government reduces import and export taxes. 
IV. Government removes restrictions on foreign investment.
(a) Only I, II, and III are correct. 
(b) Only II, III, and IV are correct. 
(c) Only I, III, and IV are correct. 
(d) Only I, II, and IV are correct.

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Ans: (C) Only I, III, and IV are correct.

Globalisation is stimulated when the government reduces trade barriers, lowers import and export taxes, and removes restrictions on foreign investment — all of which encourage freer flow of goods, services, and capital. Reducing competition among producers, however, goes against globalisation.

Q13: How did information and communication technology promote the process of globalization? Explain.  (2 Marks)

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Ans: Information and Communication Technology (ICT) has promoted globalisation by making communication and information exchange instant, efficient, and low-cost.

• Instant Communication: Telecommunication, computers, and the Internet allow companies to coordinate production and services across countries in real time.
• Example: A magazine designed in Delhi can be sent instantly to London for printing, or customer care services can be handled from India — showing how ICT connects businesses globally and supports globalisation.

Previous Year Questions 2024

Q1: Examine the transformations observed in India’s trade since 1991.     (CBSE 2024)

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Ans: Indian markets have been transformed since 1991 in the following ways:

• Wider choice: Consumers now enjoy a greater variety of goods and services.
• Access to global brands: The latest models of digital cameras, mobile phones, and televisions from leading manufacturers are readily available. For example, new automobile models are frequently seen on Indian roads.
• Explosion of brands: There is a significant increase in brands across various products, including shirts, televisions, and processed fruit juices.
• Global trade: Producers from any country can sell their products globally, linking markets through trade. Examples include online shopping platforms like Amazon and Flipkart.
• Liberalisation: Enterprises now have the freedom to choose what goods to import or export, with the government imposing far fewer restrictions than before.

Q2: Examine the factors that have enabled globalization in India.     (CBSE 2024)

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Ans: The factors that have enabled globalisation in India include:

• Information Technology (IT): IT has significantly boosted service production.
• Technological Improvements: Over the past 50 years, advancements in technology, such as the use of containers for transportation, have reduced costs and increased market reach.
• Transportation Advances: Rapid improvements in transportation have made long-distance shipping cheaper and faster.
• Government Policies: The Indian government has removed previous trade barriers, facilitating easier import and export of goods and services.

Previous Year Questions 2023

Q3: Which one of the following is a major benefit to an MNC when it works on joint production with a local company?    (2023)
(a) MNC shares its latest technology with the local company.
(b) MNC decides all parameters and prices of the product.
(c) MNC shares its institutional policy with local company.
(d) MNC built good and familial relations with the local company

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Ans: (a)
When a multinational corporation (MNC) works on joint production with a local company, a major benefit is that the MNC shares its latest technology with the local company. This helps improve the local company’s production processes and quality, making it more competitive. Therefore, option (a) is the correct answer, while the other options do not highlight the key advantage of technology transfer.

Q4: Explain any five steps taken by the developing countries to attract Foreign investment.    (2023)

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Ans: Steps to Attract Foreign Investment:

• The government has established Special Economic Zones (SEZs) that provide excellent facilities such as electricity, water, and transport.
• Companies operating in SEZs benefit from tax exemptions for the first five years.
• Labour laws have been made more flexible, allowing companies to hire workers without long-term job security during busy periods.
• Various legal concessions are offered to encourage foreign companies to invest.
• Efforts are made to improve infrastructure and services to create a more attractive investment environment.

Q5: Why did the Indian government liberalize trade regulations in 1991?    (CBSE 2023)
(a) Government wanted foreign exchange equivalent to Indian Currency.
(b) Government wanted maintain good relations with Western Countries.
(c) Government wanted Indian producers to compete in the World Market.
(d) Government wanted to provide socio-economic justice to all.

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Ans: (c)

The Indian government liberalized trade regulations in 1991 to help Indian producers compete in the global market. By reducing restrictions on imports and exports, it aimed to enhance the efficiency and competitiveness of Indian industries, enabling them to thrive in international trade. Therefore, option (c) is the correct answer, while the other options do not directly address the main goal of liberalization.

Q6: How is information technology connected with globalization?    (CBSE 2023)

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Ans: Information technology has significantly accelerated the process of globalisation. It has transformed how people interact and communicate worldwide. 
Key points include:

• People can connect instantly with anyone, anywhere in the world.
• Most transactions, except for the physical movement of goods, can be conducted online.
• Without information technology, globalisation would have progressed much more slowly.
• Communication of essential information would have taken longer, delaying integration among countries.

Q7: ‘Liberalization of foreign trade involves policy framework at National and International level’. Explain the statement.    (2023)

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Ans: Liberalisation of foreign trade refers to the removal of government restrictions on trade. This process involves a policy framework at both national and international levels. 
Key points include:

• Policy Changes in India: In 1991, India made significant policy changes to enhance competition among domestic producers, aiming to improve quality.
• Removal of Barriers: Restrictions on foreign trade and investment were largely lifted, supported by influential international organisations.
• Ease of Trade: This liberalisation allowed for easier import and export of goods, enabling foreign companies to establish factories and offices in India.
• Reduced Restrictions: The government now imposes fewer restrictions compared to the past, indicating a more liberal trade environment.

Q8: Explain the rapid transformation in the communication sector in modern times.    (2023)

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Ans: In recent times, technology in the telecommunications, computer, and internet fields has been changing rapidly. Telecommunication facilities such as telegraph, telephone (including mobile phones), etc., are used to contact one another around the world, access information instantly, and communicate from remote areas. Information and communication technology has played a major role in spreading out the production of services across countries. For example, a news magazine published for London readers can be designed and printed in Delhi, with the text of the magazine sent through the internet to the Delhi office.

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Previous Year Questions 2022

Q9: Examine the steps taken by the Central and State governments to attract foreign companies to invest in India.  (Term-II, 2021-22)

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Ans: The Central and State governments have taken several measures to attract foreign companies to invest in India. Some of these steps include:

• Simplification of rules and regulations: The government has simplified the procedures and regulations related to foreign direct investment (FDI) in order to create a more business-friendly environment. This includes streamlining the approval process and reducing bureaucratic red tape.
• Incentives and benefits: The government offers various incentives and benefits to foreign companies, such as tax exemptions, subsidies, and financial assistance. These incentives are aimed at attracting investment and promoting economic growth.
• Infrastructure development: The government has focused on developing world-class infrastructure, including transportation, communication, and industrial facilities. This infrastructure development provides a conducive environment for foreign companies to set up their operations.
• Skill development and training: The government has prioritized skill development and training programs to enhance the employability of the workforce. This ensures that foreign companies have access to a skilled and qualified pool of talent.
• Sector-specific policies: The government has formulated sector-specific policies to attract foreign investment in key industries such as manufacturing, services, and technology. These policies provide clarity and guidance to foreign companies interested in investing in these sectors.

Overall, the Central and State governments have been proactive in creating a favorable investment climate to attract foreign companies to invest in India.

Q10: “Technology is the vital force in the modern form of globalisation”. Explain the statement with suitable examples. 
(Term-II,2021-22)

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Ans: Globalisation and technology are closely linked. The movement of people, goods, and ideas is accelerated by advancements in transport and communication. In turn, technological development benefits from the diversity of ideas and the larger scale that globalisation provides.
Key points about the role of technology in globalisation include:

• Revolutionised economy: Technology has transformed the global economy and is now a critical competitive strategy.
• New markets: Globalisation has opened up new markets, while information technologies support these emerging opportunities.
• Overcoming barriers: Technology helps address major challenges in globalisation, such as trade barriers, ethical standards, transportation costs, and delays in information exchange.
• Collaboration: It enables software experts to collaborate over networks with companies worldwide.
• Transport advancements: Improvements in transportation technology allow for faster and cheaper delivery of goods over long distances.

For example, the use of containers has significantly reduced port handling costs and increased the speed of exports. Additionally, the falling costs of air transport have enabled greater volumes of goods to be shipped by airlines.

Q11: “Globalisation is the process of rapid integration between countries”. Examine the statements.   (Term-ll, 2021-22 C)

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Ans: Globalisation refers to the integration of a country’s economy with those of other nations, allowing for the free flow of trade, capital, and movement of people across borders. Historically, foreign trade has been a key channel connecting countries. This integration occurs when goods from one country are traded in another, thereby linking their markets. 

Key points include:

• Trade routes, established in ancient times, connected regions like Asia to the rest of the world.
• These routes facilitated not just the movement of goods, but also the exchange of ideas and cultures.
• Trading companies, such as the East India Company, were drawn to regions like India due to trading interests.
• Foreign trade allows producers to expand beyond domestic markets, increasing competition.
• Consumers benefit from a wider variety of goods, leading to more choices.

As trade opens up, the prices of similar goods in different markets tend to equalise. Producers in different countries compete with each other, regardless of the distance between them. Thus, foreign trade leads to:

• Market integration across countries.
• Increased competition among producers.
• A greater selection of goods for consumers.

In summary, foreign trade plays a crucial role in connecting and integrating markets globally.

Q12: Examine the debate that took place in the World Trade Organisation for the developing countries. (Term-11,2021-22)

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Ans: All WTO agreements include special provisions for developing countries, such as:

• Extended timeframes to implement agreements and commitments.
• Measures to enhance their trading opportunities.
• Support for building infrastructure related to WTO activities.
• Assistance in handling disputes and implementing technical standards.

These provisions aim to ensure that developing countries can participate effectively in global trade.

Q13:  “The impact of globalisation has not been uniform”. Explain the statement with suitable examples. (Term-ll, 2021-22,2020)

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Ans: The impact of globalisation has varied significantly across different groups. 
Here are some key points:

• Beneficiaries: Wealthy consumers and skilled producers have gained from globalisation, enjoying greater choice, improved quality, and lower prices.
• Challenges for Small Producers: Many small producers and workers have faced difficulties due to increased competition.
• Job Security: Globalisation has led to less job security for workers, as employers prefer flexible hiring practices.
• Resource Exploitation: Developed countries often source cheap materials from underdeveloped nations, then sell expensive finished goods back to them.
• MNC Investments: Multinational corporations (MNCs) have invested heavily in India, particularly in sectors like electronics and services, creating new jobs.

In summary, while globalisation has created opportunities for some, it has also resulted in significant challenges for others, highlighting the uneven nature of its impact.

Previous Year Questions 2020

Q14: Choose the correct statement about factors regarding globalisation in India: 
(I) Improvement in transportation technology.
(II) Liberalisation of foreign trade and foreign investment.
(III) Favourable rules of WTO towards India in comparison to developed countries.
Choose the correct options from the codes given below:     (2020)
(a) I and II only
(b) I and III only
(c) II and III only
(d) III only

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Ans: (a)
The correct answer is (a) I and II only. Factors contributing to globalization in India include improvements in transportation technology, which make it easier to move goods, and the liberalization of foreign trade and investment, which allows more foreign businesses to operate in India. However, the rules of the WTO do not necessarily favor India over developed countries, so option III is not correct.

Q15: Read the sources given below and answer the questions that follow:    (2020)
Source A : Production across countries Until the middle of the twentieth century, production was largely organised within countries. What crossed the boundaries of these countries were raw material, food stuff and finished products. Colonies such as India exported raw materials and food stuff and imported finished goods. Trade was the main channel connecting distant countries. This was before large companies called multinational corporations (MNCs) emerged on the scene.
Source B : Foreign trade and integration of markets Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries. Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world. Similarly, for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.
Source C : Impact of globalisation in India Globalisation and greater competition among producers – both local and foreign producers – has been of advantage to consumers, particularly the well-off sections in the urban areas. There is greater choice before these consumers v/ho now enjoy improved quality and lower prices for several products. As a result, these people today, enjoy much higher standards of living than v/as possible earlier.
Source A : Production across countries
(i) How are MNCs a major force in connecting the countries of the world?
Source B : Foreign trade and integration of markets 
(ii) How does foreign trade become a main channel in connecting countries?
Source C : Impact of globalisation in India 
(iii) How is globalisation beneficial for consumers?

Hide Answer  

Ans: (i) Countries like India exports raw material, food stuff and finished products through multinational companies to the other countries. Hence, MNCs a major force in connecting the countries of the world.
(ii) Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., foreign countries.
(iii) For consumers there is a greater choice than before who enjoy improved quality and lower priced for several product

Also read: Mind Map: Globalisation & the Indian Economy

Previous Year Questions 2019

Q16: State any one example of ‘Trade Barrier’.    (AI 2019)

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Ans: Tax on imports is a common example of a trade barrier.

• It raises the price of imported goods.
• This can protect local industries from foreign competition.
• Governments use such barriers to control the amount and type of goods entering the country.

Q17: Analyse any three factors that make globalisation more fair.   (AI 2019)

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Ans: Globalisation refers to the increasing interaction between people and companies worldwide, driven by advancements in transportation and communication technology. 
To ensure that globalisation is fair, it is essential to focus on the following factors:

• Proper implementation of labour laws to protect workers’ rights.
• Support for small businesses to help them compete against larger corporations.
• Application of trade barriers when necessary to protect emerging sectors.
• Collaboration with other countries to challenge the dominance of developed nations and negotiate fair rules with the WTO.

Q18: Analyse the impact of globalisation on Multi-national Corporations (MNCs) in India.   (AI 2019)

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Ans: Globalisation has had a significant positive impact on Multi-National Corporations (MNCs) in India.
The benefits include:

• Proximity to Markets: MNCs can establish production facilities near their target markets, utilising both skilled and unskilled labour at lower costs.
• Favourable Government Policies: MNCs often choose locations based on supportive government policies that align with their interests.
• Joint Ventures: Globalisation allows MNCs to collaborate with local companies, providing them access to capital and advanced technology.
• Improved Products: MNCs have introduced better and safer products to consumers at competitive prices due to globalisation.

Q19: How has technology stimulated the globalisation process? Explain with examples. (CBSE 2019, 12)

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Ans: Technology has significantly stimulated the globalisation process through various advancements:

• Transport technology: Improvements have enabled faster and cheaper delivery of goods over long distances.
• Containerisation: Goods are transported in containers, reducing port handling costs and speeding up exports.
• Air transport: The cost of air freight has decreased, allowing for larger volumes of goods to be transported quickly.
• Information and communication technology: Innovations in this area, such as the Internet and mobile communication, facilitate instant contact and transactions.

Previous Year Questions 2018

Q20: How have our markets been transformed in recent years? Explain with examples. 
Or
What changes have taken place in the markets during the last twenty years or so?    (CBSE 2018)

Hide Answer  

Ans: Our markets have undergone significant transformations in recent years, leading to a remarkable shift in consumer choices.

• Wider selection: Consumers now enjoy a broader range of goods and services.
• Access to latest technology: The newest models of digital cameras, mobile phones, and cars from leading global manufacturers are readily available.
• Brand explosion: There is a vast increase in the number of brands across various products, from shirts to televisions.

These changes reflect a recent phenomenon, enhancing the shopping experience in our markets.

Q21: “Foreign trade integrates the markets in different countries.” Support the statement with arguments.    (CBSE 2018)

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Ans: Foreign trade integrates the markets in different countries:

• Opportunities for Producers: Producers can expand their reach beyond domestic markets.
• Global Sales: They can sell products not only in their own country but also in various international markets.
• Competition: Producers face competition from other countries, enhancing their efficiency.
• Consumer Choice: Buyers gain access to a wider variety of goods from around the world, allowing them to choose according to their needs.
• Increased Collaboration: Producers from different countries may form joint ventures, such as AIG’s partnership in India’s insurance sector.
• Market Integration: Producers in different countries compete closely, even if separated by vast distances.

Thus, foreign trade effectively connects and integrates markets across nations.

Q22: The impact of globalisation has not been uniform.” Discuss with the help of examples.
Or
Discuss the impact of globalisation on India.      (CBSE 2018)

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Ans: (a) Positive impact: 
(i) It has resulted in more choices for consumers to get various products of better quality and at lower prices.
(ii) It has improved the standard of living.
(iii) With the investments by the MNCs new jobs have been created in the developing countries.
(iv) New technology has been introduced.
(v) Large companies have become multi-national companies such as Infosys.
(b) Negative impact: 
(i) Creation of special economic zones has disrupted the lives of the people who have been displaced.
(ii) Flexibility in labour laws has worsened the condition of workers who may be appointed temporarily.
(iii) Small producers are unable to compete with MNCs. Thus, several units have been shut down rendering many workers jobless.

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Previous Year Questions 2016

Q23: Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources?   (AI 2016)

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Ans: Multinational companies (MNCs) often establish their offices and factories in regions where they can access resources at lower costs. 
This strategy helps them to:

• Acquire land, labour, and raw materials at cheaper rates.
• Enhance their competitiveness in the global market.
• Increase their profitability by minimising production costs.

Q24: Differentiate between investment and foreign investment.    (AI 2016)

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Ans: Investment by any person or entity is the money spent for buying building, land or other assets with a motive to earn a profit in future by selling it or in any other fashion. Foreign investment is any investment made by a foreign business entity such as a MNC, or an individual or a foreign government in India for buying assets with the motive to earn a profit from it.

Q25: Due to which reason the latest models of different items are available within our reach?  (Foreign 2016)

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Ans: Globalisation has made the latest models of various items easily accessible to consumers. Key reasons include:

• Improved technology: Advances in technology allow for quicker production and distribution.
• Liberalisation: Relaxation of trade restrictions has increased the variety of products available.
• Global markets: Consumers can now access goods from around the world.

As a result, we now enjoy a wider selection of products than ever before.

Q26: Barriers on foreign trade and investment were removed to a large extent in India since 1991.” Justify the statement.    (CBSE 2016)
Or
Why had the Indian government put barriers to foreign trade and foreign investments after independence?    (CBSE 2016)

Hide Answer  

Ans: (A) (i) The government had put restrictions on the import of goods to protect domestic producers from foreign competition.
(ii) The government allowed imports of only essential items such as machinery, fertilisers and petroleum. These restrictions helped to attain technological capability within the country.
(B) (i) Starting around 1991, the government wished to remove the barriers because India had attained technological capability.
(ii) The government decided that the time had come for Indian producers to compete with producers around the globe.
(iii) It felt that competition would improve the performance of producers within the country.
(iv) There would be an unrestricted exchange of capital, technology and experience between India and other countries of the world.

