Students must start practicing the questions from CBSE Sample Papers for Class 12 Economics with Solutions Set 7 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Economics Set 7 with Solutions
Time Allowed: 3 Hours
Maximum Marks: 80
General Instructions:
- This question paper contains two sections
Section A – Macroeconomics
Section B – Indian Economic Development - This paper contains 20 Multiple Choice Questions of 1 Mark each.
- This paper contains 4 Short Answer Questions of 3 Marks each to be answered in 60 to 80 words.
- This paper contains 6 Short Answer Questions of 4 Marks each to be answered in 80 to 100 words.
- This paper contains 4 Long Answer Questions of 6 Marks each to be answered in 100 to 150 words.
Section A
(Macroeconomics)
Question 1.
“During January to November 2007, India experienced a rise in overseas investment amounting to a net 18.8 billion of stocks and bonds.”
This will be recorded in which account of balance of payments?
(a) Current account
(b) Capital account
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(b) The given case shows the example of investment received from abroad. This item has an impact on the assets of the country thus recorded in the capital account of BoP.
Question 2.
The government of India has decided to vaccinate the adult population of India (with Covaxin/Covishield), without any charge. This would be categorised as………… . (1)
(a) revenue nature income
(b) capital nature expenditure
(c) revenue nature expenditure
(d) capital nature income
Answer:
(c) The given case is an example of revenue expenditure as it doesn’t lead to increase in assets or decrease in liabilities of the country.
Question 3.
Demand deposits include …… and …… . (1)
(i) saving account deposits
(ii) fixed deposits
(iii) current account deposits
(iv) post office savings
Codes
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i) and (iv)
Answer:
(c) Demand deposits are those deposits with the commercial banks which can be withdrawn at any point of time. These deposits are comprised of saving deposits and current account deposits.
Question 4.
Inventory is a ……… concept whereas the change in inventory is a …….. concept. (1)
(a) stock, flow
(b) flow, stock
(c) stock, stock
(d) flow, flow
Answer:
(a) stock, flow
Question 5.
Which of the following situations of government budget is represented in the image below?
(a) Budget deficit
(b) Budget surplus
(c) Balanced budget
(d) None of these
Answer:
(a) Budget deficit
Question 6.
Find the missing figures and choose the correct alternatives. (1)
Alternatives
(a) -40, 600, 400, 560
(b) 40, 400, 600, 720
(c) -40, 400, 600, 720
(d) -40, 400, 800, 560
Answer:
(c) (i) Aggregate Supply = Consumption + Saving
200 = 240 + Saving
Saving = (-) 40
(ii) AS = C + S ; 400 = C + 0 ; C = 400
(iii) AS = C + S ; AS = 560 + 40 ; AS = 600
(iv) AS = C + S ; 800 = C + 80 ; C = 720
Question 7.
Statement I Inflationary gap shows the – measurement of deficient demand.
Statement II During recession, expansionary fiscal policy is followed by the government.
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both the statements are true
(d) Both the statements are false
Answer:
(c) Both the statements are true
Question 8.
Identify which of the following is not an example of tax revenue for the government? (1)
(a) Wealth tax
(b) Special assessments
(c) Income tax
(d) Corporate tax
Answer:
(b) Special assessments are charged for purposes to meet an objective of the government and not considered as a compulsory payment as tax.
Question 9.
In case of currency appreciation, the domestic currency becomes ……… . (1)
(a) less valuable
(b) rise
(c) more valuable
(d) fall
Answer:
(c) more valuable
Question 10.
is not related with banking system. (1)
(a) Bank rate
(b) Fiscal deficit
(c) Credit creation
(d) Cash reserve ratio
Answer:
(b) Fiscal deficit
Question 11.
Given the following data, find net value added at factor cost by Sambhav (a farmer) producing wheat (3)
S.NO | Items | (₹ in crores) |
i. | Sale of wheat by the farmer in the local market | 6,800 |
ii. | Purchase of tractor | 5,000 |
iii. | Procurement of wheat by the government from the farmer | 200 |
iv. | Consumption of wheat by the farming family during the year | 50 |
v. | Expenditure on the maintenance of existing capital stock | 100 |
vi | Subsidy | 20 |
Or
How do you distinguish between old age pensions and retirement pensions in the context of estimation of national income?
