Frank solutions for इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी chapter 22 - Model Short Answer Questions [Latest edition]

What is microeconomics?

Give an example of microeconomics.

Define macroeconomics.

Give an example of macroeconomics.

What do you mean by demand?

How does demand differ from want?

Distinguish between desired (ex-ante) demand and effective (ex-post) demand.

Give the meaning of joint demand.

What is composite demand?

What is meant by derived demand?

What is price demand?

What do you understand by income demand?

Define Substitute goods.

Define complementary goods. 

Give the meaning of Cross demand.

What do you mean by a normal good?

Define an inferior good.

What do you understand by Giffen goods?

What is a demand function?

Explain any four factors affecting the demand for a commodity.

How does an increase in income affect the demand for an inferior good?

State the law of demand.

Give two exceptions to the law of demand.

Define income effect.

What is the substitution effect?

What do you mean by movement along the demand curve (change in quantity demanded)?

How does an increase (decrease) in the price of a commodity affect its quantity demanded? Explain it with the help of a diagram.

What do you understand by Shift of demand curve?

What do you understand by Shift of demand curve?

Differentiate between a change in quantity demanded and a change in demand.

Distinguish between “movement along the demand curve” and shift of a demand curve.

Give any three factors that can cause a rightward shift of the demand curve.

Give two reasons for the shift of the demand curve towards the left.

What is the difference between cardinal and ordinal measurement of utility?

Define Utility.

Define marginal utility. 

When does marginal utility become zero?

When does marginal utility become negative?

Define the following concept:

Total utility

Explain the relationship between Total utility and Marginal utility.

Explain the law of diminishing marginal utility.

State and explain the assumptions of the law of diminishing marginal utility.

Explain the Law of Equi-Marginal Utility.

State the equilibrium condition in terms of cardinal utility analysis in the case of one commodity.

State the equilibrium condition in terms of cardinal utility analysis in case of two commodities.

What do you understand by indifference curve?

What do you understand by indifference map?

What do you understand by scale of preference?

Explain the marginal rate of substitution between two goods.

What is a budget line?

Discuss any two properties of the indifference curve. 

State two assumptions of indifference curve analysis.

State the condition of consumer's equilibrium in terms of the indifference curve approach.

State two differences between utility analysis and indifference curve analysis.

What is meant by price elasticity of demand?

What does income elasticity of demand show?

What is meant by cross elasticity of demand?

What does zero cross elasticity of demand between two goods imply? Give an example to explain.

Mention two factors affecting price elasticity of demand.

Draw three demand curves showing the same value of price elasticity of demand at all the points.

Draw three demand curves showing the same value of price elasticity of demand at all the points.

Draw a downward sloping straight line demand curve touching both the axes. Mark the price elasticity at different points on this demand curve.

What would be the price elasticity of demand when total expenditure on a commodity changes in the opposite direction to change in its price?

What would be the price elasticity of demand when total expenditure on a commodity changes in the same direction as the change in its price?

What will be the elasticity of demand in the following situation?

When total expenditure remains the same in spite of a change in price.

With the rise in price by ₹ 5, the quantity demanded changes from 100 units to 95 units. The price elasticity of demand is (–) 1.2. Find out the price before change.

If demand falls by 5 percent due to an increase in income by 20 percent, calculate the income elasticity of demand. What type of commodity is this?

Distinguish between supply and stock.

Give two differences between intended supply and actual supply.

Explain four factors on which the supply of a commodity depends.

State the law of supply.

What are the reasons for upward sloping supply curve?

Explain the law of supply.

Draw the supply curve of a perishable commodity. Explain this shape of the supply curve.

What is meant by market period?

What is the shape of supply curve in the market period?

Why is the supply curve of labour backward sloping? Explain with the help of a diagram.

Distinguish between expansion of supply and increase in supply.

Distinguish between contraction and decrease in supply.

State what causes movement along the supply curve and show it diagrammatically.

State what causes a shift in the supply curve and show it diagrammatically.

What is meant by price elasticity of supply?

Draw diagrams to illustrate the price elasticity of supply as equal to zero.

Draw diagrams to illustrate the price elasticity of supply as equal to infinity.

Draw the supply curve showing price elasticity of supply equal to one.

Draw the supply curve showing price elasticity of supply less than one.

Draw a straight line supply curve of the following situation.