Q27: “Information and communication technology has played a major role in spreading out production of services across countries.” Justify the statement with examples.    (CBSE 2016)

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Ans: (i) Telecommunication facilities – telegraph, mobile phones, fax – are used to contact one another around the world and to communicate from remote areas.
(ii) This has been facilitated by satellite communication devices.
(iii) Computers have now entered almost every field of activity.
(iv) Internet allows us to send instant electronic mail (e-mail) and talk (voice mail) across the world at negligible costs.
(v) IT has played a major role in spreading out the production of services across countries. For example, for a magazine published for London readers different work is done as follows:
(a) Designing in Delhi.
(b) Orders how to design from London.
(c) Designing done on the computer.
(d) After printing sent to London by air.
(e) Payment through e-banking.

Previous Year Questions 2015

Q28: How are MNCs controlling and spreading their productions across the world? Explain.   (CBSE 2015)

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Ans: (i) MNCs set up production jointly with local companies.
(ii) MNCs buy up local companies to expand production.
(iii) MNCs in developed countries place orders for production with small producers of developing countries for various products such as garments, footwear etc. The MNCs sell these products under their brand name. MNCs determine price, quality, delivery and other conditions for these producers.

Q29: Explain the role of technology in stimulating globalisation process.  (CBSE 2015)

Hide Answer  

Ans: Technology plays a crucial role in stimulating the globalisation process:

• Transport advancements: Recent improvements in transport technology have enabled faster and cheaper delivery of goods worldwide.
• Containerisation: The use of containers has significantly reduced port handling costs and increased the speed of exports.
• Air transport: Lower costs in air transport have allowed for larger volumes of goods to be transported quickly.
• Information technology: Developments in IT, especially in telecommunications like the internet, have transformed global connectivity.
• Access to information: Tools such as telegraphs, mobile phones, and faxes have made information accessible anytime, anywhere.
• Cost reduction: These technological advancements have lowered operational costs, benefiting consumers globally.
• Research and development: Technology has opened new avenues for further advancements and innovation.

Q30: Why did the Indian government remove barriers to a large extent on foreign trade and foreign investment after 1991? (CBSE 2015)

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Ans: The Indian government removed barriers on foreign trade and investment after 1991 to:

• Encourage competition among local industries.
• Improve the quality of domestic products.
• Facilitate easier imports and exports.
• Attract foreign investment by allowing companies to establish operations in India.

This process, known as liberalisation, aimed to create a more open market, enabling businesses to make their own decisions regarding trade.

Also read: Mind Map: Globalisation & the Indian Economy

Previous Year Questions 2014

Q31: Explain any four ways by which MNCs exercise control on production.   (CBSE 2014)

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Ans: Multinational Corporations (MNCs) control production in several ways:

• Factory Location: They establish factories near markets to access skilled and unskilled labour at lower costs, along with other necessary resources.
• Local Partnerships: MNCs collaborate with local companies to enhance production capabilities.
• Acquisition: They often buy local firms, allowing them to expand and modernise production using advanced technology and capital.
• Outsourcing: Large MNCs place orders with small producers, selling these products under their own brand names globally.

Previous Year Questions 2012

Q32: How are MNCs spreading their production across countries? Explain with an example.
Multinational Corporations (MNCs) are spreading their production in different ways. Some of them are:  (CBSE 2012)

Hide Answer  

Ans: Multinational Corporations (MNCs) are expanding their production across countries in several ways:

• By buying local companies and, then expanding production. For example, Cargill Foods, a very large American MNC, purchased small Indian company, Parakh foods. Cargill Foods is, now, the largest producer of edible oil in India with a capacity making 5 million pouches daily.
•  By placing orders for production with small producers. Garments, footwears, sports items are examples where production is carried out by small producers for large MNCs around the world.
•  By producing jointly with some of the local companies. It benefits the local company in two ways.

1. A MNC can provide money for additional investments.
2. A MNC can bring latest technology for production.

For example, Ford Motors set up a large plant near Chennai, in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks.

Previous Year Questions 2025

Q1: Why does it become difficult for farmers in rural areas to take loans from government banks? Read the following reasons and choose the most appropriate option: (1 Mark ) (CBSE 2025)
I. Lack of collateral
II. Complicated procedure
III. Higher cost of borrowing
IV. Lack of awareness
Options:
(a) Only I, II and III are correct.
(b) Only II, III and IV are correct.
(c) Only I, II and IV are correct.
(d) Only I, III and IV are correct.

Hide Answer  

Ans: (c)Farmers in rural areas often face difficulty taking loans from banks due to lack of collateral, complicated procedures, and lack of awareness. The higher cost of borrowing is associated with informal lenders, not government banks.

Q2: Which of the following groups in urban India depend on informal sources to meet their credit needs? (1 Mark ) (CBSE 2025)
(a) Poor households
(b) Households with few assets
(c) Both poor households and households with few assets
(d) Both well-off households and households with few assets

Hide Answer  

Ans: (c)

In urban areas, 54% of loans taken by poor households come from informal sources, while households with few assets also depend largely on them due to lack of collateral and access to formal banks.

Q3: Read the given source and answer the questions that follow :
Loans From Cooperatives
Besides banks, the other major source of cheap credit in rural areas are the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives possible such as farmers cooperatives, weavers cooperatives, industrial workers cooperatives, etc. Krishak Cooperative functions in a village not very far away from Sonpur. It has 2300 farmers as members. It accepts deposits from its members. With these deposits as collateral, the Cooperative has obtained a large loan from the bank. These funds are used to provide loans to members. Once these loans are repaid, another round of lending can take place.
Krishak Cooperative provides loans for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses. (4 Marks ) (CBSE 2025)

(a) Cooperative societies come under which source of credit?  (1 Mark)

Hide Answer  

Ans: Cooperative societies come under the formal source of credit.

(b) Mention any two sources of capital of cooperative societies.  (1 Mark)

Hide Answer  

Ans: Two sources of capital of cooperative societies are:

• Deposits collected from members.
• Loans obtained from banks using these deposits as collateral.

(c) Explain the role of cooperative societies in increasing the income of farmers.  (2 Marks)

Hide Answer  

Ans: Cooperative societies provide loans to members at low interest rates for purposes like cultivation, purchase of implements, trade, fisheries, and housing. This reduces dependence on moneylenders, ensures timely and affordable credit, and helps farmers increase their income through better production and investment opportunities.

Q4: Arrange the following sources of credit in the most to least order to meet the credit requirement of rural households in India and choose the correct option:  (1 Mark)
I. Government, 
II. Cooperative Banks and Societies, 
III. Moneylenders, 
IV. Relatives and friends.
(a) III, II, I, IV, 
(b) III, II, IV, I, 
(c) I, III, II, IV, 
(d) I, III, IV, II.

Hide Answer  

Ans: (B) III, II, IV, I.

Moneylenders provide the largest share of credit after commercial banks in rural areas, followed by cooperative banks and societies, then relatives and friends, while the government provides the least direct credit.

Q5: Read the given source and answer the questions that follow:  (4 Marks)

​​Arun’s Story
​Arun supervises the work of one farm labourer. Arun has seven acres of land. He is one of the few persons in Sonpur to receive bank loan for cultivation. The interest rate on the loan is 8.5 per cent per annum, and can be repaid anytime in the next three years. Arun plans to repay the loan after harvest by selling a part of the crop. He then intends to store the rest of the potatoes in a cold storage and apply for a fresh loan from the bank against the cold storage receipt. The bank offers this facility to farmers who have taken crop loan from them.

Arun’s Story case-based questions:
(i) Under which source does Arun’s loan come?  (1 Mark)

Hide Answer  

Ans: Arun’s loan comes under the formal source of credit.

(ii) Mention one important term of credit for taking a loan from the bank.  (1 Mark)

Hide Answer  

Ans: One important term of credit for taking a loan from the bank is the interest rate, which in Arun’s case is 8.5% per annum.

(iii) How is Arun’s loan beneficial? Explain any two reasons.  (2 Marks)

Hide Answer  

Ans: Arun’s loan is beneficial because:

• The interest rate is low, reducing his cost of borrowing.
• It allows him to repay after harvest and even use his produce stored in cold storage as collateral for a fresh loan, helping him increase his income and investment capacity.

Q6: “Reserve Bank of India plays a crucial role in regulating the Indian banks.” Justify the statement.  (3 Marks)

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Ans: Reserve Bank of India plays a crucial role in regulating the Indian banks:

• Supervises functioning of banks: The RBI monitors all formal sources of credit and ensures that banks follow proper rules and guidelines.
• Maintains cash balance: It ensures that banks keep a minimum cash reserve out of the deposits they receive.
• Checks fair lending: The RBI ensures that banks give loans not only to profit-making businesses but also to small cultivators, small borrowers, and small-scale industries.
• Collects information: Banks are required to submit reports to the RBI on how much they lend, to whom, and at what interest rate.

This supervision helps in maintaining stability, fairness, and trust in the banking system.

Q7: Explain any three functions of money as a medium of exchange.  (3 Marks)

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Ans: Functions of money as a medium of exchange:

• Facilitates exchange of goods and services:
  Money acts as an intermediate in the exchange process, making it easy to buy and sell goods or services without the need for barter.
• Eliminates double coincidence of wants:
  In a barter system, both parties must want what the other offers. Money removes this problem, as it can be exchanged for any commodity or service.
• Widely accepted means of payment:
  Money, authorised by the government (like the rupee in India), is legally accepted for all transactions, ensuring smooth trade and settlement.

Q8: Examine the importance of bank deposits.  (3 Marks)

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Ans: Importance of bank deposits:

• Safe place to keep money:
  Depositing money in banks keeps people’s savings safe from theft or loss.
• Earns interest:
  Banks pay interest on deposits, allowing people to earn an income on their savings.
• Provides liquidity and convenience:
  People can withdraw money whenever needed, as deposits can be used for payments through cheques or digital transactions.

Thus, bank deposits help people manage their money securely while contributing to the flow of funds in the economy.

Q9: Read the following sources of loan carefully and choose the correct option related to formal sources of credit:  (1 Mark)
(i) Commercial Bank, 
(ii) Landlords, 
(iii) Government, 
(iv) Money Lender.
(a) (i) and (iii) are correct. 
(b) (ii) and (iv) are correct. 
(c) (i) and (ii) are correct. 
(d) (ii) and (iii) are correct.

Hide Answer  

Ans: (a) (i) and (iii) are correct.

Formal sources of credit include commercial banks and the government, as they are regulated by the Reserve Bank of India and follow legal procedures and fair lending practices.

Q10: Imagine you are a part of a ‘Self Help Group’ (SHG). Explain the working system of the Self Help Group (SHG) to the new member.  (5 Marks)

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Ans: Working System of a Self Help Group (SHG):

• Formation and Members:
  A typical SHG consists of 15–20 members, usually from the same neighbourhood, often women, who come together to save regularly.
• Regular Savings:
  Each member contributes a small amount (Rs 25–Rs 100 or more) every month. These savings are pooled to create a common fund for the group.
• Internal Lending:
  Members can take small loans from this fund to meet their needs. The group charges low interest compared to moneylenders.
• Bank Linkage:
  After saving regularly for one or two years, the SHG becomes eligible to take a bank loan. The loan is sanctioned in the name of the group, not individuals.
• Decision-Making and Repayment:
  The group collectively decides the purpose, amount, and interest rate for loans. Members ensure timely repayment, and any default is followed up by the group.
• Empowerment and Social Role:
  SHGs help members become financially self-reliant and provide a platform to discuss and act on social issues like health, nutrition, and domestic violence.

Thus, SHGs promote savings, provide affordable credit, and empower rural women socially and economically.

Q11: Imagine that you are the Village Development Officer of a village. Explain the usefulness of formal sources of credit for the farmers.  (5 Marks)

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Ans: Usefulness of Formal Sources of Credit for Farmers:

• Low Rate of Interest:
  Formal sources such as banks and cooperatives provide loans at reasonable and fixed interest rates, reducing the burden of repayment for farmers compared to moneylenders.
• Fair and Regulated System:
  These institutions are supervised by the Reserve Bank of India (RBI), ensuring that lending practices are fair, transparent, and free from exploitation.
• Availability of Different Types of Loans:
  Farmers can take loans for cultivation, purchase of agricultural tools, irrigation, livestock, or housing, which helps in improving productivity and income.
• Encourages Economic Growth:
  By providing cheap and timely credit, formal sources help farmers invest more in modern farming methods, leading to higher production and income.
• Reduces Dependence on Informal Lenders:
  Access to formal credit reduces farmers’ reliance on moneylenders who charge very high interest rates and often trap them in debt.

Hence, formal sources of credit are essential for ensuring fair, affordable, and productive borrowing, leading to overall rural and agricultural development.

Q12: Analyse the role of credit in rural economy.  (5 Marks)

Hide Answer  

Ans: Role of Credit in Rural Economy:

• Supports Agricultural Activities:
  Credit helps farmers meet expenses for seeds, fertilisers, irrigation, pesticides, and equipment during cultivation when they have no income until harvest.
• Encourages Production and Development:
  By providing funds at the right time, credit enables farmers to expand production, improve techniques, and increase productivity, contributing to rural growth.
• Promotes Self-Employment:
  Small farmers, artisans, and rural workers use credit to start small businesses or self-employment activities, helping them earn a steady livelihood.
• Improves Living Standards:
  Affordable and timely credit allows rural families to meet social and emergency needs like education, health, and housing without falling into debt traps.
• Reduces Dependence on Moneylenders:
  Access to formal and cooperative credit protects poor farmers from high-interest informal loans and exploitation, leading to greater economic stability in villages.

Thus, credit plays a vital role in the growth, self-reliance, and development of the rural economy.

Q13: Analyse the differences between formal and informal sectors of credit.  (5 Marks)

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Ans: Differences between Formal and Informal Sectors of Credit:

Conclusion: Formal credit is cheaper, safer, and promotes development, while informal credit often increases debt burden and inequality in rural and urban areas.

Q14: Analyse the role of banks in the economy of the country.  (5 Marks)

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Ans: Role of Banks in the Economy of the Country:

• Mobilisation of Savings:
  Banks encourage people to deposit their savings by offering a safe place and paying interest. These savings become a major source of funds in the economy.
• Providing Loans and Credit:
  Banks use a major portion of deposits to give loans to individuals and businesses for productive activities such as farming, trade, industry, and services.
• Acting as Financial Intermediaries:
  Banks mediate between depositors and borrowers — taking money from those with surplus funds and lending it to those who need funds, thus maintaining the flow of money in the economy.
• Facilitating Payments and Settlements:
  Through cheques, demand deposits, ATM cards, and digital transactions, banks make payments easy, safe, and efficient without the use of cash.
• Promoting Economic Development:
  By ensuring cheap and timely credit, banks help in expanding production, generating employment, and improving living standards, contributing to overall national development.

Thus, banks play a vital role in maintaining financial stability and promoting growth and development in the country’s economy.

Q15: Analyse the role of Self Help Groups in the development of rural areas in India.  (5 Marks)

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Ans: Role of Self Help Groups (SHGs) in the Development of Rural Areas in India:

• Provides Access to Credit:
  SHGs enable poor people, especially women, to get small loans at reasonable interest rates without collateral, helping them meet daily needs and start income-generating activities.
• Promotes Savings Habit:
  Members save regularly and pool their money, which builds a habit of financial discipline and collective responsibility in rural communities.
• Encourages Self-Employment:
  Loans from SHGs are used for small businesses, agriculture, livestock, handicrafts, or trade, promoting self-employment and reducing dependence on moneylenders.
• Empowers Women:
  Most SHG members are women. By managing finances and participating in decision-making, they become financially and socially empowered.
• Strengthens Community Development:
  Regular meetings help members discuss and act on social issues like health, education, nutrition, and domestic violence, contributing to overall rural development.

Thus, SHGs play a crucial role in reducing poverty, empowering women, and promoting sustainable rural growth in India.

Q16: Shyamal is a small farmer. Shyamal has got his ‘Kisan Card’ made. He needs a loan to grow new crops. Which of the following means will be easy and beneficial for this?  (1 Mark)
(a) Cooperative Bank, 
(b) Agricultural Traders, 
(c) Relatives, 
(d) Friends.

Hide Answer  

Ans: (a) Cooperative Bank.

Cooperative banks provide cheap and easy credit to farmers with simple procedures and low interest rates. This makes them the most beneficial and reliable option for small farmers like Shyamal.

Q17: The problem of ‘Double Coincidence of Wants’ can be solved by which of the following?  (1 Mark)
(a) By increasing the circulation of currency, 
(b) By expanding the scope of markets, 
(c) By creating awareness amongst people, 
(d) By registering the buyer and seller.

Hide Answer  

Ans: (b) By expanding the scope of markets.

Money acts as a medium of exchange and removes the need for double coincidence of wants that existed in the barter system. The wider use and circulation of money make transactions simple and convenient.

Q18: Distinguish between formal and informal sources of credit in India with example.  (3 Marks)

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Ans: Distinction between Formal and Informal Sources of Credit:
Example: A bank loan is a formal source of credit, whereas borrowing from a moneylender is an informal source.

Q19: Why are formal sources more beneficial than informal sources of credit in India? Explain by giving any three arguments.  (3 Marks)

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Ans: Formal sources are more beneficial than informal sources of credit because:

• Low Rate of Interest:
  Formal sources such as banks and cooperatives charge reasonable and fixed interest rates, reducing the burden on borrowers.
• Regulated and Fair System:
  They are supervised by the Reserve Bank of India (RBI), ensuring fair lending practices and protection against exploitation.
• Encourages Development:
  Cheap and timely loans from formal sources help people invest in farming, small industries, and trade, leading to higher income and economic growth.

Q20: Explain the role of credit in the economic development of the country with example.  (3 Marks)

Hide Answer  

Ans: Role of Credit in the Economic Development of the Country:

• Promotes Production and Investment:
  Credit provides funds to farmers, traders, and entrepreneurs to start or expand productive activities, increasing overall output and income.
• Generates Employment:
  When people use credit to set up small businesses or industries, it creates job opportunities and improves living standards.
• Encourages Self-Reliance:
  Availability of affordable and timely credit helps individuals and small producers become financially independent and contribute to national growth.

Example: Salim, the shoe manufacturer, used credit to complete production on time and earn profit — showing how credit can play a positive role in development.

Q21: Rama is a farmer. She needs a loan for agriculture work. Which of the following sources of loan will be beneficial for Rama? Choose the most appropriate option:  (1 Mark)
I. Bank,
II. Agricultural Trader, 
III. Self-Help Group, 
IV. Government.
(a) Only I, III, and IV are correct. 
(b) Only I, II, and III are correct. 
(c) Only II, III, and IV are correct. 
(d) Only I, II, and IV are correct.

Hide Answer  

Ans: (a) Only I, III, and IV are correct.

Banks, Self-Help Groups, and the Government provide formal and low-interest loans that are fair and beneficial for farmers like Rama.
Agricultural traders, on the other hand, often charge high interest rates and impose unfavourable terms, making them less beneficial.