Answer:
Net Value Added at Factor Cost (NVAFC) = Sale of wheat by the farmer in the local market + Procurement of wheat by the government from the farmer + Consumption of wheat by the farming family during the year + Subsidy – Expenditure on the maintenance of existing capital stock
= 6,800 + 200 + 50 + 20-100 = ₹ 6,970 crore
Or
Old age pensions are unilateral payments or transfer payments. These are not included in the estimation of national income.
On the other hand, retirement pensions are like a deferred wage. These are related to factor services rendered by the recipients prior to their retirement. Accordingly, these are included in the estimation of national income.
Question 12.
“Foreign investments in India have a significant impact on the exchange rate”. Explain the effects of foreign investment on the exchange rate. (3)
Answer:
The market exchange rate will tend to fall due to foreign investments in India. The foreign investors who want to invest in India will increase the supply of foreign exchange.
As the supply of foreign exchange rises, with demand remaining unchanged, the market exchange rate will fall, as is explained in the diagram given below
As the supply of foreign exchange increases, the exchange rate falls from O R to O R1.
Question 13.
“There are various components of money supply as used by the RBI”. Do you agree with the given statement? Explain.
Answer:
Yes, I agree with the given statement. The total stock of money in circulation among the public at a particular point of time is called money supply. Money supply is a stock variable, RBI publishes figures for four alternative measures of money supply, viz M1, M2, M3 and M4.
They are defined as follows M1 = C U + D D
Where, CU is Currency (notes plus coins) held by the public and DD is net Demand Deposits held by commercial banks.
The word ‘net’ implies that only deposits of the public held by the banks are to be included in money supply.
The interbank deposits, which a commercial bank holds in other commercial banks, are not to be regarded as part of money supply. M1 money is also referred to as transaction money.
M2 = M1 + Savings deposits with post office savings banks
M3 = M1 + Net time deposits of commercial banks M4 = M3 + Total deposits with post office savings organisations (excluding National Savings Certificates)
Question 14.
Given that national income is ₹ 80 crore and consumption expenditure is ₹ 64 crore, find out Average Propensity to Save (APS). When income rises to ₹ 100 crore and consumption expenditure to ₹ 78 crore, what will be the Average Propensity to Consume (APC) and Marginal Propensity to Consume (MPC)?
Answer:
Here in first condition,
Y = ₹ 80 crore and C = ₹ 64 crore
Hence, S = Y-C = 80-64 = ₹ 16 crore
Now, Average Propensity to Save (APS)
APS = \(\frac{S}{y}\) = \(\frac{16}{80}\) = 0.20
Again, when income and consumption expenditure rise, Y = ₹ 100 crore and C = ₹ 78 crore
So, Average Propensity to Consume (APC)
APC = \(\frac{C}{Y}\) = \(\frac{78}{100}\) = 0.78
Here,
Δ Y = 100-80 = ₹ 20 crore ;
Δ C = 78-64 = ₹ 14 crore
So, Marginal Propensity to Consume (MPC)
MPC = \(\frac{\Delta C}{\Delta Y}=\frac{14}{20}\) = 0.70
where, Δ C = Change in Consumption
Δ Y = Change in Income
Δ = Change in Investment; K = Multiplier
MPC = Marginal Propensity to Consume,
APC = Average Propensity to Consume
APS = Average Propensity to Save
Question 15.
Government has started spending more on providing free services like education and health to the Or “An increase in tax rates on higher income group reflects an economic value of equality of social welfare”. Do you agree with the given statement? Explain.
Answer:
With rising government expenditure on educational and health related services, level of health and education of poor people is expected to rise. This leads to a rise in human capital formation. Efficiency of workers is expected to rise with the improvement in their health and with improvement in their education, skill formation will take place. Consequently, the level of technology tends to scale up due to which more research and innovations are facilitated.
Higher level of output is achieved with the same level of inputs. So, national income also tends to rise.
Or Yes, I agree with the given statement. The economic value that is reflected in the rise in tax rate for higher income group is the ‘equality and social welfare’.
The main objective of the budgetary policy of the government is to reduce inequalities of income and wealth in the country. For this, it performs the function of equal distribution of income and wealth.
