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Economics · 2025 · 6 marks
CBSE 2025 · Region 5 · Set 2 · Q16
(a) (i) Explain the likely impact of construction of 100 new super speciality hospitals in a nation on Gross Domestic Product (GDP) and welfare in…
(i)
Explain the likely impact of construction of $\displaystyle 100$ new super speciality hospitals in a nation on Gross Domestic Product (GDP) and welfare in the economy.
(ii)
Suppose, there are only three firms in a hypothetical economy, viz. A, B and C. During a given period of time, the following transactions were undertaken by them :
(I)
Firm A sold goods worth ₹ $\displaystyle 2,000$ to Firm B and ₹ $\displaystyle 1,200$ to Firm C.
(II)
Firm B sold goods worth ₹ $\displaystyle 1,100$ to Firm A and ₹ $\displaystyle 3,500$ to Firm C.
(III)
Firm C sold to households for final consumption, goods worth ₹ $\displaystyle 5$,700.
Estimate the value of Gross Domestic Product at Factor Cost (GDP$\displaystyle _{FC}$), assuming the value of Net Indirect Taxes to be ₹ 240.
(i)
On the basis of the given data, estimate the value of Net Domestic Product at Factor Cost (NDP$\displaystyle _{FC}$) :
| S.No. | Items | Amount (in ₹ Crore) |
| (i) | Household Consumption Expenditure | $\displaystyle 1,800$ |
| (ii) | Gross Business Fixed Capital Formation | $\displaystyle 1,150$ |
| (iii) | Gross Residential Construction Expenditure | $\displaystyle 1,020$ |
| (iv) | Government Final Consumption Expenditure | $\displaystyle 2,170$ |
| (v) | Excess of Imports over Exports | $\displaystyle 720$ |
| (vi) | Inventory Investments | $\displaystyle 540$ |
| (vii) | Gross Public Investments | $\displaystyle 1,300$ |
| (viii) | Net Indirect Taxes | $\displaystyle 240$ |
| (ix) | Net Factor Income from Abroad | (–) $\displaystyle 250$ |
| (x) | Consumption of Fixed Capital | $\displaystyle 440$ |
(ii)
“All consumption goods are durable in nature.”
Defend or refute the given statement with a valid argument.
Marking-scheme solution
(i)
The construction of $\displaystyle 100$ new super speciality hospitals may impact the Gross Domestic Product (GDP) positively as improved health infrastructure may lead to an increase in employment opportunities. Moreover, it may improve the health status and in turn well being of the people, consequently improving the welfare in the economy.
(ii)
| Firms | Value of Output (in ₹) (i) | Intermediate Consumption (in ₹) (ii) | Value Added (in ₹) {(i)-(ii)} |
| A | $\displaystyle 2,000$ + $\displaystyle 1,200$ | $\displaystyle 1,100$ | $\displaystyle 2,100$ |
| B | $\displaystyle 1,100$ + $\displaystyle 3,500$ | $\displaystyle 2,000$ | $\displaystyle 2,600$ |
| C | $\displaystyle 5,700$ | $\displaystyle 1,200$ + $\displaystyle 3,500$ | $\displaystyle 1,000$ |
| Gross Domestic Product at Market Price (GDP$\displaystyle _{MP}$) | $\displaystyle 13,500$ | $\displaystyle 7,800$ | $\displaystyle 5,700$ |
Gross Domestic Product at Factor Cost (GDP$\displaystyle _{FC}$) = GDP$\displaystyle _{MP}$ – Net Indirect Taxes
= $\displaystyle 5,700$ – $\displaystyle 240$
= ₹ $\displaystyle 5,460$
(i)
Net Domestic Product at Factor Cost (NDP$\displaystyle _{FC}$) = (i)+(iv)+(ii)+(iii)+(vii)+(vi)-(v)-(x)-(viii)
= $\displaystyle 1,800$+$\displaystyle 2,170$+$\displaystyle 1,150$+$\displaystyle 1,020$+$\displaystyle 1,300$+$\displaystyle 540$–$\displaystyle 720$–$\displaystyle 440$–$\displaystyle 240$
= ₹ $\displaystyle 6580$ crore
(ii)
The given statement is refuted. Consumption goods can be categorised as durable and non-durable. Non-durable consumption goods, such as food, have a shorter lifespan. Whereas durable consumption goods, like cars and home appliances, can be used over an extended period usually more than one year. Hence, not all consumption goods are durable in nature.
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CBSE Class 12 Economics past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.