Q22: Two statements are given below. They are Assertion (A) and Reason (R).   (1 Mark)
Assertion (A): Rupees is accepted as medium of exchange in India. 
Reason (R): The World Bank legalises the use of rupee as a medium of payment in India.
(a) Both (A) and (R) are correct and (R) is the correct explanation of (A). 
(b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A). 
(c) (A) is correct, but (R) is incorrect.
(d) (A) is incorrect, but (R) is correct.

Hide Answer  

Ans: (c) (A) is correct, but (R) is incorrect.

Rupee is accepted as a medium of exchange in India because it is authorised by the Government of India and issued by the Reserve Bank of India, not by the World Bank.

Previous Year Questions 2024

Q1: Read the image of the cheque. Identify the cheque number from the given options:   (1 Mark ) (CBSE 2024)
(a) 362255
(b) 110002078
(c) 000313
(d) 16137926023

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Ans: (a)
The cheque number is a unique identifier for a specific cheque, typically found at the top right corner of the cheque. In the given options, the correct cheque number is (a) 362255, as it matches the format and position usually found on a cheque. The other options either have too many digits or do not fit the typical cheque numbering format.

Q2: Which one of the following banks in India controls the issuance of currency and regulates the credit system in the country?   
(1 Mark ) (CBSE 2024)
(a) Punjab National Bank
(b) Indian Bank
(c) Reserve Bank of India
(d) State Bank of India

Hide Answer  

Ans: (c)
The Reserve Bank of India (RBI) is the central bank of India, responsible for issuing currency and regulating the country’s credit system. It manages monetary policy and ensures financial stability, making option (c) the correct answer. The other banks listed are commercial banks that operate under the regulations set by the RBI.

Q3: Explain the role of `Self Help Groups’ in the rural society.    (3 Marks ) (CBSE 2024)

Hide Answer  

Ans: The role of self help groups in a rural society/ economyis as follows: 
(1) They organise rural poor, in particular women, into small Self Help Groups to pool their savings.
(2) Self-help groups provide a platform for the rural poor to interchange thoughts, ideas and opinions about various domestic and regional issues.
(3) It inculcates the habit of saving and investing.
(4) It also becomes a medium to borrow cheap loans easily from local banks. Loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members.
(5) It develops the power of decision-making and develops political and social opinion among the members.

Q4: Why do lenders often require collateral before lending loan? Choose the most suitable option from the following.    (1 Mark ) (CBSE 2024)
(a) To lower interest rates for borrowers. 
(b) To establish personal relations. 
(c) To increase their profit margins. 
(d) To mitigate the risk of loan default. 

Hide Answer  

Ans: (d) To mitigate the risk of loan default.
Lenders require collateral before lending a loan to ensure that if the borrower fails to repay the loan (defaults), the lender can recover the loan amount by selling the collateral. This reduces the financial risk for the lender, as collateral provides security for the loan.

Q5: Look at the given picture carefully and infer the income of the bank.    (1 Mark ) (CBSE 2024)

Choose the correct option from the following. 
(a) The difference between the amount deposited and borrowed by the bank to Reserve Bank of India. 
(b) The difference of amount of interest between what is charged from borrowers and what is paid to depositors. 
(c) The difference of interest rate between what is charged from borrowers and what is charged from depositor. 
(d) The difference between the amount deposited by the depositor and borrowed by the borrower. 
Note: The following question is for Visually Impaired Candidates only in lieu of Q. No. 20. Which one of the following supervise the functioning of formal sources of loan in India? 
(a) Reserve Bank of India 
(b) State Bank of India 
(c) National Development Council 
(d) National Finance Commission 

Hide Answer  

Ans: (b) The difference of amount of interest between what is charged from borrowers and what is paid to depositors.  
For visually impaired Students only  
(a) Reserve Bank of India 

Q6: How is credit essential for economic activities? Explain with examples.    (3 Marks ) (CBSE 2024)

Hide Answer  

Ans: Credit is essential for economic activities because it provides the necessary financial resources for individuals, businesses, and governments to invest, grow, and expand. 
Here’s how credit plays a key role:

• Boosting Business Investments: Businesses often need credit to invest in machinery, technology, or expansion. For example, a company might take a loan to buy new equipment or expand its operations. This helps the business grow, increase production, and create more jobs, which boosts the economy.
• Supporting Consumption: Consumers rely on credit to make purchases that they might not be able to afford immediately, such as buying a house, car, or even paying for education. For instance, a person may use a home loan (mortgage) to buy a house, which contributes to the housing market and the overall economy.
• Encouraging Innovation: Entrepreneurs use credit to fund new projects or startups. For example, someone may take a loan to launch a tech startup, creating new products or services that could lead to job creation and new markets.
• Enabling Government Spending: Governments often use credit (through bonds and loans) to fund large infrastructure projects like building roads, schools, and hospitals. These projects not only improve public welfare but also stimulate economic activity and create jobs.
• Facilitating International Trade: Credit is essential for international trade. Businesses use credit (such as trade credit or letters of credit) to import and export goods. This allows companies to expand their markets and engage in cross-border business, boosting global economic activity.

In summary, credit provides the financial means for individuals, businesses, and governments to invest, spend, and grow, all of which are crucial for a thriving economy.

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Previous Year Questions 2023

Q7: Explain the role of banks with regard to money which they accept from the public.   (3 Marks) (2023)

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Ans: Banks play an important role regarding the money they accept from the public

• They keep the money of the public in their safe custody.
• They give interest on the deposited money to the public.
• Banks use the major portion of deposits to extend loans. These loans are then recovered with interest.
• It is easy for individuals to get credit who have savings and a current account in the banks. 

Q8: Explain any three functions of the Reserve Bank of India.    (3 Marks) (2023, Al 2019)

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Ans: The Reserve Bank of India has many important roles that affect the common public:

• RBI monitors the balance kept by the bank for day to day transactions.
• RBI monitors the banking activity, particularly the loan-giving activity of the banks. It ensures that the banks give loans to the priority sector like agriculture and not just to profit-making sectors.
• The RBI undertakes the responsibility of controlling credit created by the commercial banks. RBI uses quantitative and qualitative techniques to control and regulate the credit flow. This includes interest rates and the percentage of loans to a sector.
• The RBI gives guidelines to the bank about setting up the terms of credit that the bank may decide upon for the borrowers.

Q9: “Cheap and affordable credit is crucial for the country’s development’.” Justify the statement.     (5 Marks) (CBSE 2023)

Hide Answer  

Ans: Cheap and affordable credit is crucial for a country’s development due to the following factors:

• Increased lending leads to higher incomes, encouraging people to invest in agriculture, business, and small-scale industries.
• Cheap credit leaves more income with borrowers for reinvestment, accelerating economic activity.
• Affordable credit allows weaker sections of society to access formal lending, reducing exploitation by informal moneylenders.
• It helps break the cycle of debt and promotes sustainable economic activity, enabling borrowers to invest in better technology and become more competitive.

Q10: Justify the role of ‘Self Help Groups’ in the rural economy.    (5 Marks) (CBSE 2023)

Hide Answer  

Ans:  (i) SHGs have emerged as building blocks of the rural poor as it is the group as a whole which is responsible of the repayment of the loan. In case of non-repayment, it is taken up in a serious manner by the group members.
(ii) The SHGs are organisations of the rural poor people especially women. They provide small loans on reasonable rates.
(iii) The members of SHGs pool their savings and take loans at nominal rates of interests.
(iv) This creates self employment opportunities for the members particularly rural poor women.
(v) The SHGs help poor borrov/ers to overcome the problem of lack of collateral.

Previous Year Questions 2022

Q11: Why are transactions made in money? Explain.     (Term-II,2021-22 C)

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Ans: A person holding money can easily exchange it for any commodity or service that he or she might want. Thus, everyone prefers to receive payments in money and then exchange the money for things that they want.

Q12: How does a bank work as a key component of the financial system? Explain.    (Term-II, 2021-22)

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Ans: Banks mediate between those v/ho have surplus funds (the depositors) and those who are in need of these funds (the borrowers). People need small amount of money for their day-to-day needs and deposit the surplus amount in the bank. Bank accepts the deposit and also pay an amount of interest on the deposits. In this way people’s money is safe and earns an amount as an interest.
Bank use the major portion of the deposits to meet the loan requirements of the people.

Q13: Analyse the situation in which credit pushes the borrower into a situation from which recovery is painful.    (Term-II, 2021-22)

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Ans: Bank usually refered as a formal source of credit and in some situations the borrower would not able to repay loan. This pushes them in the situation of dept trap. Example:

(i) In case of rural areas if crop fails due to natural factors it will be difficult for the farmers to pay loan.

(ii) In case of failure of a business. It will be difficult for the businessman to repay the credit.

(iii) In case of informal sector, rate of interest is very high. If due to crop failure previous loan is not repaid interest rate further mounts.

(iv) In case of high risk activities failure without some support can push borrower in painful situation.

(v) In many cases people has to sell their land and fixed assets to repay loan.

Q14: Explain with an example the role of credit for development.    (Term-ll, 2021-22)

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Ans: ‘Credit’ refers to an agreement in which the lender supplies the borrowers with money, goods or services in return for the promise of future payment. Credit plays vital role for development in different ways as:
(i) Credit helps people from all walks of life in setting up their business, increase their income and support their families.
(ii) To some people loan helps a lot in constructing their houses and get relief from monthly rent, to others it helps a lot in raising their standards of living.
(iii) Example of Salim: The credit helps him and he is able to meet the ongoing expenses of production, complete production on time and thereby increase his earning. 38. Banks play an important role in the economic development of the country.
(i) Capital formation : Banks offer very attractive schemes to attract the people to save their money with them and organised money market.
(ii) They mobilize the small savings of the people through their branches and make it available for productive purposes.
(iii) Credit creation leads to increased production, employment and caused faster economic development.
(iv) The banks help in the development of different type of industries by extending loans to concern persons.
(v) It ensures full utilisation of resources.

Q15: Read the following source and answer the questions that follow:    (Term-II,2021-22)
A House Loan
Megha has taken a loan of Rs. 5 lakhs from the bank to purchase a house. The annual interest rate on the loan is 12 per cent and the loan is to be repaid in 10 years in monthly installments. Megha had to submit to the bank, documents showing her employment records and salary before the bank agreed to give her the loan. The bank retained as collateral the papers of the new house, which will be returned to Megha only when she repays the entire loan with interest.

(i) From which source of credit Megha has taken loan?

Hide Answer  

Ans: Formal source

(ii) Explain the terms of credit given in the source.

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Ans: Terms of credit given in the source are
Document required – Salary slip and employment record.
Interest rate – 2% per annum
Mode of repayment – Monthly instalment
Collateral – New house papers

Q16: Dhananjay is a government employee and belongs to a rich household, whereas Raju is a construction worker and comes from a poor rural household. Both are in need and wish to take a loan. Create a list of argument explaining who between the two would successfully be able to arrange money from a formal source. Why?    (Term-II,2021-22 C, 2016)

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Ans: Dhananjay will be able to get a loan from a formal source.
Arguments:

• Banks are not present everywhere in rural India. Even when they are present, getting a loan from a bank is much more difficult than taking a loan from informal sources.
• Bank loans require proper documents and collateral. Absence of collateral is one of the major reasons which prevent the poor from getting bank loans.
• Informal lenders such as moneylenders, on the other hand, know the borrowers personally and hence, are often willing to give a loan without collateral.

Also read: NCERT Solutions: Money & Credit

Previous Year Questions 2021

Q17: The exchange of goods with a commodity is known as:          (2021 C)
(a) Double coincidence of wants
(b) Local trade
(c) Domestic trade
(d) Foreign trade

Hide Answer  

Ans: (a)

The exchange of goods with a commodity is known as “double coincidence of wants.” This term means that for a trade to happen, each party must want what the other has to offer at the same time. Therefore, option (a) is the correct answer, as it specifically describes this type of barter system. The other options refer to different types of trade but do not capture this specific concept.

Q18: Which of the following authorities of India issues currency notes on behalf of the Central Government?          (2021 C)
(a) The State Bank of India
(b) The Reserve Bank of India
(c) The Allahabad Bank
(d) The Punjab National Bank

Hide Answer  

Ans: (b)
The Reserve Bank of India (RBI) is the authority responsible for issuing currency notes on behalf of the Central Government. It manages the country’s monetary policy and ensures the supply of currency in the economy. Therefore, option (b) is the correct answer, while the other banks listed are commercial banks that do not have this authority.

Q19:  “The use of money spans a very large part of our everyday life”. Support the statement.          (2021 C)

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Ans:  In everyday lives, we use money to fulfill our requirement in different ways:
(i) To buy goods and services like in market, money can be used to buy clothes, vegetables etc.
(ii) To deposit in banks so that money can be saved and used for future use. For example : If a labourer deposits his monthly salary in his bank account, then, he can use it in installments during the entire month.
(iii) As a store value. For instance, we cannot store perishable goods like milk, grain etc. to exchange; but v/e can keep money for future use.

Previous Year Questions 2020

Q20: How do demand deposits have the essential features of money? Explain.    (2020)

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Ans: Demand deposits are considered as money because:

• The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.
• Banks accept the deposits and also pay an interest rate on the deposits.
• In this way, people’s money is safe with the banks and it earns an interest.

Q21: Read the information given below and select the correct option.   (2020 C)
Rohan has taken a loan of Rs.5 lakhs from the bank to purchase a house on 12% rate of interest. He has to submit papers of new house and salary record to the bank. What is this process called as?
(a) Interest Rate
(b) Collateral
(c) Principal Amount
(d) Installments

Hide Answer  

Ans: (b)
The process described is called “collateral,” which refers to the assets (like the house Rohan is purchasing) that a borrower offers to the bank as security for a loan. If Rohan fails to repay the loan, the bank can take possession of the collateral. Therefore, option (b) is the correct answer, while the other options refer to different aspects of loans and interest.

Q22: Krishna is working in a neighbouring field with very less wages. Expenses on sudden illnesses or functions in the family are also met through loans. The landowner charges an interest rate of 5 per cent per month. At present she owes the landowner Rs. 5,000.
Analyse the credit arrangements given above.    (CBSE 2020)

Hide Answer  

Ans: Credit arrangement-informal sources of credit / No intervention of government in controlling the credit activities carried out by informal sources. 

Q23: Why do lenders ask for collateral while lending? Explain.   (CBSE 2020)

Hide Answer  

Ans: Lenders ask for collateral while lending because:

• It works as a guarantee to a lender until the loan is repaid.
• If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment.
• It reduces exposure in order to do more business with each other when credit limits are under pressure.

Q24: “The Reserve Bank of India supervises the functioning of formal sources of loans.” Support the statement with examples.    (2020)

Hide Answer  

Ans: The Reserve Bank of India (RBI) supervises the functioning of formal sources of loans in the following ways:

• It monitors the balance kept by banks for day-to-day transactions.
• It checks that the banks give loans not just to profit-making businesses and traders but also to small borrowers.
• Periodically, banks have to give details about lenders, borrowers, and interest rates to RBI. It is necessary for securing public welfare. It avoids the banks to run the business with a profit motive only. It also keeps a check on the interest rate of credit facilities provided by banks. RBI makes sure that the loans from the banks are affordable and cheap.

Q25: “Bank plays an important role in the economic development of the country”. Support the statement with an example.    (2020)

Hide Answer  

Ans: Banks play an important role in the economic development of the country. 
(i) Capital formation : Banks offer very attractive schemes to attract the people to save their money with them and organised money market. 
(ii) They mobilize the small savings of the people through their branches and make it available for productive purposes. 
(iii) Credit creation leads to increased production, employment and caused faster economic development. 
(iv) The banks help in the development of different type of industries by extending loans to concern persons. 
(v) It ensures full utilisation of resources.

Q26: “Credit sometimes pushes the borrower into a situation from which recovery is very painful”. Support the statement with examples.    (2020)

Hide Answer  

Ans: (i) In rural areas, the main demand for credit is for crop production. Crop production involves considerable costs on seeds, fertilisers, pesticides, water, electricity, repair of equipment, etc. 
(ii) There is a minimum stretch of three to four months between the time when the farmers buy these inputs and when they sell the crop. 
(iii) Farmers usually take crop loans at the beginning of the season and repay the loan after harvest. 
(iv) Repayment of the loan is crucially dependent on the income from farming. 
(v) Example of credit which is painful for a borrower: A farmer picks up the loan from a money lender to meet the expenses of cultivation. But unfortunately crops hit by the pests and fails. So, he is unable to repay the loan and ; debt grows larger with interest. Next year, he picks up a fresh loan and is able to have a normal crop that year. But earnings are not enough to pay the earlier loan. He can repay the loan, only after selling a part of the land. So we can say that “Credit sometimes pushes the borrower into a situation from which recovery is very painful”.

Q27: Self-Help Groups are the building blocks of organisation of the rural poor. Suggest any three ways to make them popular for social issues.    (2020 C)

Hide Answer  

Ans: Ways to make SHGs popular for social issues:

• Government should make proper provisions to provide funding to SHGs for various social programs.
• SHG members can resolve family’s internal issues like domestic violence faced by women and provide financial assistance for marriages.
• SHGs can be given a separate fund for pregnant women’s health, which can provide proper diet and medical requirements.

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Previous Year Questions 2019

Q28: Why are demand deposits considered as money?    (AI2019)

Hide Answer  

Ans: Demand deposits are considered as money, because they can be withdrawn when required and the money withdrawn can be used for making payments. So, they are also considered as money in the modern economy.

Q29: How is ‘double coincidence of wants’ not appreciable in the contemporary scenario?    (CBSE 2019)

Hide Answer  

Ans: For double coincidence of wants to work out, an individual must require what the other person is willing to give away and vice-versa. If this situation is not reached exchange of goods does not happen. This problem is eliminated by the use of money.

Q30: Why is money called a medium of exchange?   (AI2019)
OR
How does money act as medium of exchange?    (2015)

Hide Answer  

Ans: Money acts as an intermediate in the transaction and the exchange process . We can buy things with the help of money. 

Q31: Describe the bad effects of informal sources of credit on borrowers.   (Delhi 2019)

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Ans: The informal sector consists of money lenders, traders, employers, friends, relatives, merchants, and landlords. There is no organization that supervises the credit activities of lenders in the informal sector.