Even distribution of wealth and social welfare remains the main objective of budgetary policy.
The government uses progressive taxation policy to reduce the inequalities of income and wealth in the country. Government imposes high tax rates on higher income group and low tax rates on lower income group. People with income below a certain level are not levied any direct tax altogether.
On the other hand, the government spends these tax receipts on granting subsidies and providing other public services such as health and education to people with lower income groups. Thus, the wealth gets redistributed and reduction in inequalities is achieved.
Question 16.
(i) From the following data, calculate
(a) Gross Domestic Product at Market Price (3)
(b) Factor Income to Abroad (2)
S.NO | Items | (₹ in crores) |
i. | Compensation of employees | 1,000 |
ii. | Net exports | (-) 50 |
iii. | Profits | 400 |
iv. | Interest | 250 |
v. | Rent | 150 |
vi | Gross national product at factor cost | 1,850 |
vi. | Gross domestic capital formation | 220 |
Viii. | Net indirect tax | 100 |
ix. | Net domestic capital formation | 170 |
x. | Net indirect taxes | 100 |
xi. | Factor income from abroad | 30 |
(ii) Define domestic income. (1)
Or
(i) Distinguish between nominal GDP and real GDP.
(ii) “Interest is paid to by the borrowers on the loans taken for a variety of purpose, however, every interest that is paid is not included in the domestic income.”
Briefly explain, why?
Answer:
i) (a) NDPFC = Compensation of Employees + Rent + Interest + Profits = 1,000 + 150 + 250 + 400 = ₹ 1,800 crore GDPMP = NDPFC + Net Indirect Taxes + Depreciation
= 1800 + 100 + (220-170)
= ₹ 1,950 crore
(b) GNPFC = GDPWF – Net Indirect Taxes + (Factor Income form abroad – Factor Income to abroad) 1,850 = 1,950-100 + 30- Factor Income to Abroad
Factor Income to Abroad = 1,880-1,850 = ₹ 30 crore
(ii) Domestic income is the sum total of factor incomes earned within the domestic territory of a country in the course of an accounting year. It can be earned by normal residents or non-residents of a country.
Or
(i) Nominal GDP is measured at current prices. Since this aggregate measures the value of goods and services at current year prices, GNP will change when volume of product changes or price changes or when both changes.
Real GDP is computed at the constant prices. Under Real GDP, value is expressed in terms of prices prevailing in the base year, This measure takes only quantity changes. Real GDP is the indicator of real income level int he economy.
(ii) Interest is paid for the capital as its remuneration, however interest paid on loans taken for consumption purposes are not included in the domestic income as these loans does not lead to any production activities or adds value to the GDP. e.g. loan taken by a household for marriage, etc. One the other hand interest on loans taken for production purposes are included in the domestic income as these loans add value to the GDP.
Question 17.
(i) In a simple Keynesian two-sector model, government sector is expected not to involve in the production activity. Government is expected to stay out of market and maintain law and order.
However, in a general economy, government has to play its part directly or indirectly. Directly, government is involved in production activities where market mechanism fails to attain desirable target. Indirectly, government is involved in terms of collecting tax and non-tax revenues.
Explain the impact on aggregate demand, if government involves in the economy both directly and indirectly.
(ii) “Monetary measures offer a valid (3)
solution to the problem of inflationary gap in an economy”. State and discuss any two monetary measures to justify the given statement. (3)
Answer:
(i) Aggregate demand is the sum total of consumption expenditure, investment expenditure and government expenditure (when included). With the involvement of government directly aggregate demand will increase, whereas if government is included indirectly through taxes, it impacts consumption expenditure. Increase in taxes decreases disposable income and hence consumption and vice-versa in case of decrease in taxes.
(ii) Inflationary gap refers to the situation when Aggregate Demand (AD) is more than Aggregate Supply (AS) at the full employment level.
Two measures which may be used to solve the problem of inflation are
(a) An increase in Cash Reserve Ratio (CRR) may reduce the credit creation capacity of the commercial banks in the economy.
This may lead to a fall in the borrowings from banks causing a fall in consumption and aggregate demand in the economy and helps to correct the inflationary gap in the economy.