More than unitary elastic

At a price of ₹8 per unit, the quantity supplied of a commodity is 200 units. It’s price elasticity is equal to 1.5. If its price rises to ₹10 per unit, calculate its quantity supplied at the new price.

What is the equilibrium price?

Using a diagram, show the situation when the equilibrium quantity changes but the equilibrium price remains same as a result of change in demand.

With the help of diagrams, show the effect of a change in demand (or shift in demand curves) on equilibrium price and quantity of a commodity when Supply curve is perfectly elastic.

Using a diagram, show the situation when the equilibrium price changes, but the equilibrium quantity remains same as a result of change in demand.

Using a diagram, show the situation when the equilibrium price changes, but the equilibrium quantity remains same as a result of change in demand.

When does the equilibrium quantity remain unaffected by a change in supply? Show it with the help of a diagram.

When does the equilibrium quantity remain unaffected by a change in supply? Show it with the help of a diagram.

When does the equilibrium price remain unaffected by a change in supply? Show it with the help of a diagram.

Show with the help of a diagram the effect of a change in supply on equilibrium price when the demand curve is perfectly elastic.

Explain price ceiling with the help of a diagram.

Explain the meaning of floor price with the help of a diagram.

Define production function.

Distinguish Between short-run and long-run.

Define average product.

How can you get the average product from the total product?

Define marginal product.

How can you get marginal product from total product?

What will be the marginal product

1. when the total product of a variable factor reaches its maximum.
2. when is total product falling? Draw a diagram to illustrate your answer.

Give the meaning of returns to a factor.

What is meant by increasing returns to a variable factor?

What do you understand by diminishing returns to a variable factor?

State the law of variable proportions.

Give two assumptions of the law of variable proportions.

What is meant by returns to scale?

What do you understand by increasing (decreasing) returns to scale?

Explain the meaning of the indivisibility of a factor with an example.

Distinguish between internal economies and external economies.

Distinguish between internal and external diseconomies of scale.

Distinguish between fixed factors and variable factors of production.

Differentiate fixed cost from variable cost.

Explicit Cost − Define.

Distinguish between implicit costs and explicit costs.

The following expenses are implicit costs and explicit costs: Give a reason for your answer.

Interest for funds provided by the owner of a firm

The following expenses are implicit costs and explicit costs: Give a reason for your answer.

Expenses incurred on machinery and equipment

The following expenses are implicit costs and explicit costs Give a reason for your answer.

Payment made for an advertisement on TV.

The following expenses are implicit costs and explicit costs Give a reason for your answer.

Managerial services are provided by the owner of a firm.

State the differences between money cost and real cost.

Define opportunity cost of production.

Distinguish between private costs and social costs.

Define total fixed cost (TFC).

Explain the shape of the total fixed cost (TFC) curve.

Explain the shape of the total variable cost with the help of a diagram.

Explain the shapes of AFC and AVC curves with the help of a diagram.

Explain the shape of the average cost curve (or average variable cost curve).

Why is the short-run marginal cost curve ‘U’-shaped?

What are the average fixed cost, average variable cost and average cost of a firm? How are they related?

Define marginal cost.

Illustrate marginal cost through a numerical example.

Why is marginal cost not associated with total fixed cost?

Can there be some fixed cost in the long run? If not, why?

Define marginal revenue.

With the help of an example, show how we can get marginal revenue from total revenue.

Why average revenue curve of a firm is considered as its demand curve?

Which concept of revenue is called ‘price’?

When can AR = MR = Price? Give reasons for your answer.

Why is the MR curve below the AR curve under imperfect competition?

Define the term market.

Define market structure.

Distinguish between the following:

Perfect competition and Monopoly

Mention the similarities between perfect competition and monopolistic competition.

Distinguish between the following:

Perfect competition and Monopolistic competition

In what respects does oligopoly differ from monopoly? 

Differentiate between monopoly and monopsony.

How would you distinguish a price-taker firm form a price-maker firm?

Identify the market that has a characteristic of perfect substitutes. Give one reason for your answer.

Define the market which has product differentiation as a distinguishing characteristic.

Explain the implication of ‘freedom of entry and exit to the firms’ under perfect competition.

Explain the following concept.

Product Differentiation

Identify the market form for the item given below:

Product differentiation

What are selling costs?

What is meant by price discrimination in a monopoly market?

Define normal profits.

What is meant by abnormal (super-normal) profit?