• The informal lenders usually charge a very high rate of interest. A higher cost of borrowing is often detrimental to the borrower. It usually results in a debt trap for the borrower. The borrower is seldom able to escape the never-ending cycle of loan repayment.
• Most loans from informal lenders carry a very high-interest rate and have other stringent conditions. They do little to increase the income of the borrowers.
• It has been observed that the loan recovery mechanics in the informal sector are particularly harsh in cases of loan repayment default. There have been cases of selling of properties at throwaway prices and total loss of belongings and even suicides.

Q32: Explain the three important terms of credit.    (CBSE 2019)

Hide Answer  

Ans: The three important terms of credit are:

• Interest Rate: It is the interest that the borrower pays to the bank. An interest component is added to the principal that the borrower pays to the bank as loan payment in installments.
• Collateral: An asset which is owned by the borrower and is used as a guarantee to a lender until the loan is repaid is called collateral. Land, house, vehicle, livestock, deposits with banks, insurance policy, gold, etc., are examples of assets that can be kept as collateral. If the borrower fails to repay the loan, the lender reserves the right to sell the collateral to obtain payment.
• Documentation: The transaction between the lender and the borrower is put on record by documenting it. It includes the rate of interest, tenure, collateral, and mode of repayment. The terms of credit vary from one loan agreement to another and also on the nature of the lender and the borrower. 

Q33: Describe the vital and positive role of credit with examples.    (2019, Delhi 2016)

Hide Answer  

Ans: ‘Credit’ refers to an agreement in which the lender supplies the borrower with money to buy, goods or services in return for the promise of future payment. Credit plays a vital and positive role a s :
(i) Credit helps people from all walks of life in setting up their busiess, increases their income and support their families.
(ii) To some people loan helps in constructing their houses and get relief from monthly rent.
(iii) To other it helps in raising their living standards,
(iv) Example :Sheela has joined a job. She has taken a loan to buy a scooty that she can attend office conveniently and build a career. Without the loan she would have to travel in bus which takes more time. Thus she would not be able to attend evening classes.

Q34: Describe the importance of formal sources of credit in economic development.   (Delhi 2019)

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Ans: The formal source of credit comprises of banks and cooperative societies. The Reserve Bank of India supervises the functioning of formal sources of loans.
The importance of formal sources of credit in economic development are:

• Even though collateral and paperwork are needed to secure a loan from banks, the interest rates here are lesser than informal sources.
• The formal sources of credit are part of the greater national economy. Hence even small borrowers should try to avail this facility and not go for informal sources of borrowing.
• The role of formal sources of credit has been very great, particularly for financing large developmental projects and various business projects in the private sector and the public sector.

Q35: Give one example each of modern currency and older currency. (CBSE 2019)

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Ans: Examples of modern currency are paper bills/notes, coins, credit cards etc., whereas examples of older currency are coins made of precious metals like gold or silver, terracotta coins, etc.

Q36: Examine any three situations in which credit helps in the development of agriculturists.  (CBSE 2019)

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Ans: Credit helps in the development of agriculturists: 
(1) The credit helps him to meet the ongoing expenses of production. 
(2) It helps in purchasing raw material and equipment. 
(3) It helps in irrigation.

Q37: Examine any three situations in which credit pushes the borrower into a  debt-trap. (CBSE 2019)

Hide Answer  

Ans: Credit leads borrowers into debt traps in these situations: 
(1) Loans from informal sector could lead to debt trap. 
(2) Lack of planning results in debt. 
(3) Difficulty in repaying loans due to certain circumstances. 

Q38: Why do banks and cooperative societies need to lend more? Explain. (CBSE 2019)

Hide Answer  

Ans: Banks and cooperatives should increase their lending in rural areas because: 
(1) India largely depends on agriculture for export revenues. Farmers and agricultural workers in rural areas deserve special attention as they lack capital and resources to invest in their work. 
(2) Most of the people in rural areas are illiterate and informal money lenders exploit and cheat them for their benefit. People need a reliable source for credit. 
(3) Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers. 
(4) Banks and co-operative societies provide loans to the rural households at cheap rates and are backed by the government, which helps them boost their income. Incentives are also given to farmers for quick repayment. 
(5) Most of the people in urban areas depend upon the rural people for their food and raw material requirements. For better production and to boost their income sources, easy credit is required.

Previous Year Questions 2018

Q39: Give any two examples of informal sector of credit.    (2018)

Hide Answer  

Ans: Two examples of the informal sector of credit are moneylenders and relatives/friends who provide loans.

Also read: NCERT Solutions: Money & Credit

Previous Year Questions 2017

Q40: Explain any three loan activities of banks in India.    (Al 2017)

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Ans: 

• Banks provide loans for various economic activities to people or organizations.
• Banks keep only a small proportion of the deposits with them as cash, to meet daily payment demands. The deposits are used to meet the loan requirements of the people.
• Banks intermediates between those who have surplus funds and those who are in need of these funds. Banks offer less interest on deposits than what they charge on loans.
  

Q41: “Banks are an efficient medium of exchange.” Support the statement with arguments.   (Delhi 2017)

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Ans: 

• People deposit their money with banks by opening a bank account. Banks keep the money safe and provide interest on the deposited amount.
• The deposited money can be withdrawn from banks as and when required on demand.
• Banks also facilitate easy transfer of money through cheques, demand drafts, and internet banking from one account to another in the same or any other bank.
• Banks keep only 15% of their total cash deposits to meet the everyday withdrawal demands of their customers. The major portion of the remaining deposits is used to give loans to people at a specific rate of interest. Thus, we see that money is very efficiently exchanged between various people.

Q42: Illustrate with examples the role of ‘loan’ in ‘business’.    (Foreign 2017)

Hide Answer  

Ans: Loan or credit plays a crucial role in business. By sanctioning loans to developing industries and trade, banks provide them with the necessary aid for functioning, developing, and expanding business. This leads to an increase in production, profits, and employment.
For this reason, it is important that the formal sector gives out more loans so that borrowers are not duped by money lenders and can ultimately contribute to national development. 

Q43: Review any three merits and any two demerits of ‘Formal sector of credit’ in India.    (Foreign 2017)

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Ans: Merits of the formal sector of credit in India:

• Regulation: The formal sector is regulated by the Reserve Bank of India, ensuring fair practices and protection for borrowers.
• Lower Interest Rates: Formal sources generally offer loans at lower interest rates compared to informal sources, reducing the burden on borrowers.
• Accessibility: The formal sector provides credit to a wide range of individuals, including both big businessmen and small borrowers.

Demerits of the formal sector of credit in India:

• Lengthy Process: Getting a loan from formal sources often involves a lengthy and bureaucratic process, leading to delays in loan disbursement.
• Collateral Requirement: Formal sources may require collateral for loans, which can be a barrier for individuals who do not possess valuable assets.

Q44: How is money beneficial in transactions?   (Foreign 2017)

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Ans: Money is beneficial in transactions because it eliminates the inconvenience of the double coincidence of wants. In a barter system, individuals would have to find someone who has what they want and is willing to accept what they have to offer in exchange. This can be inefficient and time-consuming. However, with the introduction of money, people can simply exchange their goods or services for money and then use that money to purchase whatever they desire from anyone willing to accept it. Money provides a common medium of exchange that simplifies and accelerates transactions.

Q45: Explain the inherent problem of the ‘barter system’. (CBSE 2017, 15)

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Ans: The inherent problem of the barter system is that it is not necessary that when one person is willing to exchange his/her goods, the person he/she wants to exchange with is also willing to do the same.

Q46: Why is it necessary that banks and cooperatives increase their lending in rural areas? Explain. (CBSE 2017)

Hide Answer  

Ans: Banks and cooperatives should increase their lending in rural areas because: 
(1) India largely depends on agriculture for export revenues. Farmers and agricultural workers in rural areas deserve special attention as they lack capital and resources to invest in their work. 
(2) Most of the people in rural areas are illiterate and informal money lenders exploit and cheat them for their benefit. People need a reliable source for credit. 
(3) Most loans from informal lenders carry a very high interest rate and do little to increase the income of the borrowers. 
(4) Banks and co-operative societies provide loans to the rural households at cheap rates and are backed by the government, which helps them boost their income. Incentives are also given to farmers for quick repayment. 
(5) Most of the people in urban areas depend upon the rural people for their food and raw material requirements. For better production and to boost their income sources, easy credit is required

Previous Year Questions 2016

Q47: Why one cannot refuse a payment made in rupees in India?   (2016)

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Ans: One cannot refuse a payment made in rupees in India because the Indian rupee is the authorized and accepted medium of exchange in the country. The Government of India has established the Indian rupee as the official currency, and it is legally recognized as a valid form of payment. Therefore, individuals and businesses are required to accept payments made in rupees, and refusal to do so would be in violation of the accepted legal tender.

Q48: How does money eliminate the need for double coincidence?   (2016)

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Ans: Money eliminates the need for double coincidence by providing a crucial intermediate step in transactions. In a barter system, individuals would have to find someone who not only wants what they have to offer but also has what they desire in return. This double coincidence can be challenging to achieve. However, with the introduction of money, individuals can simply sell their goods or services for money and then use that money to purchase any other desired commodity available in the market. Money acts as a universally accepted medium of exchange, allowing individuals to acquire what they need without the requirement of a direct match between their wants and the wants of others.

Q49: How do the deposits with banks become their source of income?      (CBSE 2016)

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Ans: When we deposit our money in the bank we get an interest on it. However the bank uses that money to give loan to people. The bank charges an interest on its loan at a higher rate than what is paid to the depositors. Thus, the banks earn money from the deposits.

Q50: Why do banks maintain cash reserve?  (2016)

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Ans: Banks maintain cash reserve to ensure smooth daily withdrawal by depositors.

Q51: Prove with an argument that there is a great need to expand formal sources of credit in rural India.   (2016)

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Ans: The expansion of formal sources of credit in rural India is crucial because it ensures that the rural poor have access to credit at reasonable interest rates. This helps them meet their financial needs without falling into the trap of high-interest informal loans. Additionally, formal sources of credit provide better regulation and supervision, ensuring fair lending practices.

Q52: Why is the supervision of the functioning of formal sources of loans necessary?  (2016)

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Ans: The supervision of formal sources of loans is necessary to ensure that these institutions provide loans not only to the rich but also to the poor. It helps in preventing exploitation and ensures that the banks follow the proper procedures and regulations set by the Reserve Bank of India (RBI).

Q53: Why do farmers require credit?  (CBSE 2016)

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Ans: Farmers require credit to finance their agricultural activities. This credit is used to purchase agricultural inputs such as seeds, fertilizers, pesticides, and machinery. It helps farmers to manage their expenses and invest in their farming operations for better productivity.

Q54: How can money be used to easily exchange it for goods or services? Give examples to explain.    (Delhi 2016)

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Ans: Money acts as a medium of exchange itself for goods and services. A person holding money can easily exchange it for any commodity or service that he or she might want. Everyone prefers to receive payments in money and exchange the money for things they want.
For example, a shoemaker wants to sell shoes in the market and buy wheat. The shoemaker will first exchange shoes for money and then exchange the money for wheat. If the shoemaker had to directly exchange shoes for wheat without the use of money, he would have to look for a wheat-growing farmer who not only wants to sell wheat but also wants to buy the shoe in exchange. Both the parties have to agree to sell and buy each other’s commodities. This process is very difficult, time-consuming, and unhealthy.

Q55: How is money transferred from one bank account to another bank account? Explain with an example.    (Foreign 2016)

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Ans: If a person has to make a payment to his or her friend and writes a cheque for a specific amount, this means that the person instructs his bank to pay this amount to his friend. His friend takes this cheque and deposits it in his account in the bank. This said amount is transferred from one bank account to another bank account.

Q56: Mention three points of difference between formal sector and informal sector loans.   (2016)

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Ans: Formal sector loans:

• Loans from banks and cooperatives need collateral.
• Under the supervision of the Reserve Bank of India.
• Reasonable rates of interest.

Informal sector loans:

• Loans from moneylenders, relatives, friends, traders, etc., do not need collateral.
• No supervision of any institution.
• Very high rates of interest.

Q57: How is the concept of Self Help Groups important for poor people? Give your viewpoint.  (Foreign 2016)

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Ans: Self Help Groups are known as SHGs:

• These are mainly created by the poor, often females of rural areas, for their own benefits.
• In this, all members deposit their monthly savings to the leader.
• This creates self-employment for the members.
• If any member needs money for domestic work such as renovation of a house, buying fertilizers, or agricultural equipment, he/she can borrow it from the group.
• Members can get timely loans at reasonable interest and without any collateral and documentation. It operates on mutual trust.

Q58: Poor households still depend on informal sources of credit”. Support the statement with examples.  (2016)

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Ans:

• Banks are not present everywhere in rural India, whereas informal sources are easily available everywhere.
• Getting a loan from a bank is difficult for poor people than taking a loan from informal resources because bank loans require proper documents and collateral.
• Moneylenders provide loans to poor people without any collateral.
• Formal sources provide loans only for productive purposes, whereas informal sources provide credit for productive and non-productive purposes.
• Other informal sources of credit are friends and relatives, or traders and landlords, who know the borrowers personally and therefore do not demand collateral.

Q59: “The credit activities of the informal sector should be discouraged.” Support the statement with arguments.  (CBSE 2016)

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Ans:

• 85% of loans taken by poor households in urban areas are from informal sources.
• Informal lenders charge very high interest on their loans.
• There are no boundaries and restrictions.
• The higher cost of borrowing means a larger part of the earnings of the borrowers is used to repay the loans.
• In certain cases, the high interest rate for borrowing can mean that the amount to be repaid is greater than the income of the borrower.
• This could lead to increasing debt and debt trap, therefore the credit activities of the informal sector should be discouraged.

Q60: What are demand deposits? Explain any three features of it.  (2016)

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Ans: Demand deposits refer to the deposits made by individuals in banks that can be withdrawn on demand.
Three features of demand deposits are:

• Banks pay interest on these deposits, providing a safe place for people to keep their money.
• Cheques can be issued against demand deposits, allowing for easy and convenient transactions without the need for cash.
• Demand deposits, along with currency, constitute the money supply in the modern economy.

Q61: How can formal sector loans be made beneficial for poor farmers and workers? Suggest any five measures.   (AI 2016)

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Ans: Formal sector loans can be made beneficial for poor farmers and workers through the following measures:

• Creating awareness: Educating farmers and workers about the availability and benefits of formal sector loans can encourage them to utilize these resources.
• Simplifying the loan process: Streamlining loan application procedures and reducing paperwork can make it easier for farmers and workers to access formal sector loans.
• Expanding banking services: Opening more branches of nationalized banks and cooperatives in rural areas can increase the accessibility of formal sector loans to farmers and workers.
• Increasing loan facilities: Banks and cooperatives should increase the availability of loans to cater to the demand of poor farmers and workers.
• Reducing interest rates: Lowering the interest rates for formal sector loans can make them more affordable for poor farmers and workers, reducing their financial burden.

Q62: Dhananjay is a Government employee and belongs to a rich household whereas Raju is a construction worker and comes  from a poor rural household. Both are in need and wish to take loans. Create a list of arguments explaining who between the two will successfully be able to reach money from a formal source. Why? (CBSE 2016)

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Ans: Out of the two, Dhananjay is more likely to lend money from formal sources. 
(1) Dhananjay is more educated and rich and hence, he can understand the nuances of credit. 
(2) He must have the required documentation. 
(3) He must have assets to be submitted as the collateral. 
(4) Raju is a poor construction worker. He is not educated enough. 
(5) He might not have the required documentation. 
(6) He might not have the required asset to be used as a collateral.

Previous Year Questions 2025

Q1: ‘X’ lives in a town. He cultivates flowers along with animal husbandry. The work of ‘X’ will fall under which sector of the economy?  (1 Mark)
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (a)

Flower cultivation and animal husbandry use natural resources (land, biological processes) and produce natural goods (flowers, milk), so they belong to the primary (agriculture and related) sector.

Q2: The work of which of the following comes in the secondary sector of the economy?  (1 Mark)
(a) Bee-keeper
(b) Moneylender
(c) Basket weaver
(d) Fisherman

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Ans: (c) Basket weaver

A basket weaver converts raw natural materials into a manufactured good (a basket), so this activity belongs to the secondary (industrial) sector.

Q3: Explain the difference between public and private sector of Indian economy with example.  (3 Marks)

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Ans: 

Public sector: Owned and run by the government. The government provides big services that are needed by everyone and may be too expensive for private companies to do cheaply.
Example: Railways or the Post Office.

Private sector: Owned by private people or companies. They run businesses to earn profit by selling goods and services.
Example: TISCO or Reliance.

Main difference (one line): Public sector is owned and managed by the government to serve people, while private sector is owned by individuals/companies to make profit.

Q4: Rakhi has done an economic survey of her area. The survey has revealed that people earn their livelihood by doing different jobs. The table prepared by Rakhi is given below. Study the table carefully and answer the Question that follows:  (1 Mark)

How many people are working in the organised sector?
(a) 380
(b) 140
(c) 320
(d) 210

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Ans: (d) 210

Organised sector includes regular, registered places of work (e.g., schools, big factories, hospitals). So add teachers (10) + factory workers (140) + hospital employees (60) = 210.

Q5: Rakhi has done an economic survey of her area. The survey has revealed that people earn their livelihood by doing different jobs. The table prepared by Rakhi is given below. Study the table carefully and answer the Q that follows: 

How many people are working in the unorganised sector?   (1 Mark)
(a) 380
(b) 210
(c) 320
(d) 140

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Ans: (c) 320

Total people = 530. Organised sector workers = teachers (10) + factory workers (140) + hospital employees (60) = 210.
So unorganised = 530 − 210 = 320 (farmers 250 + handloom weavers 70).

Q6: The total value of all final goods and services produced within a country in a particular year is called ______.  (1 Mark)
(a) Per Capita Income
(b) Per Capita Production
(c) Gross National Income
(d) Gross Domestic Product

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Ans: (d) Gross Domestic Product

GDP is defined as the value of all final goods and services produced within a country during a particular year, as explained in the chapter.

Q7: Identify the sector based on the following characteristics and choose the correct option:  (1 Mark)
(i) The objective of this sector is to earn profit.
(ii) This sector is owned by a person or company.
(iii) Tata Iron and Steel is an example of this sector.
(a) Cooperative Sector
(b) Unorganised Sector
(c) Public Sector
(d) Private Sector

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Ans: (d) Private Sector

The private sector is owned by individuals or companies and aims to earn profit; TISCO (Tata Iron and Steel) is given in the chapter as an example of a private firm.

Q8: Identify the odd one out:  (1 Mark)
(a) Hindustan Computers Limited
(b) Bharti Airtel Limited
(c) Hindustan Unilever Limited
(d) Bharat Heavy Electricals Limited

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Ans: (d) Bharat Heavy Electricals Limited

The odd one out is the public sector enterprise—BHEL—while the other three are privately owned companies. The classification here is based on ownership (public vs private) as explained in the chapter.

