ICSE Class 10th Economics Exam 2024 : Most Important Question with Solution for Last-Minute Revision

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ICSE 10th Economics Exam 2024 Most Important Question

SECTION A

Question 1

(a) Land is heterogeneous in nature. Explain.

Ans: Land like other factors of production differs from another in respect of location, fertility, nature and productivity. Two prices of land are not exactly the same.

(b) What is meant by efficiency of labour? Give one reason for low efficiency of labour in India.

Ans: Efficiency of labour is that feature of labour by which the work get completed within time and without wastage of resources. One reason for low efficiency of labour in India is lack of skill and knowledge which is required to complete a task.

(c) Mention two important characteristics of Capital as a factor of production.

Ans: Two important characteristics of capital as a factor of production are: (A) Capital is a produced means of production: The composition or supply of capital is not automatic, but it is produced with the joint efforts of labour and land. Therefore, capital is a produced means of production.

(B) Capital depreciates: As we go on using capital, the value of capital goes on depreciating. When machines are used continuously for some time, these depreciate and their value falls.

(d) State two qualities of a successful entrepreneur.

Ans: The word entrepreneur is derived from the French word, entreprendre, which means 'to undertake'. An entrepreneur is the one who organizes, manages,and assumes the risks of a business or enterprise.Two qualities of a successful entrepreneur are:

1) He is innovative. He is a person who develops and owns his own enterprise to show his innovation skills.

2) Exhibits sense of leadership. Also exhibits sense of competitiveness.

(e) Mention two factors which gave birth to the Consumer Movement.

Ans: The Consumers Movement in India:

(i)The consumer movement as a ‘social force’ originated with the necessity of protecting and promoting the interests of consumers against unethical and unfair trade practices.

(ii)Rampant food shortages, hoarding, black marketing, adulteration of food and edible oil gave birth to the consumer movement in an organised form in the 1960s.

(iii)Till the 1970s, consumer organisations were largely engaged in writing articles and holding exhibitions. They formed consumer groups to look into the malpractices in ration shops and overcrowding in the road passenger transport. More recently, India witnessed an upsurge in the number of consumer groups. 

Question 2

(a) What are inferior goods? Give an example.

Ans: It is a good whose demand decreases with rise in income and increases with fall in income of the consumer. So that, there is an inverse (or negative) relation between income and quantity demanded. Example: Coarse cloth, coarse grain. When the income of the consumer rises, the demand for coarse grain falls..

(b) Mention two reasons behind the leftward shift of a supply curve.

Ans: Two reasons behind the leftward shift of a supply curve are:

1) When price of the substitute goods rises, the supply of the another product falls and the supply curve of the another product shifts leftward.

2) When the government impose taxes, cost of production rises and the supply curve shifts leftward.

(c) What is meant by Price Elasticity of Demand? When will the Demand Curve be parallel to X-axis?

Ans: Price elasticity of demand is defined as a measurement of percentage change in quantity demanded in response to a given percentage change in own price of the commodity.

Demand curve is parallel to X- axis n case of perfectly elastic demand. A perfectly elastic demand refers to the situation when demand is infinite at the prevailing price.

(d) Draw:

(i) Unitary Elastic Supply curve

(ii) Perfectly Inelastic supply curve

Ans: (i)

(ii) 

(e) Define Food Adulteration. Name two health problems caused due to adulterated food.

Ans: Food adulteration is an act of adding or mixing of poor quality, inferior, harmful, substandard, useless or unnecessary substances to food. This act of spoiling the nature and quality of food items is considered food adulteration.The two major health problems caused by food adultration are as under-

1) Adulterated food is dangerous because it may be toxic and can affect health and it could deprive nutrients essential for proper growth and development of a human being.

2) Some adulterated food even causes cancer, the most life threatening disease.

Question 3

(a) Mention two merits of direct tax.

Ans: A) Merits:

1. Equity: 

A direct tax is equitable in the sense that it is levied according to the taxable capacity of the people. The rates of direct taxes, like the income tax, can be fixed in such a way that the higher the income of a man, the greater is the rate at which he has to pay the tax. Such a system is known as progressive taxation.

2. Certainty:

A direct tax satisfies the canon of certainty. For instance, a person liable to pay income tax knows how much he will be required to pay; for that purpose, he can appropriate steps beforehand.

(b) What is public expenditure?

Ans: Public Expenditure: The expenditures incurred by the government are called Public Expenditures.

(c) What is meant by productive and unproductive debt?

Ans: Productive and unproductive debt: A debt is called productive if the loan is financed for projects which bring revenue to the government; for example, irrigation and power projects. Productive debts are self-liquidating in nature; this means the principal amount and interest are normally paid out of the revenue generated from the projects for which the loans were used.