(b) Sale of government securities in the open market by the central bank will adversely affect the ability of the commercial banks to create credit in the economy. As a result, aggregate demand in the economy may fall due to fall in consumption and correct the inflationary gap in the economy.
Section B
(Indian Economic Development)
Question 18.
“Modernisation as a planning objective refers to the use of new and modern technology in production process.”
In the context of the given statement, which of the following is/are the components of modernisation a planning objective?
(a) Modernisation in the technology
(b) Modernisation in the outlook
(c) Both (a) and (b)
(d) Neither (a) and (b)
Answer:
(c) Both (a) and (b)
Question 19.
Some economists argue that debt waiver schemes are extremely beneficial to the poor and marginalised farmers, as these schemes.reduce the burden of ……… . (1)
(a) indebtedness
(b) personal expenditure
(c) debt of technical education and training
(d) All of the above
Answer:
(a) indebtedness
Question 20.
Which of the given statements are correct with regard to commercialisation of agriculture?
(i) In a simple Keynesian two-sector model, government sector is expected not to involve in the production activity. Government is expected to stay out of market and maintain law and order.
However, in a general economy, government has to play its part directly or indirectly. Directly, government is involved in production activities where market mechanism fails to attain desirable target. Indirectly, government is involved in terms of collecting tax and non-tax revenues.
Explain the impact on aggregate demand, if government involves in the economy both directly and indirectly. (3)
(ii) “Monetary measures offer a valid solution to the problem of inflationary gap in an economy”. State and discuss any two monetary measures to justify the given statement. (3)
(i) Production for self-consumption
(ii) Production of cash crops instead of food crops
(iii) Production of crops for sale in the market
(iv) Commercialisation improved the economic status of the farmers
Codes
(a) (i) and (iv)
(b) (ii) and (iii)
(c) (ii) . nd (iv)
(d) (iii) and (iv)
Answer:
(b) (ii) and (iii)
Question 21.
“China has the lowest population density among the three nations”. What are the possible reasons for this?
(i) Law growth rate of population
(ii) One child policy
(iii) Large geographical area
Codes
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i), (ii) and (iii)
Answer:
(d) (i), (ii) and (iii)
Question 22.
Choose the correct combination between the following columns
Column I | Column II |
A. NCERT | (i) Takes measures for promotion and coordination of university education |
B. IGNOU | (ii) Implements policy in the case of school education. |
C. UGC | (iii) Responsible for the introduction and promotion of open university. |
Codes
(a) A- (i)
(b) B-(ii)
(c) C-(iii)
(d) None of these
Answer:
(a) (A)-(i)
Question 23.
Observe the picture given below and choose the correct statement from the options given below.
(a) Investment in human capital reinforces GDP
(b) Health is the only component of human development
(c) Both (a) and (b)
(d) Both the statements are false
Answer:
(a) Investment in human capital reinforces GDP
Question 24.
Statement I Human capital considers education and health as a means to increase labour productivity, whereas human development considers that they are necessary for human well-being.
Statement II Human capital brings about quantitative improvement in the labour force. (1)
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both the statements are true
(d) Both the statements ar talse
Answer:
(i) Human capital brings about qualitative improvement in the labour force as it improves the skilis, knowledge and expertise of an individual.
Question 25.
correctly relates to the Chinese economy.
(a) Very high fertility rate
(b) Growth due to service sector
(c) Growth due to manufacturing sector
(d) High density of population
Answer:
(c) Growth due to manufacturing sector
Question 26.
……… refers to the maximum size of landholding that an agricultural household can own. (1)
(a) Land reforms
(b) Land ceiling
(c) Landholding
(d) None of these
Answer:
(b) Land ceiling
Question 27.
Assertion (A) There is a need for diversification which involves not only a change in cropping pattern but also a shift of workforce from agriculture to other allied activities.
Reason (R) There is uncertainty of income in agriculture caused by factors like crop failure, irregular rainfall, reduction in ground water table etc. (1)
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Question 28.
“A skilled worker like software professional, generates more income than an unskilled worker”. Why?
