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CBSE 12th Term-2 2022 : Economics Most Important Questions with Solution for Last Minute Revision
Given below is the set of important questions which are suggested by the experts to practice for the CBSE Class 12 Economics Term 2 Exam 2022 that is going to be conducted tomorrow. These questions are best for last minute revision and fine-tune your preparations for the exam.
Q. Define flows
Ans. flows reflect the creation, transformation, exchange, transfer or extinction of economic value; they involve changes in the volume, composition, or value of an institutional unit's assets and liabilities.
Q. What is aggregate demand? State its components.
Ans. Aggregate demand describe total demand for goods and services of all sector of economy is planed in domestic territory , in accounting year.
Q. Define marginal propensity to consume.
Ans. Marginal Propensity to Consume expresses the propensity to consume in proportionate terms. It refers to the ratio of change in the consumption expenditure and change in the disposable income. Algebraically,
Q. Explain with the help of an example, the basis of classifying goods into final goods and intermediate goods.
Ans. The underlying basis for classifying goods into final goods and intermediate goods is based on the fact whether the good has been purchased for 'ultimate consumption' or 'further processing'. If a goods has been purchased for ultimate consumption, say milk then it is regarded as a final good. While. if a good is purchased for 'further processing', say milk has been purchased for making curd by the firm, then it will be regarded as an intermediate good.
Q. An economy is in equilibrium. From the following data. calculate the marginal propensity to save :
(a) Income =10,000
(b) Autonomous consumption = 500
(c) Consumption expenditure = 8,000
Ans.
Q. Why does consumption curve not start from the origin ?
Ans. The consumption curve does not start from the origin because at zero level of income, the consumption is not zero. There is certain minimum consumption in order to survive, i.e. autonomous consumption.
Q. Which among the following are final goods and which are intermediate goods? Give reasons.
(a) Milk purchased by a tea stall
(b) Bus purchased by a school
(c) Juice purchased by a student from the school canteen
Ans.
(a) Milk purchased by a tea stall is an intermediate good because it is purchased by a firm as a raw material for the process of production of other good.
(b) Bus purchased by a school is a final good as it is purchased for the consumption and not for resealing.
(c) juice purchased by a student from the school canteen is a final good as it is purchased for the consumption and not for reselling.
Q. Given nominal income, how can we find real income ? Explain.
Ans. When goods and services produced in a year are valued at the prices prevailing in that particular year, we get nominal income.
Nominal Income = Current Price (P1) × Current quantity (Q1)
When good and services produced in a year aare valued at prices of a fixed base year, we get Real income.
Real income = Base Year Price (P0) × Current quantity (Q1)
Nominal income can be converted to real income by the following-
Real income = Nominal income/ Current Price Index * 100
Q. What is meant by inflationary gap ? State three measures to reduce this gap.
Ans. Inflationary gap is the difference between the current level of real GDP and the anticipated GDP if the economy was at its full capacity (i.e full employment). The following could be done to reduce inflation gap:
1) Reduce government spending
2) Increase direct/indirect taxes
3) Central bank can also increase interest rates which will dampen lending and hence dampen investment
Q. Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.
Ans. The problem of double counting arises when the value of certain goods and services are include more than once while estimating National Income using Value Added Method.
Two methods to avoid the problem of double counting :
(i) To calculate only the value of final products.
(ii) To calculate only the value added which equals value of output less intermediate consumption
Q. State and discuss the components of Aggregate Demand in a two sector economy.
Ans. In the Keynesian two-sector economy there are only household and Firm.
In this simple economy, there are two elements of national income—consumption and investment, i.e., C + I.
Consumption - It denote not what people have actually consumed in a given year, but what they had planned to consume during the same period.
Investment - Investment is defined as addition to the stock of physical capital (such as machines, buildings, roads etc.
Q. Justify the following statement, with valid reason. ‘‘Ex-ante Aggregate Demand is always equal to Ex-ante Aggregate Supply.’’
Ans. Ex-ante Aggregate Demand is equal to Ex-ante Aggregate Supply only when the economy is in equilibrium. At under-employment equilibrium level, when Ex-ante Aggregate Demand falls short of Ex-ante Aggregate Supply, it will lead to accumulation of unplanned inventories. Hence the producer will reduce employment leading to reduction in output and income till the two forces becomes equal to each other and vice versa.
Q. Define Real Gross Domestic Product.
Ans. Real Gross Domestic product is the sum total of the money value of all final goods and services produced in an economy during the year estimated at some given base year’s prices.
Q. What are ’externalities’? State its types with suitable examples.
Ans. Externalities refer to the benefits/harms caused by a firm/inpidual to the society in general, without being penalised.
There are two types of externalities :-
(i) Positive externalities – Social benefits. E.g. saving of time/fuel with construction of better roads in a country
(ii) Negative externalities - Social harms for example pollution caused by stubble burning in some states of India.
Q. Define any two of the following :
(a) Absorptive Capacity of Environment
(b) Carrying Capacity of Environment
Ans.
A. Absorptive capacity of the environment means the ability of the environment to absorb degradation.
B. Carrying capacity implies that the resource extraction is not above the rate of regeneration of the resource and the wastages generated are within the assimilating capacity of the environment
Q. Why are less women found in regular salaried employment?
Ans. Less women are found in regular salaried employment due to the following reasons:
(i) Lack of Education facilities - Female education is not given due importance in India and hence majority of the women in India do not have the educational qualification and professional skills required for regular salaried employment.
(ii) Wage Discrimination - Gender-based wage discrimination is prevalent in India which demotivates the women in regular salaried employment and they prefer being at home or go for self-employment opportunities.
(iii) Security Issues - Rise in crime against women has also been a reason of women withdrawing from regular employment due to security concerns. Late working hours in private sector firms and MNCs are not found suitable by most of the women.
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