Q9: Find the odd one out:  (1 Mark)
(a) Hindustan Computers Limited
(b) Hindustan Unilever
(c) Bharti Airtel Limited
(d) Indian Postal Service

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Ans: (d) Indian Postal Service

Indian Postal Service is a public (government) service, while the others are private companies. The classification is by ownership (public vs private) as explained in the chapter.

Q10: Choose the correct option to fill the blank:  (1 Mark)

(a) Nature of social activities
(b) Nature of political activities
(c) Nature of production activities
(d) Nature of government activities

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Ans: (c) Nature of production activities

The primary, secondary, and tertiary sectors are classified based on the nature of production activities — whether goods are produced using natural resources, manufactured, or provided as services.

Q11: Explain the difference between organised and unorganised sector of the economy with examples.  (3 Marks)

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Ans: Difference between Organised and Unorganised Sector

Q12: Evaluate the contribution of the tertiary sector in Gross Domestic Product (GDP) in India.  (3 Marks)

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Ans: 

1. Over the years, the tertiary sector has become the largest producing sector in India.
2. Between 1977–78 and 2017–18, production in all three sectors increased, but it increased the most in the tertiary sector.
3. In 2017–18, the tertiary (service) sector replaced the primary sector as the biggest contributor to GDP.
4. The growth of this sector is due to:
   • Need for basic services like education, health, banking, transport, and communication.
   • Development of agriculture and industry, which increased demand for transport, trade, and storage.
   • Rising income levels and demand for new services like tourism, private schools, and hospitals.
   • Expansion of IT and communication-based services in recent years.

Conclusion: The tertiary sector plays a key role in India’s economic growth and now contributes the largest share to GDP.

Q13: Analyse the problem of underemployment in the agriculture sector in India.  (3 Marks)

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Ans: 

• In India, many people work in the agriculture sector, but their work does not increase total production.
• There are more workers than needed; even if some stop working, output remains the same.
• This situation is called underemployment or disguised unemployment.
• For example, a small farmer’s whole family works on a tiny plot though fewer people are enough.

Conclusion: Underemployment in agriculture shows that many workers are not fully used, leading to low income and productivity.

Q14: Explain the role of the primary sector in employment generation in India.  (3 Marks)

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Ans: 

• The primary sector (agriculture and related activities) is the largest source of employment in India.
• Even though its share in the total production has reduced, it still employs more than half of the workers in the country.
• Most people depend on farming, fishing, forestry, and animal husbandry for their livelihood.
• However, many of these workers face underemployment, as there are more people working than required.

Conclusion: The primary sector provides the maximum jobs in India but often with low productivity and disguised unemployment.

Q15: Analyse the changes taking place in the sectors of the Indian economy in the context of Gross Domestic Product.  (3 Marks)

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Ans: 

• In 1977–78, the primary sector (mainly agriculture) was the largest contributor to India’s GDP.
• Over the years, the secondary sector (industries) and especially the tertiary sector (services) have grown rapidly.
• By 2017–18, the tertiary sector became the largest producing sector, replacing the primary sector.
• Services like transport, banking, communication, education, and IT have expanded fast.

Conclusion: The share of the primary sector in GDP has fallen, while the tertiary sector has shown the highest growth, becoming the main contributor to India’s economic production.

Q16: Suppose you are the Sarpanch of your village. What suggestions will you give for creating additional employment in the village, so that the problem of unemployment of the residents of rural areas can be reduced?  (5 Marks) 

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Ans: 

As a Sarpanch, I would suggest the following steps to create more employmentin the village:

1. Improve Irrigation Facilities:
   • Construct wells, canals, or tanks to provide water for farming.
   • This will allow farmers to grow more than one crop in a year and create extra work.
2. Promote Small-Scale Industries:
   • Set up dal mills, food processing units, or cold storages for crops like pulses, potatoes, and onions.
   • This will provide jobs to youth and reduce dependence on farming alone.
3. Encourage Rural Services:
   • Develop transport, repair shops, tailoring, and local trade.
   • It will give employment in the tertiary sector within the village.
4. Provide Cheap Credit:
   • Help farmers get easy loans from banks or cooperatives to buy seeds, tools, and pumpsets.
   • This will improve productivity and income.
5. Implement Government Schemes:
   • Effectively use the MGNREGA 2005 (Right to Work) scheme to give 100 days of guaranteed employment.
   • Take up works like road building, water harvesting, and land improvement.

Conclusion: By improving irrigation, promoting industries, services, and government employment schemes, the village can reduce unemployment and improve the standard of living of its people.

Q17: Read the given source and answer the questions that follow:  (4 Marks)
Organised Sector: Kanta works in the organised sector. Organised sector covers those enterprises or places of work where the terms of employment are regular and therefore, people have assured work. They are registered by the government and have to follow its rules and regulations which are given in various laws such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act, Shops and Establishments Act, etc. It is called Organised Sector because it has some formal processes and procedures. Some of these people may not be employed by anyone but may work on their own, but they too have to register themselves with the government and follow the rules and regulations.
(i) Mention any one feature of the working conditions of the organised sector.  (1 Mark)
(ii) Explain any one benefit provided by the employers to the organised sector employees.  (1 Mark)
(iii) Why is it necessary for all self-employed people to register with the government?  (2 Marks)

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Ans:

(i) Feature of Working Conditions:

One feature of the organised sector is that the terms of employment are regular, and workers have assured and secure jobs.

(ii) Benefit Provided:

• Workers in the organised sector get benefits like paid leave, provident fund, medical facilities, and pensions after retirement.

(ii) Need for Registration of Self-Employed:

• It is necessary for self-employed people to register with the government because it ensures that they follow rules and regulations such as payment of minimum wages and safety laws.
  Registration also helps the government to monitor working conditions and provide legal protection, ensuring fairness and security for workers.

Q18: Analyse the significance of the Primary Sector in the Indian economy.  (3 Marks)

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Ans: 

• The primary sector includes agriculture, fishing, forestry, dairy, and mining — activities that use natural resources directly.
• It is the base of all other sectors, as raw materials for industries (like cotton for textiles, sugarcane for sugar) come from it.
• The primary sector also provides employment to more than half of India’s workers, especially in rural areas.
• It plays a vital role in ensuring food security and supports industries and services linked to farming and trade.

Conclusion: The primary sector is the foundation of India’s economy, as it provides raw materials, jobs, and livelihood to a large part of the population.

Q19: Examine the factors driving the growth of the Tertiary Sector in India.  (3 Marks)

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Ans: 

The tertiary sector(service sector) has grown rapidly in India due to the following factors:

1. Basic Services:
   • The government provides essential services like education, health, banking, transport, and communication, which are part of the tertiary sector.
2. Support to Other Sectors:
   • Growth of agriculture and industries increases the demand for transport, trade, storage, and banking services.
3. Rising Income and Demand:
   • As people’s income levels increase, they spend more on services like tourism, private schools, and hospitals.
4. Information and Technology Services:
   • In recent years, IT and communication-based services like call centres, software companies, and internet services have expanded quickly.

Conclusion: These factors together have made the tertiary sector the largest contributor to India’s GDP and a key part of economic growth.

Q20: Suggest any three measures to increase employment opportunities in urban areas in India.  (3 Marks)

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Ans: 

1. Promote Small-Scale Industries:
   • Encourage setting up of small factories, workshops, and business units in cities to create more jobs for skilled and unskilled workers.
2. Develop the Service Sector:
   • Expand services like transport, banking, IT, tourism, and retail trade, which can provide a large number of employment opportunities.
3. Support Self-Employment:
   • Provide loans and training to youth to start small businesses, shops, or repair centres through banks and government schemes.

Conclusion: By promoting industries, improving services, and supporting self-employment, cities can generate more jobs and reduce urban unemployment.

Q21: “In India, workers in the organised sector enjoy security of employment.” Examine the statement by giving appropriate arguments.  (3 Marks)

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Ans: 

• Workers in the organised sector have regular and secure jobs because their employment is governed by government laws such as the Factories Act and Minimum Wages Act.
• They receive fixed salaries, paid leave, overtime payment, and medical benefits.
• The employer cannot remove them without proper notice or reason, which ensures job security.
• They are also entitled to provident fund, gratuity, and pension after retirement.

Conclusion: Hence, organised sector workers in India enjoy security and stability in employment, unlike those in the unorganised sector who face low pay and job uncertainty.

Q22: Study the given flowchart and answer the questions that follows:  (5 Marks)
Explain the steel manufacturing process on the basis of the above flowchart.

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Ans: 

The given flowchart explains the process of steel manufacturing in a step-by-step manner:

1. Transport of Raw Material to Plant:
   • Raw materials such as iron ore, coal, and limestone are transported to the steel plant. These are the main inputs for steel production.
2. Blast Furnace – Melting:
   • The raw materials are melted in a blast furnace at a very high temperature.
   • This process helps in separating impurities and produces a basic form of iron known as pig iron.
3. Pig Iron Production:
   • The molten metal obtained from the blast furnace is pig iron, which is an intermediate product.
   • Pig iron still contains impurities and is not strong enough for use.
4. Steel Making:
   • Pig iron is further purified and refined in steel-making furnaces.
   • Carbon and other elements are added or removed to obtain different grades of steel with desired properties.
5. Shaping Metal:
   • Finally, the molten steel is cooled and shaped into sheets, rods, bars, or other forms for industrial use.

• Conclusion:
  The steel manufacturing process involves conversion of raw materials into finished steel through stages of melting, purification, and shaping — making it a key activity of the secondary (industrial) sector.

Q23: How are final goods and services calculated? Explain through one example.  (3 Marks)

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Ans: 

• The value of final goods and services produced in each sector during a year is used to calculate total production.
• Only final goods are counted because their value already includes the cost of intermediate goods used in making them.
• Counting both would mean double counting.

Example:
A farmer sells wheat to a flour mill for ₹20 per kg. The mill makes flour and sells it to a biscuit company for ₹25 per kg. The biscuit company makes biscuits and sells them to consumers for ₹80.
Here, only the final good (biscuits) worth ₹80 is counted in GDP because it already includes the value of wheat and flour.

Conclusion: Hence, GDP includes only the value of final goods and services to avoid counting the same product multiple times.

Previous Year Questions 2024

Q1: Examine the role of Public sector in the development of the country.    (CBSE 2024)

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Ans: The public sector plays a vital role in the country’s economy by fulfilling various  functions:
(1) Developing and investing in infrastructure, such as ports, roads, bridges, and telecommunications, is one of the public sector’s primary responsibilities. The foundation of the economy is this infrastructure, which makes communication, trade, and commerce possible.
(2) The provision of fundamental social services including housing, healthcare, and education falls under the responsibility of the public sector.
(3) The public sector’s establishment and enforcement of laws governing economic activity is another essential function. This entails keeping an eye on business activities, guaranteeing consumer safety, and preserving the sustainability of the environment.

Previous Year Questions 2023

Q2: Which one of the following pair is correctly matched?    (2023)
(a) Primary Sector – Fisherman
(b) Secondary Sector – Priest
(c) Tertiary Sector – Basket Weaver
(d) Quarternary Sector – Gardener

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Ans: (a)

The primary sector involves activities that extract or harvest natural resources, such as agriculture and fishing. Fishermen are part of this sector because they catch fish directly from water bodies. Therefore, option (a) is the correct match. The other pairs do not align with their respective sectors.

Q3: Which one of the following pairs is correctly matched?    (CBSE 2023)
(a) Primary Sector – Flower Cultivator
(b) Secondary Sector – Milk Vendor
(c) Tertiary Sector – Fisherman
(d) Manufacturing Sector – Gardener

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Ans: (a)
The primary sector includes activities that involve the extraction and cultivation of natural resources, such as farming and flower cultivation. A flower cultivator fits into this category because they grow flowers directly from the soil. Therefore, option (a) is the correct match, while the other pairs do not accurately represent their respective sectors.

Q4: Kanta works in an office. She gets her salary regularly at the end of every month. In addition to the salary, she also gets other benefits laid down by the government. In which of the following sector Kanta is working?    (2023)
(a) Organised Sector
(b) Unorganised Sector
(c) Primary Sector
(d) Quarternary Sector

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Ans: (a)
Kanta works in the organized sector because she receives a regular salary and additional benefits provided by the government, such as health insurance or retirement plans. The organized sector consists of jobs with formal contracts and worker protections. Therefore, option (a) is the correct answer.

Q5: Which of the following organisation is providing data regarding employment in India?    (2023)
(a) National Statistical Office
(b) Niti Aayog
(c) National Informatics Centre
(d) Public Service Commission

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Ans: (a)
The National Statistical Office (NSO) is responsible for collecting and providing data about various aspects of the economy, including employment in India. It conducts surveys and research to help understand employment trends and statistics. Therefore, option (a) is the correct answer.

Q6:  Which one of the following sectors contribute highest in the GDP of India?    (CBSE 2023)
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (c)
The tertiary sector contributes the highest to India’s Gross Domestic Product (GDP). This sector includes services such as retail, healthcare, education, and information technology, which have grown significantly and now represent a large part of the economy. Therefore, option (c) is the correct answer.

Q7: Compare the employment conditions prevailing in the organised and unorganised sector.    (2023)

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Ans: Employment conditions under :
(a) Organised sector 
(i) Rules and regulations (labour laws) as proposed by the government are followed.
(ii) Formal processes and procedures are followed.
(iii) Security of employment to workers, who are employed for full time is ensured.
(iv) Working hours fixed, overtime is paid for extra hours of work.
(v) Workers get benefits like provident fund, gratuity, medical benefits, paid leave, etc. 

(b) Unorganised sector 
(i) Outside the control of the government laws.
(ii) Small and scattered units.
(iii) Rules and regulations are not followed
(iv) Low-paid and irregular jobs
(v) High degree of insecurity.
(vi) No provision for overtime, paid leave, holidays, etc.

Q8: Explain how Tertiary Sector’ is different from other sectors.    (2023)

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Ans: Tertiary sector is different from other sectors because:
(i) The activities of the tertiary sector help in the development of secondary and primary sectors.
(ii) Tertiary sector activities do not produce goods by themselves, but they support or aid the process of production in other sectors.
(iii) To help in the trade or production, credit would be required, hence the need to borrow from banks would arise, and communication through phones or letters are  also a necessity to complete the processes involved in production and trade.
(iv) After production, the need to store the produce in go downs or cold storage facilities will also arise.

Q9: Why is ‘Tertiary Sector ’ becoming important in India? Explain.  (CBSE 2023)

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Ans: Tertiary sector is becoming important in India because: 
(1) Several services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc., are required with the world globalising and advancing. This imparts significance to the sector. 
(2) The development of agriculture and industry leads to the development of services. Greater the development, greater the progress of this sector. 
(3) Over the past decade, new services based on information and communication technology have become important and essential.

Q10: Why is there a need to protect workers in the Unorganised Sector? Explain.  (CBSE 2023)

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Ans: There is a need to protect workers in the Unorganised sector because: 
(1) Jobs in this sector are low-paid and not regular. There is no fixed provision of medical leaves, overtime, paid holidays etc. 
(2) Employment is not secure. People can be asked to leave anytime without any notice. 
(3) There is immense competition in the unorganised sector despite the low growth it offers

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Previous Year Questions 2022

Q11: Activities that help in the development of Primary and Secondary sectors come under which one of the following sectors?     (Term-1,2021-22)
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (c)
Tertiary sector generates services rather than goods. They promote primary and secondary sectors by providing expertise, finance, transportation, advertisement, etc.

Q12: At the initial stages of development, which one of the following sectors was the most important of economic activity?    (Term-1,2021-22)
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (a)
It has been noted from the history of many newly developed countries that at initial stages of development, primary sector was the most important sector of economic activity.

Q13: Activities in which natural products are changed into other forms come under which one of the following sectors?     (Term-1,2021-22)
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (b)
Manufacturing industries are secondary activities. They change natural products into other forms.

Q14: The products received by exploiting natural resources come under which one of the following sectors?     (Term-1,2021-22)
(a) Quaternary
(b) Tertiary
(c) Secondary
(d) Primary

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Ans: (d)
Products obtained by exploiting natural resources, such as agriculture, fishing, and mining, fall under the primary sector. This sector involves activities that directly use natural resources to produce goods. Therefore, option (d) is the correct answer.

Q15: Read the source given below and attempt any 5 questions.    (Term-1,2021-22)
Take the case of Laxmi with her two-hectare plot of unirrigated land. The government can spend some money or banks can provide a loan, to construct a well for her family to irrigate the land. Laxmi will then be able to irrigate her land and take a second crop, wheat, during the rabi season. Let us suppose that one hectare of wheat can provide employment to two people for 50 days (including sowing, watering, fertiliser application and harvesting). So two more members of the family can be employed in her own field. Now suppose a new dam is constructed and canals are dug to irrigate many such farms. This could lead to a lot of employment generation within the agriculture sector itself reducing the problem of underemployment.

(i) Which one of the following economic sectors is Laxmi related to?
(a) Primary
(b) Secondary
(c) Tertiary
(d) Quaternary

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Ans: (a)
Laxmi works on agricultural land. It is a primary sector.

(ii) Which one of the following categories of farmers is Laxmi related to?
(a) Big
(b) Medium
(c) Marginal
(d) Agricultural labourer

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Ans: (b)
A farmer cultivating 2 to 4 hectare is a medium farmer.

(iii) In which one of the following sectors is underemployment seen at the maximum?
(a) Industry
(b) Agriculture
(c) Trade
(d) Commerce

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Ans: (b)
More people are engaged in agriculture than needed. It is underemployment.

(iv) How does construction of dams and canals create employment in large numbers in rural areas?
(a) Large number of engineers are needed
(b) Large number of technicians are also required
(c) Adjustment of large number of unskilled labourers
(d) Executives and administrators can easily be adjusted

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Ans: (c)
The construction of dams and canals requires a lot of unskilled laborers to help with physical tasks like digging, transporting materials, and building structures. This creates employment opportunities for many people in rural areas who may not have other job options, making option (c) the correct answer.

(v) Which one of the following is the main result of increasing irrigation facilities in the field of agriculture?
(a) Increase in production
(b) Increase in productivity
(c) Change in cropping pattern
(d) Promote high yielding of crops

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Ans: (c)
Increasing irrigation has changed the cropping pattern of many regions with farmers shifting to water intensive and commercial crops.

(vi) Which one of the following means of irrigation generally comes under the Public Sector?
(a) Well
(b) Tubewell
(c) Tank
(d) Canal

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Ans: (d)
Canals are constructed and maintained by the government. It comes under Public Sector.