What do you mean by producer’s (firm’s) equilibrium?

What are the conditions for the producer’s equilibrium?

The break-even Point and the shutdown point are different. How?

What is meant by aggregate demand?

State components of aggregate demand.

Distinguish between desired (ex-ante) demand and effective (ex-post) demand.

What is aggregate supply?

What is a ‘consumption function’?

Define average propensity to consume (APC).

Define marginal propensity to consume (MPC).

Given that national income is ₹800 crore and consumption expenditure is ₹640 crore, what is the average propensity to consume? When income increases to ₹1000 crore and consumption increases to ₹790 crore, what will be the marginal propensity to consume?

Give the equation for a linear consumption function.

Give the main properties of Keynesian consumption function.

Briefly explain the shape of the Keynesian consumption function.

What do you mean by a propensity to save?

Differentiate between marginal propensity to save and average propensity to save.

Calculate the marginal propensity to save (MPS) when total savings increase from ₹140 crore to ₹160 crore as a result of an increase in income from ₹600 crore to ₹700 crore.

Distinguish between average propensity to consume and average propensity to save. How are the two interrelated?

Explain that the sum total of marginal propensity to consume (c) and marginal propensity to save (s) is equal to 1.

Find out:

If MPC is 0.75, what will be the MPS?

Find out:

If APS is 0.3, what will be the APC?

Define investment.

Differentiate between private investment and public investment.

Distinguish between autonomous investment and induced investment.

State briefly the two approaches to the determination of income and output.

Define investment multiplier.

State the formula for the investment multiplier.

How is the investment multiplier related to marginal propensity to consume?

How is the multiplier related to the marginal propensity to save?

Find out the value of multiplier when MPC (c) = 0.8

Find out the value of multiplier when MPS (s) = 0.25.

In an economy, MPC = 0.8. If investment increases by ₹ 500 crore, calculate the increase in income.

Define full employment.

Distinguish between voluntary and involuntary unemployment.

What is excess demand? Illustrate it graphically.

What is meant by inflationary gap?

Define ‘deficient demand’.

Illustrate graphically the notion of ‘deficient demand.’

How can excess demand and deficient demand be tackled?

What is meant by barter exchange?

What is a barter economy?

What do you mean by double coincidence of wants?

Point out two shortcomings of the barter system of exchange.

What is money?

Explain various stages in the evolution of money.

What is paper money?

What is deposit money or bank money?

Distinguish between currency and deposit money.

Distinguish between legal tender and optional money.

What is meant by legal tender money?

Distinguish between limited legal tender and unlimited legal tender.

State the two primary functions of money.

Explain the secondary functions of money.

Define money supply.

State the main components of money supply in terms of the narrow definition of money supply (M₁).

State the various components of money supply used by the Reserve Bank of India.

What is high-powered money?

What is a commercial bank?

What are the two main functions of a commercial bank?

Distinguish between:

Demand deposit and Time deposit

Distinguish between:

Current Account and Fixed Deposit Account

What is an overdraft facility?

What are the different forms in which banks extend loans?

Point out any three limitations to the credit creation by commercial banks.

What is a credit multiplier?

What is a central bank?

Name the central bank of our country.

Mention two differences between the Central Bank and a Commercial Bank. 

Explain the functions of the Central Bank. 

How is a central bank (RBI) banker to the banks?

Central bank is the lender of the last resort. Explain.

What is meant by the following function of the central bank?

Clearing house

Define bank rate.

What is meant by open market operations?

Distinguish between:

Cash Reserve Ratio and Statutory Liquidity Ratio

Distinguish between repo rate and reverse repo rate.

Differentiate between quantitative and qualitative methods of credit control.

What are the major qualitative instruments of credit control?

What is moral suasion?

What do you mean by credit rationing?

What is monetary policy?

Define balance of payments.

State the broad classification of components of balance of payments.

State the items included in the balance of payments of a country.

Define balance of trade.

What is meant by balance of current account?

What is balance of capital account?

Distinguish between Balance of Trade and Balance of Payments.

Distinguish between an autonomous transaction and accommodating transactions of the balance of payments account.

Mention two invisible items in the balance of the payments of a country.

What do you mean by adverse balance of payments?

Briefly explain two reasons for the adverse balance of payments in any economy.

State two measures to correct disequilibrium in the balance of payments.

What is meant by foreign exchange?