Answer:
A skilled worker generates more income than an unskilled worker mainly because the productivity of an educated and skilled person is higher than an unskilled one. A skilled worker also commands higher earnings and gainful employment. This is because they cannot be substituted easily because, it takes years to generate a manpower which is skilled in a particular field. On the other hand, an unskilled worker like a rickshaw puller can be easily substituted and such workers easily compromise on lesser earnings.
Question 29.
Defend or refute the given statement with valid explanation.
‘The problem of land degradation has been increasing in India’. (3)
Or
“Non-farm employment plays a crucial role in transforming rural economies by offering alternative income sources beyond traditional agricultural activities”.
Explain how does non-farm employment contribute to promoting rural diversification.
Answer:
I defend the given statement. Land in India suffers from varying degrees and types of degradation mainly due to excessive use and inappropriate management practices. (1)
The factors responsible for land degradation in India are
(i) Loss of vegetation occurring due to deforestation.
(ii) Unsustainable fuel, wood and fodder extraction.
(iii) Shifting cultivation.
(iv) Reduction of forest lands.
(v) Forest fires and overgrazing.
(vi) Non-adoption of adequate soil conservation measures.
Or
Non-farm sector is an alternative employment opportunity for people in the rural sector. It has different segments, for example, the traditional household-based industries like pottery barn, handlooms, etc. and dynamic sub-sectors like food processing units, agro-processing units, tourism, etc.
Some of these segments have potential for growth while others may have low productivity. Lack of infrastructure may also be a hindrance for rapid. development of the non-farming sector.
On the positive side, the potential for this sector has opened employment opportunities for women as well. The produce from this segment contributes to the growth of GDP.
Question 30.
The figure given below highlights the grim situation of deforestation in context of the Indian economy.
As per one news article “Deforestation has led India lost forest land as big as the size of Kolkata in past 3 years”.
In light of the given statement, explain any two consequences of deforestation.
Source laughingcolours.com/ deforestation-india-increases-98259/
Answer:
Deforestation at a large scale has the following consequences
(i) It leads to soil erosion. According to an estimate, quantity of nutrients lost due to soil erosion each year ranges from 5.8 to 8.4 million tonnes.
(ii) The forests sustain all types of life forms. Destruction of these forests means losing the various life forms sustained by these forests. According to an estimate, at least 1,000 species are lost in a year.
Question 31.
“Industries play a crucial role in strengthening the economy of a country”. Explain how?
Answer:
Industries help to strengthen the economy of a country in the following ways
(i) Industries help in the establishment of the infrastructure of the country such as dams, railways, etc. Infrastructural development helps in the growth of other sectors also.
(ii) Industries help in increasing agricultural productivity by supplying the agricultural sector with mechanised means of production such as tractors, threshers, etc and also with fertilisers, insecticides, etc.
(iii) Expansion of capital goods industries led to industrial growth and as a result, the econorry is able to undertake large scale production of goods at low cost.
(iv) Industrialisation helps a country to become self-reliant in the production of defence goods.
Question 32.
State whether the following statements are true/false, with valid arguments
(i) It was necessary for a developing country like India to follow self-reliance as an objective of economic planning.
(ii) The government has been successful in introducing ‘navratna policy’ to improve the performance of public sector undertakings (PSUs) in India.
Or
“New economic policy stimulated economic growth”. Give three arguments in favour and against of this statement.
Answer:
(i) The given statement is true. Self-reliance as an objective of economic planning was necessary for a developing country like India because of the below mentioned reasons
(a) It helped in order to reduce dependence on foreign countries, especially for food.
(b) Self-reliance increases employment generation in an economy.
(c) It is understandable that people who are recently freed from foreign domination should give importance to self-reliance.
(d) It increases the level of national income in the country.
(ii) The given statement is true. The policy has been successful. The government identified PSUs and declared them as maharatnas, navratnas and mininavratnas in order to improve their efficiency and performance and enable them to compete globally.
They are given greater managerial and operational autonomy in taking various decisions. Greater operational, financial and managerial autonomy has also been granted to profit making enterprises referred to as miniratnas.
Or
Arguments in favour of this statement are
(i) India has become a vibrant economy with the introduction of NEP.
(ii) NEP led to considerable increase in foreign exchange reserve.
(iii) NEP helped to control fiscal deficit.
Arguments against this statement are
(i) It led to urban concentration of growth process.