Previous Year Questions 2021

Q16: Which one of the following activities comes under ‘Primary sector’?         (2021C)
(a) Mining
(b) Transport
(c) Education
(d) Storage

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Ans: (a)
Mining is classified under the primary sector because it involves extracting natural resources directly from the earth. The primary sector includes activities that utilize natural resources, such as agriculture, fishing, and mining. Therefore, option (a) is the correct answer, while the other options belong to the secondary and tertiary sectors.

Q17: How do the workers of the organized sector receive the benefits of employment security? Explain with examples.        (2021C)
OR
Why do people prefer to work in an organized sector? Explain.   (2015)

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Ans: People enjoy working in the organised sector as there is a proper and systematic way to get the work done from the employees.
Benefits of organised sector: 
(i) People enjoy security of employment.
(ii) Work for fixed hours.
(iii) If they work more, they get overtime allowances.
(iv) They have registered by the government and have to follow its rules and regulations which are given in various laws such as Factories Act, Shop Act etc.
Examples are Reliance Industries Limited, Tata Motors etc.

Also read: Long Answer Questions: Sectors of the Indian Economy

Previous Year Questions 2020

Q18: “Tertiary sector activities help in the development of the primary and secondary sectors”. Evaluate the statement.      (CBSE 2020)

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Ans: Transport, storage, communication, banking and trade are some examples of tertiary sector. Since, these activities generate services rather than goods, they promote primary and secondary sector by:
(i) Providing expertise and finance
(ii) They are helpful for advertisement and marketing.
(iii) Provide transportation and communication facilities.

Q19: “Primary sector was the most important sector of economic activity at initial stages of development.” Evaluate the statement.       (2020)

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Ans: Primary sector was the important sector of economic activity at the initial stages of development.
(i) It is concerned with the extraction of raw materials i.e., mining, fishing, farming, etc.
(ii) It gives employment to the large population.
(iii) It enables the workers to leave the agricultural sector and move to other secondary and tertiary sectors.

Q20: Suggest any three measures through which underemployment in the agriculture sector can be minimized.      (2020)

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Ans:  Underemployment is a situation where there is under-utilisation of labour, either they are not in job where they can use their skill or they do not get full time job. these methods may help to solve the problem of underemployment
(i) One or two members of farmers family can work in the farms of big landlord and earn wages.
(ii) More irrigated facilities can be provided to grow two or three crops in a year.
(iii) By opening processing units of agriculture production, more employment opportunities can be created.

Q21: Why is the ‘tertiary sector’ becoming important in India? Explain any three reasons.    (2020, Delhi 2019)

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Ans: Tertiary sector in India has been growing rapidly for a number of reasons. In the year 2013-14, the tertiary sector has emerged as the largest sector in India replacing the primary sector. The reason for the growth of the tertiary sector are as follows –
(a) Basic services such as hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, requires a large number of people to be engaged in these tertiary sector activities. “
(b) The growth of agriculture and industry leads to the development of services such as transport, trade and storage. The demand for these services increases when the primary and secondary sectors are well developed.
(c) As the income rise certain sections of people start demanding many more services like eating out, tourism, shopping, private hospitals, private schools, professional training etc. We can see these changes in the big cities.

Q22: “All the services of the “service sector” are not growing equally well.” Evaluate the statement.      (2020)

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Ans: (i) Service sector in India employs many different kinds of people. At one end there are a limited number of services that employ highly skilled and educated workers, such as managers, lawyers, accountants, etc.
(ii) At the other end, there are a very large number of workers engaged in services, such as small shopkeepers, repair persons, transport persons. These people barely manage to earn a living and yet perform these services.
(iii) There is no alternative opportunity for them. Only a part of this sector is growing in importance.

Q23: Suggest any three ways to save workers of unorganized sector from exploitation.      (2020)

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Ans: Workers can be saved from unorganised sector possible in the following way:
(i) Social security to workers.
(ii) Support from Labour Ministry
(iii) Provide support for the conversion of unorganised sector to organised sector.

Q24: In the question given below, there are two statements marked as Assertion(A) and Reason (R). Read the statements and choose the correct option:      (2020)
Assertion (A): The Government of India buys wheat  and rice from farmers at fair price.
Reason (R): Public sector contributes to the economic development.
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.

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Ans: (b)
The Assertion (A) is true because the Government of India does buy wheat and rice from farmers at a fair price to ensure food security. The Reason (R) is also true as the public sector plays a significant role in economic development by providing services and stability. However, the reason does not explain why the government buys wheat and rice; they are related but not directly connected. Therefore, option (b) is the correct answer.

Q25: How is Public sector different from Private sector?     (2020)

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Ans: Public sector is controlled by the Government whereas private sector is under the control of an individual or a firm.

Q26: Suggest any three ways to improve the condition of the public sector at grass root level.     (2020)

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Ans: Reforms to improve public sector:
(i) More investment by Government at grass root level.
(ii) More banks and cooperatives.
(iii) Infrastructural development at grass root level.
(iv) Health and education profits at grass root level.

Q27: How is GDP calculated? (CBSE 2020)

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Ans: GDP in India is calculated by adding the total value of the final goods and services produced by all three sectors. Only final goods and services are counted to get the final value.

Previous Year Questions 2019

Q28: Distinguish between ‘primary’ and ‘secondary’ sectors.     (Delhi 2019)

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Ans: When the economic activity depends mainly on exploitation of natural resource, then that activity comes under the primary sector. Agriculture and its related activities are the primary sectors of the economy, so farming is an example of primary sector activity. While the activities in which natural products are changed into other forms comes under secondary sector.

Q29: Highlight any five features of ‘Public Sector.’    (Al 2019)

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Ans: The features of the public sector can be enumerated as follows:
(i) Some projects need spending of large sums of money, which is beyond the capacity of the private sector. Collecting money from thousands of people who use these facilities is not easy. This is seen in various public conveniences.
(ii) In certain cases of national security such as the defense forces, only the public sector can be trusted. Large scale operations of governing the banks and management of money circulation can only be done by the public sector.
(iii) Even if they do provide these things the private sector is more likely to charge a high rate for their use. Examples are construction of roads, bridges, railways, harbors, metro rail, providing irrigation through dams etc.
(iv) Only the governments can undertake such heavy spending and ensure that these facilities are available for everyone. There are some activities, which the government has to support.
(v) In some cases, the government subsidizes the goods that are meant for the poor. This includes cooking gas, fertilisers, irrigation, electricity in rural sector support purchase price of farm produce, primary education and medical care etc.

Q30: Explain why the service sector is gaining more importance in the global economy.     (2019,2017)

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Ans: Tertiary sector in India has been growing rapidly for a number of reasons:
(i) In a developing country, the government has to take the responsibility for the provision of basic services for example, hospitals, educational institutions, post and telegraph services, police stations, courts, village administrative offices, municipal corporations, defence, transport, banks, insurance companies, etc.
(ii) The development of agriculture and industry leads to the development of services, such as trade, transport, storage, etc. Greater the development of the primary and secondary sectors, more would be the demand for such services.
(iii) As income levels rise, certain sections of people start demanding many more services, such as eating out, tourism, shopping, private hospitals; private schools, professional at training, etc. This change was quite sharp in cities, especially in big cities.
(iv) Over the past decade or so, certain new services, such as those based on information and communication technology have become important and essential.
(v) Government policy of privatisation has also led to growth of this sector.
(vi) A large number of workers are engaged in services, such as small shopkeepers, repair persons, transport persons, etc.
(vii) However, the entire sector has not grown. Large numbers of people engaged as construction workers, maids, peons, small shopkeepers, etc. do not find any change in their life.

Q31: How does the public sector contribute to the economic development of a nation? Explain.   (2019,2014)

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Ans: The public sector contributes to the economic development of a nation in the following ways:

• It promotes rapid economic development through the creation and expansion of infrastructure in underdeveloped areas.
• It creates employment opportunities through various projects.
• It generates financial resources for economic and social development.
• It ensures balanced regional development.
• It encourages the development of small, medium, and cottage industries as ancillaries.
• It ensures the easy availability of goods at moderate rates.
• It contributes to community development by providing health and educational services.

Q32: Which of the following professions belongs to the Tertiary Sector of the economy? 
(a) Fisherman 
(b) Farmer 
(c) Woodcutter 
(d) Teacher (CBSE 2019)

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Ans: (d)
(i) The Tertiary Sector (or Service Sector) includes professions that provide services rather than goods. This sector supports the primary and secondary sectors by offering services like education, healthcare, banking, transportation, and communication.
(ii) A teacher provides an educational service, which is part of the tertiary sector.
The other options belong to the Primary Sector:
(a) Fisherman: Engaged in fishing, which is part of the primary sector as it involves direct extraction of natural resources.
(b) Farmer: Involved in agriculture, which is also part of the primary sector.
(c) Woodcutter: Involved in forestry, another primary sector activity that involves resource extraction.
Therefore, the correct answer is (d) Teacher.

Q33: There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below: 
(a) Both (A) and (R) are true and (R) is the correct explanation of (A). 
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A).
(c) (A) is correct but (R) is wrong. 
(d) (A) is wrong but (R) is correct.
Assertion (A): Not every good or service that is produced and sold needs to be counted to know the total production in each sector.
Reason (R): The value of final goods already includes the value of all the intermediate goods. (CBSE 2019)

Hide Answer  

Ans: (a)
Assertion (A): Not every good or service that is produced and sold needs to be counted to know the total production in each sector. This statement is true because, in calculating the total production, only the value of final goods is counted to avoid double-counting.
Reason (R): The value of final goods already includes the value of all the intermediate goods. This statement is also true. When calculating GDP, the value of intermediate goods (which are used to produce final goods) is not counted separately, as it is already included in the price of the final product.
Since (R) provides the correct explanation of (A), the correct answer is (a) Both (A) and (R) are true and (R) is the correct explanation of (A).

Q34: How can more employment be generated in the agriculture sector? Explain any three methods. (CBSE 2019, 15)

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Ans: More employment can be generated in the agriculture sector alone in the following ways: 
(1) Increase in irrigation facilities: Without irrigation, only a single crop can be grown in most agricultural fields, which means less working opportunities, but if irrigation is provided, two or three crops can be grown on the same field. So, more people will be employed. 
(2) Provide basic facilities: Government should provide basic infrastructure in agriculture related facilities such as transportation (building of roads), irrigation, banking to ease the work of farmers. Subsidies can be provided. Dams and storages can be built. 
(3) Provide them easy loan: If people are provided easy bank loans, then they could start small businesses, which will make them self-dependent.

Q35: Workers are exploited in the unorganised sector.” Give reasons to support this statement.  (CBSE 2019)

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Ans: Employment conditions in the unorganised sector: 
(1) There are rules and regulations but these are not followed. 
(2) Jobs are low paid and not secured. 
(3) No provisions for over time, holidays, sick leaves etc. 
(4) People can be asked to leave without any reason. 
(5) They are largely outside the control of government.

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Previous Year Questions 2018

Q36: When we produce goods by exploiting the natural resources, in which category of economic sector such activities come?    (CBSE 2018)

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Ans: When goods are produced by exploiting the natural resources, it is an activity of the primary sector.

Previous Year Questions 2017

Q37: Why tertiary sector is also called the service sector?    (2017, 2014)

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Ans: Tertiary sector is the sector which provides services, such as banking, selling, transportation, etc. These services actually help in proper functioning of the primary and secondary sectors.

Q38: Mention any one feature of the organised sector.    (2017)

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Ans: A worker in the organized sector is assured of regular work, regular salary, and other benefits.

Q39: What do you understand by underemployment?    (2017)

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Ans: Underemployment refers to the condition in which people in the labor force are employed at less than full-time or regular jobs, or at jobs inadequate with respect to their training or economic needs.

Q40: What historical changes have been brought about in the primary economy?    (2017)

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Ans: The primary economy has undergone significant historical changes over the years. Some of these changes include:

• New technologies have brought big changes to how things are done in farming, mining, and fishing. Machines and modern tools make these jobs faster and better.
• In farming, the Green Revolution changed everything. New types of crops, better ways to water them, and using chemicals like fertilizers and pesticides meant way more food could be grown. Farming isn’t just about the same old crops anymore. New kinds of plants are being grown in different places, and things like growing flowers or fancy fruits (like horticulture and floriculture) are becoming more popular. This helps get even more food and money. 
• Nowadays, there’s a lot of talk about taking care of the environment. So, in the primary sector, people are thinking more about how to do things in a way that doesn’t hurt the Earth. This means saving natural resources, keeping different plants and animals safe, and using methods that don’t hurt the environment. 
• All these changes over time have made the primary sector better at what it does. It’s more productive, cares more about the environment, and can adapt to new problems and needs.

Q41: How are the three sectors of the economy different from each other? Explain.    (2017)

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Ans: The three sectors of the economy, namely the primary, secondary, and tertiary sectors, are distinct from each other based on the nature of their activities.
Here’s an explanation of their differences:

• The primary sector deals with getting natural resources from the environment and using them. It includes stuff like farming, cutting down trees, mining, fishing, and taking care of animals. 
• The secondary sector is all about turning those raw materials from the primary sector into finished products. This includes making things like cars, buildings, and electricity. 
• The tertiary sector is focused on giving services instead of making stuff. So, things like transportation, banking, healthcare, and tourism fall under this sector. 
• Each sector depends on the others to work. The primary sector gives raw materials, the secondary sector makes them into stuff we use, and the tertiary sector helps both of them by providing services. Together, they help a country’s economy grow and develop.

Q42: Compare the employment conditions of workers in the organised and unorganised sectors.   (2017,2016)

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Ans: In the organised sector:

• Rules and regulations (labour laws) as proposed by the government are followed.
• Formal processes and procedures are followed.
• Security of employment to workers, who are employed for full time is ensured.
• Working hours fixed, overtime is paid for extra hours of work.
• Workers get benefits like provident fund, gratuity, medical benefits, paid leave, etc.

In the unorganised sector:

• Outside the control of the government laws.
• Small and scattered units.
• Rules and regulations are not followed.
• Low-paid and irregular jobs.
• High degree of insecurity.
• No provision for overtime, paid leave, holidays, etc.

Q43: Describe any five provisions of ‘National Rural Employment Guarantee’ Act 2005.     (2017)

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Ans: Provisions of National Rural Employment Guarantee Act (NREGA), 2005 are:

• It provides 100 days assured employment every year to each rural household.
• One-third of the proposed jobs are reserved for women.
• If an applicant is not employed within 15 days he/she is entitled to a daily unemployment allowance.
• The government has to establish Central Employment Guarantee Funds and state employment guarantee funds for the implementation of the scheme.
• The scheme is to be extended to 600 districts. 

Also read: Long Answer Questions: Sectors of the Indian Economy

Previous Year Questions 2016

Q44: When was Mahatma Gandhi National Rural Employment Guarantee Act implemented?    (2016)

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Ans: The Mahatma Gandhi National Rural Employment Guarantee Act was implemented in the year 2005.

Q45: What is disguised unemployment?    (2016)

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Ans: Disguised unemployment refers to a situation where labor that is employed in a job is not actually utilized for the production of goods and services.

Q46: State the meaning of under-employment.    (2016)

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Ans: Underemployment happens when workers are working at less than their capabilities. The underemployment of workers is not reflected in official unemployment statistics because of the way they are compiled.

Q47: In which sector is Seasonal and Disguised Unemployment most prevalent in India?    (2016)

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Ans: Seasonal and disguised unemployment are most prevalent in the agriculture sector (Primary sector).

Q48: What is another name for underemployment?    (2016)

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Ans: Overstaffing or hidden unemployment.

Q49: Suggest any one way to solve the underemployment situation in rural areas in India.    (2016)

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Ans: The government can spend money on the development of infrastructure projects, such as construction of roads, canals, etc. The government can provide easy credit to people and encourage entrepreneurship.

Q50: Mention any one factor responsible for the growth of the service sector in the Indian economy.     (2016)

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Ans: As income levels rose, a certain section of the population started demanding many services like eating out, tourism, private hospitals, etc. The rise of information and communication technology can be largely attributed to improvement in telecommunication and power sectors.

Q51: Which sector has gained prominence over the last thirty years?    (2016)

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Ans: The tertiary sector has gained prominence over the last thirty years.

Q52: TISCO and Reliance are owned by which sector?    (2016)

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Ans: TISCO and Reliance are owned by the private sector.

Q53: Describe the estimates of the Planning Commission to create jobs in tourism and education.     (2016)

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Ans: Regarding jobs in education:

• The Planning Commission estimates that nearly 20 lakh jobs can be created in the education sector alone.
• More teachers and infrastructure will be required to accommodate more children in schools.

Regarding jobs in tourism

• The Planning Commission estimates that nearly 35 lakh jobs can be created in the tourism sector.
• Regional crafts, cottage industry, and new services like IT also have the potential to generate jobs. 

Q54: Suggest any five measures to reduce unemployment.     (CBSE 2016)

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Ans: To reduce unemployment, the following measures can be taken:

• Planned development by accelerating industrialization and stimulating demand for goods and services.
• Creation of more employment opportunities in rural areas by processing farm produce, promoting cooperative farming, and developing allied activities and cottage industries.
• Planning projects to eliminate seasonal unemployment and providing micro-finance and community self-help in both rural and urban areas.
• Demonstrating and promoting adaptive technology through educational programs to encourage entrepreneurial spirit.
• Launching self-employment schemes in services or small manufacturing, connected to core activities in rural/urban areas, to enable unemployed youth to start their own business or small-scale firms.

Previous Year Questions 2014

Q55: Why is agriculture the most labour-absorbing sector in India? How does disguised unemployment make it worse?  Explain with an example. (CBSE 2014)

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Ans: (1) Agriculture is the most labour absorbing sector because there are not many jobs created in the tertiary and the secondary sector.
(2) Farming does not require a lot of initial investment or very hard training. 
(3) Families are involved in agriculture and hence, it becomes an inherited skill. 
(4) Agricultural products have huge demand in the market and can be sold without any processing. 
(5) Disguised unemployment which involves employment of more than the required people in a job reduces the productivity of the people and their effort gets divided without earning much.

Q56: How does the public sector contribute to the economic development of a nation? Explain. (CBSE 2014)

Ans: The public sector contributes to the economic development of a nation in the following ways: 
(1) The public sector promotes rapid economic development through the construction of infrastructure. 
(2) It creates employment opportunities. 
(3) It helps to generate revenue to support the holistic development of all classes and castes. 
(4) It encourages the development of small, medium and cottage industries, which provide opportunities for the vulnerable groups. 
(5) It ensures easy availability of goods at moderate rates. 