A debt is called unproductive if the loan is financed for war and other relief operations in case of emergencies. Unproductive public loans are a net burden on the community. The government will have to resort to additional taxation for their servicing and repayment.

(d) State two differences between progressive and proportional taxation.

Ans: 

(e) Where should the consumer go to get justice? Mention two consumer rights.

Ans: Consumers are entitled to demand compensation for unfair commercial practises and exploitation. In India, the consumer movement has resulted in the creation of various organizations, referred to as customer forums or consumer protection councils. They direct consumers in the consumer court on how to bring lawsuits.

• COPRA, a three-tier quasi-judicial machinery for the redress of consumer disputes, was developed at district, state and national levels.
• The District Court called the District Forum, which discusses cases involving allegations of up to Rs 20 lakhs.
• The state level court known as the State Commission to deal with issues involving allegations around Rs 20 lakh and Rs 1 crore.
• The national court, which deals with cases involving claims above Rs 1 crore, is known as the National Commission. A customer can also appeal in the state and ultimately in national courts if a case is dismissed in district-level courts.

Question 4

(a) State two primary functions of money.

Ans: Two primary functions of money are as follows:-

i. Money of Exchange: Money acts as a medium of exchange. Hence, it removes the problem of double coincidence of wants faced under the Barter System. Money has general acceptability and purchasing power so nobody refuses to accept money in exchange for goods and services. As a medium of exchange, money helps us to purchase all goods and services from the market.

ii. Measure of Value: Money acts as a common measure of value. The value of everything can be expressed in terms of money and is known as its price, when we say that the price of one metre of cloth is Rs 15, this means that in order to obtain one metre of cloth, we have give up 15 units of money.

(b) What is meant by double co-incidence of wants?

Ans: The occurrence when the wants of buyers and sellers both get fulfilled simultaneously in the process of exchange of mutually possessed goods is known as double coincidence of wants. Both parties, the seller and buyers have to agree to sell and buy each others commodities. Goods are directly exchanged without the use of money.For example, a person has rice but he is in need of wheat and other who has wheat but he is in need of rice. Then they will exchange their goods. This exchange is known as double coincidence of wants.

(c) Mention two advantages of a bank account.

Ans: The following are the advantages of having a bank account:

(i) Money is safer;

(ii) Money earns interest;

(iii) It Inculcates the habit of savings/mobilizes savings;

(iv) It helps in safe transactions through cheques;

(v) It provides facilities of overdraft, discounting bills of exchange, ECS, etc.

(d) Briefly explain Creeping and Hyper inflation.

Ans: Creeping inflation is a slow and steady rise in prices, typically below 3% annually. It's mild and can even be beneficial, encouraging spending and economic growth. Imagine prices going up so gradually you barely notice.

Hyperinflation is the opposite extreme. Prices skyrocket, often exceeding 1000% per year. This makes money worthless. People might ditch cash for bartering or use stable currencies like USD. Imagine prices doubling or tripling every month - money loses its buying power very quickly.

(e) Which section of society gains due to inflation? Why?

Ans: Inflation has a deep impact on the distribution of income and wealth in a country. It results in the redistribution of income and wealth because prices of all the factors of production do not increase in the same proportion. Generally, inflation always inflicts more injury on the fixed income groups like workers, teachers, pensioners, interest and rent earners etc.

because their incomes do not increase as fast as the prices. On the other hand, flexible income groups such as businessmen, traders merchants etc. suffer less injury due to windfall profits that arise because prices rise faster than the cost of production.

Question 5

(a) Explain five reasons for the low rate of capital formation in India.

Ans: Five reasons for the low rate of capital formation in India are:

(i) Low level of national income: The root cause of capital deficiency in under-developed countries is low level of real national and per capita income which limits to the motives of savings and investments.

(ii) Low rate of capital formation: Another cause of low rate of capital formation in under-developed countries in lack of demand of capital.

(iii) Lack of supply of capital: Like demand of capital, lack of supply of capital is responsible for low capital formation. However, due to lack of necessary supply of capital in under-developed countries, the process of capital formation is not boosted up.

(iv) Small size of market: Due to small size of domestic market, investment is not encouraged in poor countries. It does not expand the work of economic development and modern machines cannot be used as extra quantity produced has no market access.

(v) Immobility of savings: Immobility of saving also causes low rate of capital formation. Due to lack of banking and other credit institutions, poor countries have limited financial activities.

(b) What is meant by pision of labour? Explain two advantages and two disadvantages of pision of labour.

Ans: pision of labour refers to the specialisation in work. The task is moved apart in any system so that the person may specialise inpidual, organisations to acquire specialised capabilities.

