Are you looking for the AHSEC/ASSEB Class 12 Economics Solved Question Paper 2025? You’ve come to the right place! In this post, we provide the complete question paper along with important answers such as the exam pattern, marks distribution, and topic-wise analysis.
If you’re a student preparing for the Assam State School Education Board (ASSEB) Class 12 Economics exam, this solved paper will help you understand the question format and boost your preparation.
An Overview of ASSEB (AHSEC) Class 12 Economics Solved Paper 2025
ASSEB (AHSEC) Class 12 Economics Solved Paper 2025
Full Marks: 80 (Part-A=40 + Part-B=40)
Pass Marks: 24
Time: Three Hours
(The figures in the margin indicate full marks for the questions)
PART – A (Introductory Macroeconomics)
1. Give short answers to any four of the following questions: (1×4=4)
(i) Who is known as the father of Macroeconomics?
Answer: John Maynard Keynes
(ii) What are the two sectors studied in a ‘two-sector economy’?
Answer: Household sector and Business (Firms) sector
(iii) Write the full form of the FRBM Act, 2003.
Answer: Fiscal Responsibility and Budget Management Act, 2003
(iv) “Voluntary unemployment can exist in an economy with full employment equilibrium.” Write whether this statement is correct or incorrect.
Answer: Correct
(v) In which year was the ‘Bretton Woods’ Conference of the United Nations held?
Answer: 1944
(vi) When is the level of effective demand attained?
Answer: When Aggregate Demand equals Aggregate Supply
(vii) NNPFC = NNPMP - _______. (Fill in the blank)
Answer: Net Indirect Taxes
2. Answer any five of the following questions: (2×5=10)
(i) Write two differences between direct tax and indirect tax.
Answer:
(ii) What do you understand by the ‘paradox of thrift’?
Answer: It means when all people try to save more, the overall demand in the economy falls. This reduces production, income, and in the end, total savings also decrease instead of increasing.
(iii) Write one similarity and one difference between capital goods and intermediate goods.
Answer:
(iv) Explain the concept of ex-ante investment and ex-post investment.
Answer:
Ex-ante investment means planned or intended investment by firms.
Ex-post investment means actual investment that has already taken place.
(v) What are the sources of supply of foreign currency in an economy?
Answer:
Exports of goods and services
Remittances from abroad
Foreign investment (FDI, FII)
Loans and aid from foreign countries
(vi) Differentiate between revenue expenditure and capital expenditure.
Answer:
(vii) What do you understand by the devaluation of domestic currency? Write with an example.
Answer: Devaluation means reducing the value of domestic currency against foreign currency by the government.
Example: If earlier ₹1 = $0.02, after devaluation ₹1 = $0.015, then the Indian rupee is devalued.
3. Answer any two of the following questions: (3×2=6)
(i) In an economy, the marginal propensity to save is 0.5. What will be the increase in income if there is a new investment of Rs. 600 crores?
Answer: MPS = 0.5 → MPC = 1 − 0.5 = 0.5
Multiplier = 1 / (1 − MPC) = 1 / (1 − 0.5) = 1 / 0.5 = 2
Increase in income = Multiplier × Investment = 2 × 600 = Rs. 1200 crores
(ii) What is fiscal policy? Write its two objectives. (1+2=3)
Answer: Fiscal policy means the use of government spending and taxation to control the economy.
Two objectives are:
To maintain stability by controlling inflation and unemployment.
To reduce inequality by using taxes and welfare spending.
(iii) How can financial deficits be reduced? Explain briefly.
Answer: Financial deficits can be reduced by:
Increasing government revenue through better tax collection and new taxes.
Reducing unnecessary expenditure and subsidies.
Selling government assets (disinvestment).
Encouraging faster economic growth, which increases tax income.
(iv) In the context of national income accounting, analyze the concept of planned and unplanned change in inventories with a hypothetical example.
Answer:
Planned change in inventories means when firms increase or decrease their stock of goods on purpose. Example: A company produces extra goods to meet future demand.
Unplanned change in inventories happens when sales are different from what was expected.
Example: A firm produces 1000 units expecting to sell 1000. If only 900 are sold, 100 units remain unsold. This is an unplanned increase in inventories. If 1050 units are sold, stock decreases by 50, which is an unplanned decrease in inventories.
4. Answer any two of the following questions: (6×2=12)
(i) What is the balance of payment? Explain its components. (1+5=6)
Answer: The Balance of Payment (BOP) is a record of all economic transactions of a country with the rest of the world during a given period.
Its main components are:
Current Account – shows exports and imports of goods, services, income, and transfer payments.