Previous Year Questions 2025

Q1: Amongst the given countries, which one has the highest rank in ‘Human Development Index’?  (1 Mark)
(a) Pakistan
(b) India
(c) Nepal
(d) Myanmar

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Ans: (b) India
Among the given countries, India has the highest Human Development Index (HDI) rank — 130, which means it performs better in terms of income, life expectancy, and education compared to Myanmar, Nepal, and Pakistan.

Q2: Which one of the following countries has the lowest rank in ‘Human Development Index’?  (1 Mark)

(a) Pakistan
(b) India
(c) Nepal
(d) Myanmar

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Ans: (d) Pakistan
Among the given countries, Pakistan has the lowest Human Development Index (HDI) rank — 150, which indicates a lower level of development compared to India, Myanmar, and Nepal.

Q3: Read the table given below carefully and answer the question that follow : 

Which one of the following countries has high per capita income, life expectancy at birth, and high rank in Human Development Index?  (1 Mark)

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Ans: (a) A
Country A has the highest per capita income (US $12,578), highest life expectancy (76.4 years), and the best HDI rank (73) among the given countries. Therefore, it ranks highest in terms of overall human development.

Q4: Read the table given below carefully and answer the question that follow : 

The World Bank’s development report is prepared on the basis of which of the following:  (1 Mark)
(a) Per Capita Income
(b) Per Capita Production
(c) Gross National Income
(d) Gross Domestic Production

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Ans: (a) Per Capita Income
The World Bank classifies countries in its World Development Report on the basis of their Per Capita Income — that is, the average income of people in a country, calculated by dividing the total national income by the total population.

Q5: By which organization is the Human Development Report published?  (1 Mark)
(a) World Trade Organisation
(b) Amnesty International
(c) United Nations Development Programme
(d) World Health Organisation

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Ans: (C) United Nations Development Programme
The Human Development Report (HDR) is published every year by the United Nations Development Programme (UNDP) to compare countries based on health, education, and income levels.

Q6: Data related to an imaginary country is given below. Study these data and answer the question that follows :

The attendance percentage of this country of the age group of 14 and 15 years is __________  (1 Mark)
(a) 90 percent
(b) 80 percent
(c) 70 percent
(d) 60 percent

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Ans: (b) 80%

For the age group of 14 and 15 years,

So, the attendance percentage is 80 percent.

Q7: Choose the correct option to fill in the blank: (1 mark)
The total value of all final goods and services produced within a country in a particular year is called
(a) Per Capita Income
(b) Per Capita Production
(c) Gross National Income
(d) Gross Domestic Production

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Ans: (D) Gross Domestic Production
The total value of all final goods and services produced within a country during a year is known as its Gross Domestic Product (GDP) or Gross Domestic Production.

Q8: Read the following developmental goals and choose the correct option of goals related to a student studying in university:
(i) Good opportunities for research.
(ii) Opportunities to pursue higher education abroad.
(iii) Opportunities for independence.
(iv) Opportunities for good employment.  (1 Mark)
(a) Only (i), (ii) and (iii) are correct.
(b) Only (ii), (iii) and (iv) are correct.
(c) Only (i), (ii) and (iv) are correct.
(d) Only (i), (iii) and (iv) are correct.

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Ans: (c) Only (i), (ii), and (iv) are correct.
A student studying in a university would aim for good research opportunities, higher education abroad, and good employment prospects after studies. While independence is important, it is not a direct developmental goal related to university education.

Q9: Explain the role of public facilities for quality of life.  (2 Marks)

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Ans: 

• Public facilities like schools, hospitals, water supply, sanitation, and transport are essential for improving people’s quality of life.
• These services cannot be provided individually; they are best supplied collectively by the government so that everyone, especially the poor, can access them and live a healthy, secure, and dignified life.

Q10: Define ‘Gross Domestic Product’ and explain its importance.  (3 Marks)

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Ans:  Gross Domestic Product (GDP) is the total value of all final goods and services produced within a country during a particular year. It reflects the overall economic output of the nation.Importance:

• GDP shows the economic growth and performance of a country.
• It helps in comparing the development levels of different countries or states.
• A rising GDP indicates more production, income, and employment, contributing to better living standards.

Q11: How is income an important factor in assessing the development of a country? Mention the classification done by the World Bank.  (5 Marks)

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Ans: 

• Income is an important factor because it shows people’s ability to buy goods and services that improve their standard of living. A higher income usually means better access to education, healthcare, housing, and other basic needs.
• To compare countries, the average income or per capita income is used, which is calculated by dividing the total income of the country by its total population. It helps to understand how much, on average, a person earns in a year.
• The World Bank uses per capita income as the main basis for classifying countries in its World Development Report.
• As per the 2023 report, countries with per capita income of US $63,400 or above are classified as high-income (rich) countries, while those with about US $2,400 or less are low-income countries.
• India falls in the category of lower-middle-income countries, with a per capita income of about US $10,030 per annum.

Q12: How has the overuse of underground water created a serious crisis in many parts of India? Explain with examples in the context of sustainable development.  (5 Marks)

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Ans: 

• Overuse of underground water has led to a serious crisis in many parts of India because water is being extracted faster than it is replenished by rainfall.
• According to reports, about 300 districts have seen a decline in water levels of over 4 metres in the past 20 years, showing that groundwater reserves are shrinking rapidly.
• This problem is most severe in agriculturally prosperous regions like Punjab and Western Uttar Pradesh, where farmers depend heavily on tube wells for irrigation.
• If this pattern continues, nearly 60% of the country will face groundwater overuse in the next 25 years, leading to water scarcity, crop failure, and livelihood loss.
• Such overuse violates the principle of sustainable development, as it meets present needs by exhausting resources meant for future generations.

Q13: Analyse the social and economic goals of development.  (5 Marks)

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Ans: 

• Social goals of development focus on improving the quality of life and ensuring equality and dignity for all. People seek freedom, security, respect, and equal treatment in society. For example, women desire equal opportunities and freedom as men, and communities want freedom from social discrimination.
• These goals also include access to education, healthcare, and a clean environment, which are essential for a decent standard of living.
• Economic goals of development relate to increasing income, employment, and production. People want regular work, better wages, and fair prices for their goods and services.
• While income helps fulfil basic needs, non-material aspects like respect and equality are equally important for true development.
• Hence, development combines both economic growth and social well-being, ensuring that progress benefits everyone in society.

Q14: Why is the question of sustainability of development becoming challenging in the present times? Analyse the appropriate reasons.  (5 Marks)

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Ans: 

• The question of sustainability is becoming challenging because resources are being overused to meet the needs of a growing population and rising consumption.
• Renewable resources like groundwater are being exploited faster than they can be replenished. For example, many districts in India have reported a sharp fall in water levels due to overuse.
• Non-renewable resources like crude oil are limited and may last only a few decades if extraction continues at the present rate, creating future scarcity.
• Industrialisation and urbanisation have increased pollution, deforestation, and environmental degradation, affecting the balance of nature.
• As the Earth’s resources are finite, unsustainable development threatens the needs of future generations, making it one of the biggest challenges of the present times.

Q15: How can development for one be destructive for another? Explain.  (5 Marks)

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Ans: 

• Development can have different effects on different groups of people because their needs and goals are not the same. What benefits one group may harm another.
• For example, a girl may want equal freedom and opportunities as her brother and expect him to share household work, but he may not agree. Her idea of development conflicts with his.
• Similarly, industrialists may want large dams to generate more electricity for industries, but these projects can submerge the land of tribal people, forcing them to leave their homes and lose their livelihood.
• In such cases, the same development activity that provides economic growth or facilities for some can cause displacement and suffering for others.
• Thus, what is considered development for one person or group can be destructive for another, depending on their life situation and interests.

Q16: How is income an important factor in assessing the development of a country ? Mention the classification done by the World Bank. (5 Marks)

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Ans: 

• Income is an important factor because it helps to assess how much people can buy and use goods and services needed for a better standard of living. A higher income usually means better access to education, healthcare, housing, and other facilities.
• To compare countries, we use per capita income, which is calculated by dividing the total income of the country by its total population. It shows what an average person earns in a year.
• The World Bank uses per capita income as the main criterion to classify countries in the World Development Report.
• According to the 2023 report, countries with per capita income of US $63,400 or above are called high-income (rich) countries, and those with about US $2,400 or less are low-income countries.
• India is classified as a lower-middle-income country with a per capita income of about US $10,030 per annum.

Q17: “The consequences of environmental degradation do not respect national and state boundaries.” Examine the statement in the context of sustainability of development.  (5 Marks)

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Ans: 

• The statement means that environmental damage in one region affects people everywhere, crossing national and state boundaries. Problems like air pollution, climate change, and global warming spread beyond the area where they originate.
• For example, industrial pollution or deforestation in one country can change rainfall patterns or increase temperature in other countries as well.
• Such degradation makes it difficult to maintain sustainable development, which aims to meet present needs without harming future generations.
• Since natural resources like air, water, and forests are shared globally, their overuse or pollution by one region affects all others.
• Therefore, sustainability has become a global challenge, and all countries must cooperate to protect the environment and ensure balanced, long-term development.

Q18: “The goals of development may also be contradictory.” Examine the statement through examples.  (5 Marks)

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Ans: Development goals can conflict, as progress in one area may harm another, requiring careful balancing.
Explanation:

• Economic Growth vs. Environment: Building dams (e.g., Sardar Sarovar) boosts energy and irrigation but displaces communities and harms ecosystems.
• Industrialization vs. Health: Factories increase income but cause pollution-related health issues (e.g., Delhi’s air quality).
• Urbanization vs. Agriculture: Expanding cities (e.g., Bengaluru’s growth) reduces farmland, threatening food security.
• Short-Term vs. Long-Term Goals: Deforestation for immediate profit undermines long-term climate stability.
• Resolution: Policies like sustainable urban planning or renewable energy can mitigate conflicts.

Q19: Explain the significance and limitations of average income for comparing different countries with examples.  (5 Marks)

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Ans: 

Significance: Average income (per capita income) helps compare countries’ development levels. It shows how much, on average, people earn and helps classify nations as rich or poor (as done by the World Bank).

Limitations:

• It hides inequalities — for example, two countries may have the same average income, but in one, income is evenly distributed, while in another, only a few are rich.
• It ignores other factors like health, education, and equality that are equally important for development.
• It does not reflect quality of life, as higher income alone doesn’t ensure well-being.

Conclusion:
Average income is useful but an incomplete measure of development; other social indicators must also be considered.

Q20: Which organisation publishes the Human Development Report and what criteria does it use to compare countries? Examine.  (5 Marks)

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Ans: The Human Development Report (HDR) is published by the United Nations Development Programme (UNDP).

UNDP uses the Human Development Index (HDI) to compare countries. The HDI is based on three key criteria:

• Health – Measured by Life Expectancy at Birth, which indicates the average expected length of life of people in a country.
• Education – Measured by indicators such as the Mean Years of Schooling of people aged 25 and above and Expected Years of Schooling for children of school-going age.
• Income – Measured by Gross National Income (GNI) per capita (in PPP dollars), which shows the average income of citizens adjusted for price differences across countries.

UNDP combines these indicators to rank countries on a scale of human development — higher HDI values indicate better health, education, and income levels.

Thus, unlike the World Bank, which classifies countries solely on the basis of per capita income, UNDP’s approach is broader and more comprehensive, as it considers people’s well-being, health, and education along with income.

Previous Year Questions 2024

Q1: Study the table given ahead carefully and answer the question that follows.     (CBSE 2024)   (1 Mark)
Which of the following country has high Human Development Index Rank in the world?
(a) Country ‘A’
(b) Country ‘C’
(c) Country ‘D’
(d) Country ‘E’

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Ans: (a)

A country with a lower numerical HDI rank (e.g., 1, 2, 3, etc.) is considered to have a higher position in global HDI rankings. The explanation states that Country ‘C’ has an HDI rank of 148, which does not make it “highly ranked.” Instead, it implies lower human development compared to countries with higher numerical ranks. Thus, the answer provided is inconsistent with the logic of the HDI ranking system.

Q2:  Which one of the following definitions is most suitable for the ‘Literacy Rate’?     (CBSE 2024)   (1 Mark)
(a) The literate population at the global level
(b) The proportion of literate population in the seven years and above
(c) The total number of children attending school in a region
(d) The average number of schools in a region

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Ans: (b)
The literacy rate refers to the proportion of people aged seven years and above who can read and write in a population. Option (b) is the correct answer because it describes literacy in terms of people’s ability to read and write above a certain age.

Q3: Which of the following is a key indicator used to measure a country’s development?     (CBSE 2024)   (1 Mark)
(a) Primary Production
(b) Secondary Production
(c) Gross Domestic Product
(d) Net Domestic Product

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Ans: (c)
Gross Domestic Product (GDP) is a key indicator used to measure a country’s development. It represents the total value of goods and services produced within a country in a specific time period, showing how economically strong or weak the country is. This makes option (c) the correct answer.

Q4: How does the United Nations Development Program’s (UNDP’s) developmental criterion differ from the World Bank? Explain.     (CBSE 2024)   (2 Marks)

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Ans: The World Bank measures development primarily through income. In contrast, the UNDP evaluates development using a broader set of criteria, which includes:

• Improvement in health of the population
• Higher educational attainment
• Increased per capita income

This approach highlights the importance of overall well-being, rather than focusing solely on financial metrics.

Previous Year Questions 2023

Q5: Assume there are four families in a locality. If the monthly income of each family is ₹10,000, ₹ 20,000, ₹ 30,000 and ₹ 40000 then what is the average income of the locality. Choose the correct option from the following.  (2023)    (1 Mark)
(a) ₹ 25,000
(b) ₹ 30,000
(c) ₹ 20,000
(d) ₹10,000

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Ans: (a)
To find the average income, you add the incomes of all the families and divide by the number of families. Here, the total income is ₹10,000 + ₹20,000 + ₹30,000 + ₹40,000 = ₹1,00,000, and there are 4 families. So, the average income is ₹1,00,000 ÷ 4 = ₹25,000, making option (a) the correct answer.

Q6:  “Different persons can have different developmental goals.”    (CBSE 2023)    (2 Marks)
OR
How do different people have different developmental goals? Explain with examples. (CBSE 2019, 14)    (2 Marks)

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Ans: People have different developmental goals because they come from different backgrounds. For example, a developmental goal for a farmer might be better irrigation facilities, while for an unemployed youth it may mean employment opportunities.

Q7: Which of the following countries has the highest ‘Life Expectancy’ at the birth’?   (2023)    (1 Mark)
(a) Nepal 
(b) Bangladesh
(c) India 
(d) Pakistan

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Ans: (b)
Life expectancy at birth refers to the average number of years a newborn is expected to live. Among the listed countries, Bangladesh has the highest life expectancy due to improvements in healthcare and living conditions, making option (b) the correct answer.

Q8: Which of the following countries has a better rank it the Human Development Index?   (2023)    (1 Mark)
(a) Afghanistan 
(b) Myanmar
(c) India 
(d) Nepal

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Ans: (c)
The Human Development Index (HDI) measures a country’s overall achievement in health, education, and income. India has a better HDI rank compared to Afghanistan, Myanmar, and Nepal due to its larger economy, better educational facilities, and healthcare improvements, making option (c) the correct answer.

Q9: Read the following data and answer the question that follow:

How much is the Net Absence Ratio of Haryana ? Choose the appropriate option from the following:   (CBSE 2023)    (1 Mark)
(a) 39 
(b) 27 
(c) 38
(d) 18

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Ans: (a)
The Net Attendance Ratio tells us the percentage of children attending school. To find the Net Absence Ratio, subtract the Net Attendance Ratio from 100. For Haryana, the Net Attendance Ratio is 61, so the Net Absence Ratio is 100 – 61 = 39. Therefore, option (a) is the correct answer.

Q10: Read the following statements about Human Development and choose the correct option:
(I) It is the composite Index prepared by United Nations Development Programme (UNDP).
(II) Parameters to measure it are Longevity, Literacy and Per Capita Income.
(III) Countries are ranked according to Developed and Low Developing countries.
(IV) World Bank also prepares report of Human Development on the basis of Quality of Life. (CBSE 2023)    (1 Mark)
(a) I and II 
(b) II and III
(c) I and III
(d) II and IV

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Ans: (a)
Human Development is measured by a composite index created by the United Nations Development Programme (UNDP) using parameters like longevity, literacy, and per capita income, which are correctly stated in statements I and II. Statement III is not entirely accurate as the rankings are not just divided into “Developed” and “Low Developing” countries. Therefore, option (a) is the correct answer.

Q11:  The question of sustainability of development raises many fundamentally new issues about the nature and process of development’. Explain it with examples.    (CBSE 2023)    (3 Marks)

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Ans: The question of sustainability of development raises many fundamentally new issues about the nature and process of development. For example:

• Sustainable development has continued to evolve as the true agenda of protecting the world’s resources while its true agenda is to control the world’s resources.
• Environmentally sustainable economic growth refers to economic development that meets the needs of all without leaving future generations with fewer natural resources than those we enjoy today.
• The essence of this form of development is a stable relationship between human activities and the natural world, which does not diminish the prospects for future generations to enjoy a quality of life at least as good as our own.
• Example: Crude oil that we extract from the earth is a non-renewable resource. Still, its explorations are being done non-judiciously.

Q12: Which one of the following is a developmental goal of the factory workers?  (CBSE 2023)    (1 Mark)
(a) Better wages 
(b) Better technology 
(c) More hours of work 
(d) More labour work 

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Ans: (a)
For factory workers, a primary developmental goal is better wages, as it directly improves their standard of living and provides economic security. Higher wages allow them to meet their needs and improve their quality of life. The other options, such as more hours of work or more labor work, do not necessarily align with workers’ goals for development, as these may lead to greater physical strain without necessarily improving their financial or living conditions. Better technology might be beneficial but is more relevant to productivity rather than directly addressing workers’ personal developmental goals.
Therefore, the correct answer is (a) Better wages.

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Previous Year Questions 2022

Q13: Suppose there are four families in your locality, the average per capita income of whom is 10,000. If the income of three families is 6,000; 8,000 and 14,000 respectively, what would be the income of the fourth family?  (2022)
(a) 5,000
(b) 10,000
(c) 12,000
(d) 15,000

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Ans: (c)
Sol: Suppose the income of fourth family is x. According to question.