• Advantages:

1) Right man at the right job:Since work is pided into number of subparts each worker can be given job according to his abilities and choice.

2) Increase in efficiency of labour. When a worker does the same job again and again he gets specialised in it.

• Disadvantages

1) Monotony of work - Since the worker has to do the same job again and again he gets tired and may feel bored to do the same job.

2) Lack of responsibility - Responsibility is pided among workers. If anything goes wrong as far as the quality of the products is concerned; then none can be held responsible.

Question 6

(a) Define demand. Explain any four factors affecting the demand for a commodity.

Ans: Meaning of demand: Demand is the quantity of a commodity that a consumer is willing and able to buy, at each possible price during a given period of time.

Following are the factors affecting demand:

1. Price of the given commodity: It is the most important factor affecting demand for the given commodity. Generally, there exists an inverse relationship between price and quantity demanded. It means, as price increases, the quantity demanded falls due to a decrease in the satisfaction level of consumers. For example, If the price of a given commodity (say, tea) increases, its quantity demanded will fall as the satisfaction derived from tea will fall due to rise in its price.

2. Price of Related Goods: Demand for the given commodity is also affected by change in prices of the related goods. Related goods are of two types:

(i) Substitute Goods: Substitute goods are those goods which can be used in place of one another for satisfaction of a particular want, like tea and coffee. An increase in the price of substitute leads to an increase in the demand for given commodity and vice-versa. For example, if price of a substitute good (say, coffee) increases, then demand for given commodity (say, tea) will rise as tea will become relatively cheaper in comparison to coffee. So, demand for a given commodity is directly affected by change in price of substitute goods.

(ii) Complementary Goods: Complementary goods are those goods which are used together to satisfy a particular want, like tea and sugar. An increase in the price of complementary good leads to a decrease in the demand for given commodity and vice-versa. For example, if price of a complementary good (say, sugar) increases, then demand for given commodity (say, tea) will fall as it will be relatively costlier to use both the goods together. So, demand for a given commodity is inversely affected by change in price of complementary goods.

3. Income of the Consumer: Demand for a commodity is also affected by income of the consumer. However, the effect of change in income on demand depends on the nature of the commodity under consideration.

i. If the given commodity is a normal good, then an increase in income leads to rise in its demand, while a decrease in income reduces the demand.

ii. If the given commodity is an inferior good, then an increase in income reduces the demand, while a decrease in income leads to rise in demand. Suppose, income of a consumer increases. As a result, the consumer reduces consumption of toned milk and increases consumption of full cream milk. In this case, Toned Milk is an inferior good for the consumer and Full Cream Milk is a normal good.

4. Tastes and Preferences: Tastes and preferences of the consumer directly influence the demand for a commodity. They include changes in fashion, customs, habits, etc. If a commodity is in fashion or is preferred by the consumers, then demand for such a commodity rises. On the other hand, demand for a commodity falls, if the consumers have no taste for that commodity.

5. Expectation of Change in the Price in Future: If the price of a certain commodity is expected to increase in near future, then people will buy more of that commodity than what they normally buy. There exists a direct relationship between expectation of change in the prices in future and change in demand in the current period. For example, if the price of petrol is expected to rise in future, its present demand will increase.

(b) Distinguish between contraction of supply and decrease in supply with the help of diagrams.

Ans: Contraction of Supply :

1. Contraction of supply occurs when quantity supplied of a commodity falls due to a fall in price alone. 

2. It is a case of variation in supply. 

3. Supply contracts due to fall in price alone.

4. When there is a downward n curve. 

Decrease in Supply :

1. Decrease in supply occurs when less quantity is supplied at the same price. 

2. It is a case of changes in supply. 

3. Supply decreases due to –

(1) increase in cost of production 

(2) transport strike 

(3) outdated technique 

(4) heavy taxes imposed by government. 

(5) more exports etc.

4. When there is curve shifts to curve.

Question 7

(a) Give five reasons for the growth of public expenditure in recent times.

Ans: Reasons for the growth of public expenditure in India:

(i) Development Programmes: Most of the underdeveloped countries have initiated various programmes of economic development i.e. provision of infrastructure of the economy such as transport, communication power etc. This has led to growth of public expenditure.

(ii) Growing trend of Urbanisation: With the spread of urbanization, public expenditure has increased in modern times. Urbanization has led to increase in Government expenditures on civil administration, education, public health, water supply, parks etc.

(iii) Rise in Price-level: As a result of the rise in the price-level, the public expenditure has gone up everywhere. The reason is that like the private inpiduals the Government also has to buy goods and services from the market at higher prices.

(iv) Increase in Population: As a result, the Government has to incur great expenditure to meet the requirements of increasing population. In fact, the public expenditure increases in the same ratio in which the population increases.