Capital Account – records capital transfers and transactions in non-produced assets.
Financial Account – includes investments like Foreign Direct Investment (FDI), portfolio investment, and loans.
Official Reserve Account – maintained by the central bank to correct imbalances by using foreign currency and gold reserves.
Errors and Omissions – adjustments made to balance accounting mistakes.
(ii) Explain the process of credit creation by commercial banks. (5+1=6)
Answer: Credit creation means the ability of commercial banks to create money through lending.
Process:
Banks receive deposits from the public.
They keep a part of it as Cash Reserve Ratio (CRR) with the central bank.
The remaining part is given as loans to borrowers.
Borrowers use the loan for payments, which again comes back to banks as deposits.
This process continues many times, and a large amount of credit (money supply) is created.
For example, if CRR = 20%, then with Rs. 100 deposited, Rs. 80 is loaned, which becomes a new deposit, and so on. This multiplies the money in the economy.
(iii) What is aggregate demand? Write about its components. (1+5=6)
Answer: Aggregate Demand (AD) is the total demand for all goods and services in an economy at a given level of income and price.
Components of AD are:
Consumption Demand (C) – demand by households for goods and services.
Investment Demand (I) – demand by businesses for capital goods like machines and factories.
Government Demand (G) – spending by government on public goods, services, and infrastructure.
Net Exports (X−M) – exports minus imports.
So, AD = C + I + G + (X − M).
(iv) Is GDP an indicator of the welfare of a nation? Justify your answer.
Answer: GDP measures the total value of goods and services produced in a country. It shows economic growth but it is not a perfect measure of welfare.
Reasons:
GDP does not consider income distribution.
It ignores non-market activities like household work.
It does not count environmental damage or depletion of resources.
It ignores social factors like health, education, and happiness.
Welfare depends on both material and non-material aspects.
Therefore, GDP is only a partial indicator of welfare, not a complete one.
5. Answer any one of the following questions: (8×1=8)
(i) What is value addition? Explain the value-added method of calculating national income. Write an important merit of this method. (1+6+1=8)
Answer: Value addition means the increase in value of a good or service at each stage of production. It is equal to the difference between the value of output and the value of intermediate goods.
Value-Added Method of Calculating National Income:
Under this method, the economy is divided into different production sectors (like agriculture, industry, services).
For each sector, the value of output is calculated.
From this, the value of intermediate goods is subtracted to avoid double counting.
The value added by all sectors is added together to get Gross Domestic Product (GDP) at market price.
Adjustments are made: subtract depreciation, add net factor income from abroad, subtract indirect taxes, and add subsidies.
Finally, we get Net National Product (NNP) at factor cost, which is the national income.
Merit: This method avoids double counting and shows the contribution of each production sector clearly.
(ii) Write about the quantitative and qualitative measures used by the central bank to regulate the money supply in an economy. (8 marks)
Answer: The central bank controls money supply through Quantitative and Qualitative measures.
1. Quantitative (General) Measures: These affect the overall supply of money in the economy.
Bank Rate Policy – changing the rate at which central bank lends to commercial banks.
Cash Reserve Ratio (CRR) – changing the percentage of deposits banks must keep with central bank.
Statutory Liquidity Ratio (SLR) – changing the percentage of deposits banks must keep in liquid assets.
Open Market Operations – buying and selling of government securities in the open market.
2. Qualitative (Selective) Measures: These influence the flow of credit to specific sectors.
Credit Rationing – limiting the credit given to unproductive sectors.
Margin Requirements – changing the margin between loan value and security value.
Directives – issuing instructions to banks to give or restrict loans in certain areas.
Moral Persuasion – appealing to banks to follow policies in the interest of the economy.
Thus, both measures together help in controlling inflation, deflation, and maintaining stability.
(iii) Explain the working of the investment multiplier with an example. What is the backward working of the investment multiplier? (7+1=8)
Answer: Investment multiplier shows how an initial increase in investment leads to a multiple increase in national income.
Working:
When investment increases, it increases income of some people.
They spend a part of this extra income on consumption.
This increases the income of others, who again spend part of it.
This cycle continues, and total income increases by a multiple of the original investment.
Formula:
Multiplier (K) = 1 / (1 − MPC)
Example:
Suppose MPC = 0.8, and investment increases by Rs. 100 crore.
Multiplier = 1 / (1 − 0.8) = 1 / 0.2 = 5
Increase in income = 100 × 5 = Rs. 500 crore.