⇒ x + 28000 = 40000
⇒ x = ₹12000

Previous Year Questions 2021

Q14: What is development? Why do different people have different development goals? Explain with four examples.     (2021 C)

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Ans: Development means continuous progress or i increase in real per-capita income. In other words, there is i improvement in economic welfare of the people and their standard of living.
The four characteristics of development are:
(i) Developmental goals are different for different people.
(ii) What may be development for one may not be development for the other.
(iii) For development people look at a mix of goals.
(iv) Different persons could have different as well as conflicting notions of country’s development.

Q15: In what respect is the criterion used by the UNDP different from that of the World Bank? What are the limitations of the criterion used by the World Bank?   (2021)

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Ans: The World Bank uses per capita income to measure the development. But it does not give the clear picture about the condition of the people in the country.
That is why UNDP has adopted Human Development index. The Human Development Index (HDI) is based on:
(i) Per capita income: When the total national income of the country is divided by its population, we get the per capita income.
(ii) Life expectancy: It measures the average age of a person in a country. It helps us to know the health facilities of the country.
(iii) Literacy rate: Education is also one of the most important criteria for the development of a country.
(iv) Gross enrollment ratio: It measures the education gained at three levels—at the primary, secondary and higher education level.

Q16: Suppose there are four families in your locality, the average per capita income of whom is 10,000. If the income of three families is 6,000, 8,000 and 14,000 respectively, what would be the income of the fourth family? 
(a) 5,000 
(b) 10,000 
(c) 12,000 
(d) 15,000 (CBSE Term-1 2021)

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Ans: (c)
Given:
The average per capita income of the four families is 10,000.
The incomes of three families are 6,000, 8,000, and 14,000.
To find the income of the fourth family, we can set up the equation as follows:
Total income of all four families = Average income × Number of families
= 10,000×4=40,000
Sum of incomes of the first three families = 6,000 + 8,000 + 14,000 = 28,000
Income of the fourth family = Total income – Sum of incomes of the first three families
=40,000 − 28,000 = 12,000
Therefore, the income of the fourth family is (c) 12,000.

Q17: There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below:
(a) Both (A) and (R) are true and (R) is the correct explanation of (A). 
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A). 
(c) (A) is correct but (R) is wrong. 
(d) (A) is wrong but (R) is correct.
Assertion (A) : Kerala has low Infant Mortality Rate.
Reason (R) : Kerala has adequate provision of basic health and education facilities. (CBSE Term-1 2021)

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Ans: (a)
Assertion (A): Kerala has a low Infant Mortality Rate. This statement is true. Kerala consistently reports one of the lowest infant mortality rates in India.
Reason (R): Kerala has adequate provision of basic health and education facilities. This statement is also true. Kerala’s low infant mortality rate is largely due to its robust healthcare infrastructure, high literacy rate, and strong emphasis on maternal and child health services.
Since the adequate provision of health and education facilities directly contributes to the low infant mortality rate in Kerala, (R) is the correct explanation of (A).
Thus, the correct answer is (a) Both (A) and (R) are true and (R) is the correct explanation of (A).

Also read: Short Answer Questions: Development

Previous Year Questions 2020

Q18: Choose the incorrect option from column A and column B.   (2020)

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Ans: (c)
Sol: Farmers who depending on rain for growing crops – Assured a higher support prices for their crops.

Q19: What is development? Why do different people have different development goals? Explain with four examples.     (2020 C)

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Ans: Development refers to ongoing progress or an increase in real per-capita income. It signifies an improvement in the economic welfare of individuals and their overall standard of living.

The four key characteristics of development are:

• Different goals: Developmental goals vary among individuals.
• Subjective nature: What constitutes development for one person may not be the same for another.
• Mix of goals: People often consider a combination of objectives when thinking about development.
• Conflicting notions: Individuals may have different and even conflicting ideas about what national development should entail.

Q20: “Different people have different goals of development”. Explain the statement.    (2020)

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Ans: Different people have different development goals:
(i) People have different developmental goals because people come from different background.
(ii) Different people have different dreams and aspirations.
(iii) People set their goals according to the changing circumstances and the prevailing situation
(iv) People may change the goal with the change in situation which could be contradictory to previous goal
(v) For example: A person willing to do higher education will change his goal go for employment because weak economic situation of the family.

Q21: Define the term per capita income.     (CBSE 2020)

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Ans: Per capita income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area’s total income by its total population.

Q22: Define the term literacy rate.     (2020)

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Ans: The literacy rate refers to the percentage of people aged 7 and above who can read and write. It is a key indicator of education in a population.

Q23: In comparison to Kerala, which state has the highest infant mortality rate? (2020)

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Ans: In comparison to Kerala, Bihar has the highest infant mortality rate.

Q24: “Suppose the average income of a country is not being increased over time but the records of the National Income show a rise”. What does this situation signify?    (2020)

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Ans: 

When the average income of a country remains unchanged over time, yet the National Income records show an increase, it indicates a situation of unequal income distribution.

• This means that while the total income of the country may be rising, it is not benefiting everyone equally.
• A small number of individuals may be accumulating wealth, while the majority see little to no improvement in their income.
• This disparity can lead to social and economic issues within the country.

Q25: Fill in the blank: Human Development Index (HDI) level in India can be improved through _____.   (2020)

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Ans: (i) Increasing educational level of the people.
(ii) Increasing their health status.
(iii) Increasing people per capital income.

Q26: Suggest any three ways to maintain Body Mass Index.     (2020)

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Ans: The three ways to maintain Body Mass Index (BMI) are:

• It is important to exercise at least 60-90 minutes most days of the week.
• Stay hydrated and eat a balanced diet.
• Avoid fast food and oily food.

Q27: Why is the issue of sustainability important for development? Explain.     (CBSE 2020)

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Ans: The issue of sustainability is important for development because of the passage of time the generation changes and with this change society wants more and more benefits from the resources which are present in our nature. Because of the increasing needs ol people of our society, things are decaying day by day, an excessive use is making things worse. If the speed of using resources remains the same then the available resources will be exhausted soon and our coming generation will stay deprived of all kind of needs. The issue of sustainability is important for development because of the following reasons:
(a) The growth and development should be done by keeping in mind future usage.
(b) If resources are not sustained, then our natural resources will stagnate after some time and no upcoming generation will be able to take advantage of these natural resources.

Q28: “Sustainability of development is a crucial aspect in present times”. Support the statement with examples.    (2020)

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Ans: It is felt that the economic growth and industrialisation have led to reckless exploitation of natural resources. Sustainability promotes a rational use of natural resources.
(i) Currently, reckless exploitation of non-renewable natural resources is going on. Since the stock of natural resources like oil and minerals is limited, development should not take place at the cost of these scare natural resources as they are not renewable in the near future.
(ii) Ground water is an example of renewable resource. But if we use more than what is replenished by nature, then we would be overusing this resource.
(iii) Once the non-renewable resources would be exhausted, we would not be able to use them in future. So, using the resources judiciously will help in maintaining the sustainability of development of our ecosystem.
(iv) Economic development is a continuous process. Resources are to be used in such a way that they are not exploited. At the same time, development should not harm the environment.

Q29: Suggest any one way to create employment in semi-rural areas. (CBSE 2020)

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Ans: Capacity building and establishing of food processing units in semi-rural areas can help create employment in semi-rural areas.

Q30: Suggest any three ways to improve public facilities in India. (CBSE 2020)

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Ans: Public facilities are the base for any development in a country. Three ways to improve public facilities in India are: 
(1) Accessible and affordable education must be ensured to all the children of the country, irrespective of their caste, class or gender. More government and public schools should be opened, tuition fee should be reduced and education must be made free up to elementary level.
(2) Public Distribution system should be reformed to include people from the remotest of areas. Corruption in the distribution system should be checked and the food grains provided should be rigorously monitored for quality. 
(3) Health facilities should be made free to children below 10 years of age and senior citizens, disadvantaged classes etc.

Previous Year Questions 2019

Q31: What may be a goal of landless rural laborers regarding their income?     (Delhi 2019)

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Ans: A goal of landless rural laborers regarding their income may be to have more days of work and better wages.

Q32: What may be a goal of prosperous farmer of Punjab?    (Delhi 2019)

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Ans: A goal of a prosperous farmer in Punjab may include:

• Improving irrigation facilities for better crop yield.
• Providing their children with access to better education.
• Exploring high-yield crop varieties to increase productivity.

Q33: What may be a developmental goal of urban unemployed youth?    (CBSE 2019, 12)

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Ans: A developmental goal for urban unemployed youth may include:

• Securing a job with a good salary.
• Finding employment opportunities that align with their qualifications.
• Aiming for roles that meet their career aspirations.

Q34: “Consequences of environmental degradation do not respect national or state boundaries”. Support the statement with an example.    (2019)

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Ans: Consequences of environment degradation do not respect national or state boundaries. This issue is no longer a regional or national issue. Our future is linked together. Sustainability of development Is essential for all the mankind, and it is our common responsibility to save the environment. These days, it is a matter of discussion among different countries of world. Global warming, acid rain etc. are not bound to a country and cannot be controlled by one nation. It is a global matter for thinking and finding the solutions

Q35: What may be one of the developmental goals of a girl who belongs to a rich urban family? (CBSE 2019, 14, 11)

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Ans: The ideal developmental goals of a girl who belongs to a rich urban family may be getting the same freedom as her brother to pursue higher studies and earn accolades and wealth.

Q36: Mention the formula to calculate the BMI (Body Mass Index). (CBSE 2019)

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Ans: Weight of person in kg and height in metres is taken. Divide the weight by the square of the height.

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Previous Year Questions 2017

Q37: Why is average income considered as an important criterion for development? Give one reason.   (2017)

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Ans: Average income is considered an important criterion for development because it represents the total income of a country divided by the total population. If the average income is adequate to meet the basic requirements and provide other facilities, then the country is considered developed.

Q38: Why does Kerala have a low infant mortality rate?     (2017)

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Ans: Kerala has a low infant mortality rate due to the high development of education and health facilities in the state.

Q39: On the basis of which three indicators of HDI 2004 Sri Lanka has a better rank than India?   (2017) 

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Ans: On the basis of the following three indicators of HDI 2004, Sri Lanka has a better rank than India:

• Life expectancy
• Gross enrollment ratio
• Per capita income 

Q40: What is the meaning of development? Explain the two aspects of development.    (2017)

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Ans: Development refers to progress or improvement in lifestyle. Important aspects of development are:

• Different persons can have different developmental goals.
• What may be development for one may not be development for the other. It may even be destructive for the other. 

Q41: What is average income? What is its importance? Mention its limitations related to development.    (2017)

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Ans: Average income refers to the total income of a nation (GDP) divided by its population, also known as per capita income. It is an essential measure for classifying countries as developed, underdeveloped, or developing.
Importance of average income:

• Average income helps in understanding the economic well-being of a nation and its citizens. It assists in identifying disparities between countries and assessing their overall development.

Limitations of average income as a measure of development:

• Inflation bias: An increase in per capita income can be misleading if it is due to rising prices rather than an actual increase in physical output.
• Income distribution: Despite rising national income, if the distribution is unequal, it may lead to the rich getting richer and the poor getting poorer.
• Exclusion of non-marketed goods: Average income fails to consider non-market activities that contribute to human happiness and quality of life.
• Labor displacement: Technological advancements that lead to labor displacement and adversely affect the poor may still result in increased average income.
• Population growth: If the rate of population growth exceeds the rate of national income growth, per capita availability of goods and services may decrease, affecting economic welfare.
• Non-monetary contributions: Some commodities, like salt or needle, may have a higher contribution to economic welfare than their monetary value included in national income calculations.

Q42: What is the main criterion used by the World Bank in classifying different countries? Describe its limitations. (2017)

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Ans: The World Bank primarily uses per capita income as the criterion for classifying different countries.
Limitations of using per capita income for classification:

• Narrow focus: Per capita income only considers the economic aspect of life and disregards social factors such as education, health, and life expectancy.
• Inequality: It hides disparities within countries, as a small population in wealthy Middle Eastern countries may skew the per capita income, while a significant population remains poor.
• Rich-poor division: Countries are divided into rich, and poor based on per capita income, oversimplifying the complex reality of development.
• Lack of holistic assessment: The World Bank’s classification focuses solely on income, overlooking other crucial aspects of development.
• Arbitrary thresholds: The classification uses specific income thresholds, such as $49,300 per annum for rich countries and $2,500 or less for low-income or poor countries, which may not capture the full range of economic and social conditions. 

Q43:  How is it that the average person in Punjab has more income than the average person in Kerala but it lags behind in many other crucial areas? Explain.   (2017)

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Ans: The average person in Punjab may have a higher income compared to the average person in Kerala, but this does not necessarily imply a higher level of development in other crucial areas. There are several reasons for this discrepancy.
Firstly, income alone is not a comprehensive measure of development. Kerala has made significant progress in areas such as education and healthcare, which contribute to overall development. The state has a higher literacy rate and better access to healthcare facilities compared to Punjab.
Secondly, Kerala has implemented effective social welfare programs and initiatives that prioritize human development. For example, the state has invested in quality education and healthcare, leading to better outcomes in terms of literacy, life expectancy, and overall well-being.
Lastly, Punjab may face challenges in terms of inadequate investments in social sectors and a lack of emphasis on human development. While income may be higher, the overall quality of life and access to essential services may be lower in Punjab compared to Kerala.
Therefore, it is important to consider multiple indicators of development, including education, healthcare, and overall well-being, rather than focusing solely on income, to assess the true level of development in a region.

Previous Year Questions 2016

Q44: ‘For development, people look at a mix of goals”. Support the statement with three suitable example.    (2016)

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Ans: For development, people look at a mix of goals, for example:

• People have different developmental goals because people come from different background.
• Different people have different dreams and aspirations.
• People set their goals according to the changing circumstances and the prevailing situation
• People may change the goal with the change in situation which could be contradictory to the previous goal
• For example: A person willing to do higher education will change his goal to go for employment because of the weak economic situation of the family.

Q45: Explain the factors on which the quality of life depends.    (CBSE 2016)

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Ans: The quality of life depends upon the following factors:

• Money and material things
• Presence of family members, friends, and relatives
• Good working atmosphere at the office
• An opportunity to learn and contribute
• A position of self-respect in the family
• A safe and secure environment.

Q46: Explain the three components of the Human Development Index.   (2016)

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Ans: The three components of the Human Development Index are:

• It includes the level of development of a country.
• It indicates how far a country has traveled and how far it has yet to travel to achieve high ranks in matters such as the per capita income of the people.
• It includes important welfare elements such as life expectancy, literacy, educational level of people, and health status.

Q47: Which three efforts should be made by any country to improve its HDI?   (2016)

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Ans: The three efforts which could be made by any country to improve its HDI are:

• Improvement in human capacity through education and healthcare that will result in:
• Providing 100% literacy to the people.
• Improving health facilities.
• Creating a pollution-free environment.

Q48: What is sustainable development? Why is the issue of sustainability important for development? Explain.    (2016)

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Ans: Sustainable development means development should take place without damaging the environment, and development in the present should not compromise with the needs of future generations.
The issue of sustainability is important and desirable for development because:

• Economic development is a continuous process. Hence resources should not be exploited. At the same time, development should not harm the environment.
• It is desirable because everyone would certainly like the present level of development to go further or at least be maintained for future generations.

Q49: What is national development? What aspects are covered under national development?    (2016)

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Ans: National development refers to a nation’s ability to improve the standard of living and well-being of its population.
Aspects covered under national development include:

• Economic awareness: Increasing the economic knowledge and awareness of the population.
• Agricultural outputs: Enhancing agricultural production and productivity.
• Poverty eradication: Focusing on strategies and policies to alleviate poverty within the nation.
• Rural development: Ensuring the development and progress of rural areas.
• Urban growth management: Addressing the challenges associated with urbanization and managing the growth of urban areas.
• Gender parity: Striving for gender equality and equal opportunities for all genders in society.
• Conflict resolution: Promoting peaceful discussions and negotiations to resolve conflicts within the nation.

Q50: Explain the importance of sustainable development by giving the example of groundwater.   (CBSE 2016)

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Ans: Groundwater is an important natural resource that exemplifies the importance of sustainable development. 
Here’s how:

• Groundwater is a renewable resource that plays a crucial role in meeting the water needs of various sectors, including agriculture, industry, and domestic use. However, excessive extraction and overuse of groundwater can lead to its depletion and long-term negative consequences.
• Sustainable development emphasizes the responsible and judicious use of resources, including groundwater. By adopting sustainable practices, such as efficient irrigation techniques, rainwater harvesting, and recharging groundwater sources, we can ensure the long-term availability of groundwater.
• For example, in areas where groundwater is the primary source of irrigation for agriculture, sustainable practices like drip irrigation and precision farming can help reduce water wastage and improve water-use efficiency. This ensures that the available groundwater resources are used optimally without depleting them.
• Furthermore, sustainable development promotes the protection of groundwater quality. Unregulated disposal of industrial waste, improper sanitation systems, and excessive use of chemical fertilizers and pesticides can contaminate groundwater, making it unfit for human consumption and harming ecosystems. Sustainable development focuses on implementing proper waste management systems, promoting organic farming practices, and protecting water sources from pollution, thus safeguarding the quality of groundwater.
• By prioritizing sustainable development practices, we can ensure the sustainable use and management of groundwater resources, meeting the present needs without compromising the ability of future generations to meet their own needs.

Also read: Short Answer Questions: Development

Previous Year Questions 2015

Q51: What is the development goal of rural people of India as per your viewpoint? (CBSE 2015)

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Ans: The development goal of rural people in India focuses on:

• Access to better resources, including food.
• Improved transportation facilities.
• Enhanced communication services.

Q52: What does Sustainability of development mean? How can sustainable development be achieved?  (CBSE 2015)

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Ans: Sustainable development is the only way in which without sacrificing the quality of the environment for future generations, the present generations can continue to develop. Sustainable Development is significant because: 
(1) It encourages the growth that minimises environmental issues. 
(2) It is the only way to address the concerns of the future generation along with accommodating the needs of the current generation. 
(3) It demands that resource reserves, including exhaustible natural and environmental resources, be maintained. This keeps the atmosphere healthy for the current generation. For example, recent studies suggest that because of overuse, groundwater in India is exhausted. This might severely affect the future generations heavily to the point of threatening their survival.

Previous Year Questions 2012

Q53: “The future generation may not have sufficient resources as compared to the present generation.” Explain the statement by giving suitable examples. (CBSE 2012)

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Ans: The future generation may not have sufficient resources as compared to the present generation. This can be asserted in the following ways: 
(1) Resources like groundwater are getting overused everyday. They might get exhausted very soon. 
(2) Even renewable resources like hydropower may get exhausted. 
(3) Newer resources keep on adding to the line but they all have limited life due to the overuse.