(ii) This policy encouraged economic colonialism.
(iii) This policy resulted in the spread of consumerism.
Question 33.
(i) “Population growth is the cause of depletion of natural resources”. Justify the statement, give reason to support your answer.
(ii) “Rural development has tremendous importance for our country”, Discuss.
Or
(i) Given lines have been taken from an IMF article on “Five things to know about the informal economy” published on 28 July, 2021.
“The informal economy is a global and pervasive phenomenon. Some 60 % of the world’s population participates in the informal sector.
Although mostly prevalent in emerging and developing economies, it is also an important part of advanced economies”. Having understood the extent of informal economy, can you suggest some reasons for increased formalisation and working in the formal sector.
(ii) You are residing in a village. If you are asked to advice the village panchayat, what kinds of activities would you suggest for the improvement of your village which would also generate employment?
Answer:
(i) Population growth is the cause of depletion of natural resources. More the number of people, more the demand for goods and services needed to satisfy wants. As the population increases, more natural resources are required to produce goods and services and also the demand for land for housing and agriculture increases.
Increasing population has led to more extraction of natural resources from the environment thus resulting in depleting these resources.
(ii) Rural development is of tremendous importance, for our country because of the reasons enumerated below
(a) Even today, nearly 70% of the population of India resides in rural areas. So, if there is growh and prosperity in these areas, it will result in the growth and prosperity of the nation as a whole.
(b) Rural development will help to create employment opportunities in the rural areas. This will not only raise the standard of living of the rural population, but also check the problem of migration.
(c) Rural development creates opportunities in rural areas for education and skill development.
This helps to increase efficiency, productivity, mobility, income and standard of living of people.
Or (i) The following are the benefits of working in formal sector
(a) The government exercises some control over this sector. Labour laws are passed which help the employees in this sector to safeguard their rights.
(b) Workers in formal sector enjoy social security benefits.
(c) Workers in formal sector earn more.
(ii) I would suggest the following activities to generate employment in village
(a) There should be multiple cropping in the village.
(b) Other activities related to agricuiture such as plantation, horticulture, dairying, animal husbandry should be encouraged.
(c) Cottage industries should be encouraged.
(d) More and more facilities of education, health services, roads, etc. should be created in the village.
(e) Information technology sector should be encouraged.
Question 34.
Read the following text carefully and answer the given questions on the basis of the same and common understanding. Though India, Pakistan and China have totally different political systems but all of them have followed plans for their economic and social development. India and Pakistan have followed the path of mixed economy. China, on the other hand, had command economy.
All the three countries launched their economic development programme almost simultaneously in the early part of the decade of 1950s. While India and Pakistan depended heavily on the public sector for giving a big push to the economy, China was absolutely the state controlled economy.
Till the early 1980 s, the major development indicators of all the three nations such as growth rate, sectorial distribution of output/income and employment, and human development were more or less similar. The level of development was also low in all these 3 countries.
But with the introduction of economic reforms, changes in their level of development became visible. As a result of various policy measures in three countries, China has surpassed both India and Pakistan in terms of social and economic development.
(i) Briefly explain any two similar developmental strategies of India and Pakistan. (2)
(ii) “Out of the three countries namely India, China and Pakistan, China has out performed rest of neighbours in almost all areas, through its variety of reforms. Though the structural reforms of China are not free from criticism.” In the light of the statement, enumerate the failures of the structural reforms in China. (4)
Answer:
(i) India and Pakistan have followed following similar strategies in their respective development plans
(a) India and Pakistan both started their development process on the basis of economic planning after getting independence in 1947.
(b) Both of them have adopted the mixed economic system involving the C D-existence of both the public and the private sector.
(ii) Following are the failures of structural reforms in China
(a) There was slow pace of growth and lack of modernisation in the Chinese economy under the Maoist rule.
(b) Maoist vision of economic development based on decentralisation, self-sufficiency and shunning of foreign technology had failed.
(c) Despite extensive land reforms, collectivisation, the great leap forward and other initiatives, the per capita gain in output in 1978 was the same as it was in the mid 1950 s.
(d) Despite efforts to introduce market-oriented reforms, the state continues to have significant control and influence over the economy. limiting the efficiency and competitiveness of the private sector.