Backward working: If investment decreases, then income also decreases by a multiple. For example, if investment falls by Rs. 100 crore (MPC = 0.8), income falls by Rs. 500 crore. This is called backward working of multiplier.
PART – B (Indian Economic Development)
6. Give short answers to any four of the following questions: (1×4=4)
(i) What is ‘marketable surplus’ in the context of agricultural production?
Answer: Marketable surplus means the part of farm produce which the farmer sells in the market after keeping some for family use.
(ii) Write the full form of NCERT.
Answer: NCERT stands for National Council of Educational Research and Training.
(iii) Which Indian company bought the English tea company ‘Tetley’ in 2000?
Answer: Tata Tea Ltd. (now Tata Consumer Products) bought Tetley in 2000.
(iv) The owner of a saloon is a regular salaried/self-employed/casual wage labourer. (Choose the correct option)
Answer: The owner of a saloon is self-employed.
(v) What is India’s ranking in terms of the Human Development Index, 2023-2024?
Answer: India’s HDI rank in 2023-24 is 134th.
In 2024-25: India is ranked 130th out of 193 countries and territories on the Human Development Index (HDI).
(vi) Agriculture/Industry/Services sector is the largest contributor to the National Income of India at present. (Choose the correct option)
Answer: Services sector is the largest contributor to the National Income of India.
7. Answer any five of the following questions: (2×5=10)
(i) Write two causes of slow economic growth and the re-emergence of poverty in Pakistan.
Answer: Two causes are:
Political instability and conflicts.
Dependence on foreign loans and poor economic policies.
(ii) Classify the following into renewable and non-renewable resources: (a) Tree (b) Coal (c) Iron ore (d) Sea fish
Answer:
Renewable resources: Tree, Sea fish
Non-renewable resources: Coal, Iron ore
(iii) Write two benefits of formal sector employment.
Answer: Two benefits are:
Fixed and regular salary.
Social security benefits like provident fund, medical, pension.
(iv) What do you understand by outsourcing? Write with an example.
Answer: Outsourcing means giving some work to outside companies instead of doing it within the company.
Example: Many companies outsource call centres to India.
(v) What are the types of economic systems? Which economic system did India adopt after independence? (1+1=2)
Answer: There are three types of economic systems – Capitalist, Socialist, and Mixed economy. India adopted the Mixed economy after independence.
(vi) Write two important achievements of India’s education sector.
Answer: Two achievements are:
Increase in literacy rate.
Growth of higher education institutions like universities and colleges.
(vii) What are the aspects included in the ‘agricultural marketing’ process?
Answer: Aspects include:
Storage, transportation, and processing of farm produce.
Selling through regulated markets and cooperatives.
8. Answer any two of the following questions: (3×2=6)
(i) When was the Central Pollution Control Board of India established? Write two functions of this board.
Answer: The Central Pollution Control Board (CPCB) was established in 1974.
Two functions are:
To control and prevent water and air pollution in India.
To give advice to the government on environmental protection and pollution control measures.
(ii) Match the following correctly:
Answer:-
Prime Minister – C. Chairperson of the Planning
Gross Domestic Product – D. The money value of all the final goods and services produced within the economy in one year
Quota – B. Quantity of goods that can be imported
Land reform measures – E. Improvements in the field of agriculture to increase its productivity
HYV seeds – A. Seeds that give large proportion of outputs
Subsidy – F. The monetary assistance given by the government for production activities
(iii) Who is a worker? Are the following workers – a beggar, a thief, a smuggler, and a gambler? Why?
Answer: A worker is a person who is engaged in productive activity and contributes to the production of goods and services. A beggar, thief, smuggler, and gambler are not workers, because they do not do any legal and productive work for the economy.
(iv) Explain the ‘Great Leap Forward’ campaign of China as initiated in 1958.
Answer: The Great Leap Forward was a campaign started in 1958 by China to increase industrial and agricultural production.
People were organized into communes to do collective farming.
Small industries were set up in villages.
The aim was to make China a modern and industrialized country quickly.
9. Answer any two of the following questions: (6×2=12)
(i) Write a note on the development path of India, China, and Pakistan.
Answer:
India: Adopted a mixed economy after independence with five-year plans, land reforms, and industries. In 1991, liberalisation and globalisation boosted the economy. The service sector became the main growth driver.
China: Adopted socialism (1949). Launched Great Leap Forward (1958) and later (1978) reforms allowing private enterprises and foreign trade. Became the world’s manufacturing hub.
Pakistan: Relied heavily on foreign aid and loans. Industrialisation and education lagged. Political instability and poor planning slowed growth compared to India and China.