What is the rate of foreign exchange?

What is a flexible (floating) exchange rate system?

What is fixed exchange rate system?

Give one difference between flexible exchange rate and fixed exchange rate.

Differentiate between devaluation and depreciation.

Differentiate between revaluation of currency and appreciation of the currency.

What do you understand by fiscal policy?

State and explain instruments of fiscal policy.

State two objectives of fiscal policy.

Explain the use of fiscal policy in controlling inflationary situation.

State any two ways in which the fiscal policy can be used to achieve the objective of equity:

What is counter-cyclical fiscal policy?

Define a tax.

Define direct tax

Give any two examples of direct tax.

Define Indirect tax

Give an example of Indirect tax.

State the four merits of a direct tax.

What are the merits of an indirect tax?

What are progressive taxes.

Illustrate progressive tax graphically.

What are proportional taxes?

Illustrate proportional tax graphically.

What is meant by regressive taxation?

What is a degressive tax? 

Answer in One Sentence:

What is GST?

What is public expenditure?

Distinguish between the following concepts:

Developmental expenditure and non-developmental expenditure.

Distinguish between productive and unproductive public expenditure, citing an example of each.

How does an increase in public expenditure lead to an increase in the level of production in the economy?

How does an increase in public expenditure increase the level of employment in a country?

Explain two ways by which public expenditure promotes economic development.

Mention how does public expenditure reduces inequalities of income.

What do you mean by public debt?

Distinguish between internal debt and external debt.

Differentiate between productive and unproductive debt.

Mention two reasons responsible for borrowing by the government.

Give two reasons each for resorting to external borrowing by the government.

State two adverse effects of public debt.

Mention any three methods of redemption of public debt.

What is meant by ‘deficit financing’?

State two ways in which deficit financing can promote economic development.

Mention two adverse effects of the policy of deficit financing.

What is meant by budget of the government?

State the importance of the government budget.

What is Supplemetary Budget?

Explain zero base budgeting.

What is a performance budget?

What is Revenue budget?

What is a capital budget?

Distinguish between revenue receipts and capital receipts in a government budget. Give example in each case.

Distinguish between revenue expenditure and capital expenditure. 

Give two examples of revenue receipts in a financial budget.

Give two examples of capital receipts in a financial budget.

Differentiate between plan and non-plan expenditure.

Define of the following concept.

Balanced budget

Define deficit budget.

Define surplus budget.

What is meant by revenue deficit?

Define fiscal deficit.

What is a primary deficit?

Define national income.

Give two uses of national income data.

State the meaning of ‘normal resident’ of a country.

Define domestic territory.

Distinguish between final goods and intermediate goods. Give an example of each.

What is the solution to the problem of double counting in the estimation of national income?

What is double counting of national income?

What is the solution to the problem of double counting in the estimation of national income?

What do you understand by “transfer payments” or “transfer earnings”?

Distinguish between ‘current transfers’ and ‘capital transfers.’

What is meant by circular flow of income?

Distinguish between real flows and money flows.

What is meant by withdrawals (leakages)?

What is meant by injections in the circular flow of income?

Distinguish between domestic product (income) and national product (income).

Define net income earned from abroad.

Distinguish between:

National income at market prices and national income at factor cost.

What do you understand by net indirect taxes?

What is national disposable income?

Distinguish between gross national disposable income and net national disposable income.

What is private income?

Define the concept ‘Personal Income’.

Define the concept ‘Personal Disposable Income.’

What is per capita income?

Distinguish between real gross domestic product (GDP) and nominal gross domestic product (GDP).

Distinguish between national income at current and national income of constant prices?

Distinguish between nominal national income and real national income.

State any two limitations of per capita GDP as an index of economic welfare.

How does the net product method measure national income?

Distinguish between value added at market price and value added at factor cost.

State the meanings of the following:

Operating Surplus

What is meant by compensation of employees?

Explain the following component of the domestic factor income.

Compensation of employees

State the main components of domestic factor income.

What are the categories of expenditure taken in calculating national income by the expenditure method?

Distinguish between net export and net factor income from abroad.

State the precautions while using expenditure method to measure national income.

Explain four problems faced in the calculation of the national income in underdeveloped countries.

State three difficulties in calculating national income by the product (value-added) method.

State three difficulties in the estimation of national income by the income method.

Mention any three difficulties in calculating national income by the expenditure method.