(ii) Write two differences between human capital and physical capital. Discuss the sources of human capital formation. (2+4=6)
Answer:
Differences between Human Capital and Physical Capital
Sources of Human Capital Formation:
Education and training
Health facilities and nutrition
On-the-job training
Migration for better opportunities
Research and technology
(iii) Discuss the importance of credit for rural development. Write three differences between formal and informal sources of rural credit. (3+3=6)
Answer:
Importance of Credit for Rural Development:
Helps farmers buy seeds, fertilizers, irrigation, and modern tools.
Supports small industries and rural businesses.
Increases production, employment, and income in villages.
Differences between Formal and Informal Credit
(iv) Write short notes on any two of the following: (3+3=6)
(a) Import Substitution Trade Policy: This policy was followed in India after independence. The idea was to encourage domestic production by protecting Indian industries from foreign competition. Imports were restricted through high tariffs and quotas. The aim was to achieve self-reliance, reduce dependence on foreign goods, and promote the growth of Indian industries.
(b) Role of Small-Scale Industry in the Indian Economy: Small-scale industries play a vital role in India’s economy. They generate large-scale employment and use local raw materials. These industries promote balanced regional growth and reduce the gap between rural and urban areas. They also contribute to exports, income generation, and poverty reduction, making them an important part of India’s development.
(c) Condition of Agriculture at the Time of Independence: At the time of independence, Indian agriculture was in a poor state. Productivity was very low due to outdated farming methods and lack of technology. Irrigation facilities were inadequate, and farmers suffered under the zamindari system. Agriculture was mainly dependent on monsoon, and frequent famines and food shortages caused widespread poverty and suffering.
10. Answer any one of the following questions: (8×1=8)
(i) What is organic farming? How does it help in sustainable development? Write three merits and two limitations of organic farming. (1+2+5=8)
Answer: Organic farming is a method of farming that avoids the use of chemical fertilizers, pesticides, and genetically modified seeds. Instead, it uses natural manures, bio-fertilizers, crop rotation, and organic methods to grow crops.
Role in Sustainable Development:
It maintains soil fertility and protects natural resources.
It reduces pollution of water, soil, and air.
It ensures healthy food and balances environment + economy + society for future generations.
Merits of Organic Farming (any three):
Produces healthy and chemical-free food.
Improves soil fertility and biodiversity.
Reduces environmental pollution and conserves water.
Limitations of Organic Farming (any two):
Low productivity compared to modern farming.
Takes more time and effort, so not suitable for large-scale immediate demand.
(ii) “The threat to India’s environment poses a dichotomy.” Based on this statement, write an analytical note on the current environmental situation and problems in India. What are the factors responsible for land degradation in India? (6+2=8)
Answer: India faces a dichotomy (contradiction) where on one hand economic growth and industrialisation are rising, while on the other, the environment is degrading rapidly.
Current Environmental Problems in India:
Air pollution in major cities due to vehicles and industries.
Water pollution from untreated sewage, chemical waste, and agricultural runoff.
Deforestation due to urbanisation and infrastructure projects.
Loss of biodiversity because of over-exploitation of natural resources.
Climate change effects like irregular rainfall, droughts, and floods.
This shows a conflict between development goals and environmental protection.
Factors responsible for land degradation (any four):
Overgrazing by cattle.
Deforestation and cutting of trees.
Overuse of chemical fertilizers and pesticides.
Mining and industrial activities.
Improper irrigation causing waterlogging and salinity.
(iii) Briefly write about the following reforms undertaken as part of the Liberalization Policy of Economic Reforms, 1991:
(a) Industrial sector reform (3 marks)
(b) Financial sector reform (3 marks)
(c) Tax reform measures (2 marks)
Answer:
(a) Industrial sector reform: In 1991, many changes were made in the industrial sector. The system of licensing was removed for most industries, except a few related to security and safety. Public sector monopoly in many industries was ended, and private companies were allowed to enter more fields. Foreign Direct Investment (FDI) was also allowed in many industries. These steps increased competition, efficiency, and growth of industries.
(b) Financial sector reform: The government took steps to make banks and financial institutions more efficient. The control of the Reserve Bank of India (RBI) over interest rates was reduced, so banks could decide rates more freely. Private and foreign banks were allowed to operate. Capital market reforms like setting up SEBI were introduced to make share markets more transparent and fair.
(c) Tax reform measures: The tax system was simplified to encourage people to pay taxes honestly. Rates of income tax and corporate tax were reduced, and indirect taxes like excise duty and customs duty were also lowered. These reforms helped increase revenue collection and reduced tax evasion.
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