(v) Welfare State: The modern state is a welfare state. It has to spend increasing amounts on such items as social insurance, unemployment, relief, free medical aid, free education etc. to improve the socio-economic welfare of the country.

(b) What is a tax? Explain two merits and two demerits of progressive tax structure.

Ans: A tax is a mandatory financial charge or levy imposed on an inpidual or organization by a government. This money is used to fund government spending on public programs and services, like infrastructure (roads, bridges), education (schools), and social welfare (unemployment benefits). There are many different types of taxes, but some common ones include income taxes, sales taxes, and property taxes.

Merits of a progressive tax structure:

• Reduces income inequality: A progressive tax system taxes higher earners at a higher rate than lower earners. This helps to redistribute wealth and narrow the gap between the rich and the poor.
• Raises more revenue from the wealthy: Wealthy inpiduals and corporations have more resources to contribute to taxes. A progressive system ensures the tax burden is shared more fairly according to ability to pay.

Demerits of a progressive tax structure:

• Discourages investment: High taxes on income from investments can disincentivize people from investing, which can slow economic growth.
• Complexity: Progressive tax systems can be more complex to administer than flat tax systems, which can lead to higher compliance costs.

Question 8

(a) Define money. Explain various stages in the evolution of money.

Ans: Money is a medium of exchange and store of value widely accepted in transactions for goods, services, and debts. It is typically in the form of coins and banknotes, although it can also exist as digital balances in bank accounts. Money serves as a unit of account, facilitating the comparison of prices and values. It also functions as a standard of deferred payment, enabling transactions to occur over time. Additionally, money often embodies a legal tender status, mandated by governments for settling financial obligations within a country.

Money has evolved through different stages according to the time, place and circumstances. Some of the major stages through which money has evolved are as follows: (i) Commodity Money (ii) Metallic Money (iii) Paper Money (iv) Credit Money (v) Plastic Money.

(b) Explain five measures adopted by the Central Bank to control inflation.

Ans: The methods to control the volume of credit adopted by the 'Central Bank' are :-

1. Quantitative Methods of monetary policy includes those instruments which focus on the overall supply of the money. It includes:
2. Two Policy Rates:

Bank rate is the rate charged on the loans offered by the Central bank to the commercial banks without any collateral. It is increased at the time of inflation to reduce the money supply in the economy and vice versa.

Repo rate is the rate charged on the secured loans offered by the Central bank to the commercial banks that includes collateral. It is increased at the time of inflation to reduce the money supply in the economy and vice versa.

1. Two Policy Ratio:

Statutory Liquidity Ratio (SLR) refers to liquid assets that the commercial banks must hold on daily basis as a percentage of their total deposits. SLR is determined by the central bank and is a legal requirement to be fulfilled by the commercial banks. It is increased at the time of inflation to reduce the money supply in the economy and vice versa.

Cash Reserves Ratio (CRR) refers to the proportion of total deposits of the commercial banks which they must have keep as cash reserves with the central bank. The ratio is fixed by the central bank and is varied from time to time to control the supply of money in the economy depending upon the prevailing situation of inflation or deflation.

1. Open Market Operations:

Open market operation (OMO) is a monetary policy by the central bank in which the bank deals in the sale and purchase of securities in the open market to control the supply of money in the economy. By selling the securities, the central bank soaks liquidity from the economy and by buying the securities, the central bank releases liquidity.

1. Qualitative Methodsof monetary policy includes those instruments which focus on the selected sectors of the economy. It includes:
2. Margin Requirement:

Margin requirement refers to the difference between the current value of the security offered for loan (called collateral) and the value of loan granted. It is a qualitative method of credit control adopted by the central bank in order to stablise the economy from inflation or deflation.

1. Rationing of Credit:

Rationing of credit refers to fixation of credit quotas for different business activities which is introduced when the flow of credit is to be checked particularly for speculative activities in the economy.

1. Moral Suasion:

The central bank makes the member bank agree through persuasion or pressure to follow its directives which is generally not ignored by the member banks. The banks are advised to restrict the flow of credit during inflation and be liberal in lending during deflation.

Question 9

(a) Give five ways by which the consumers are exploited?

Ans: 

1. False Advertising- making deceptive and misleading claims in the advertisements of the products.
2. Deceptive Pricing-Very often traders charge deceptive and high prices from their consumers than the prescribed retail price.
3. Deceptive Billing- It may sometimes happen that traders sell fake or duplicate goods in the name of genuine goods.
4. Misuse of Customer Data- The information or data collected by the customers at the time of sale can be misused.
5. Substandard quality The traders may cheat the consumers by degrading the quality of the product and selling those in the market like expired products, defective items.

(b) Explain the following rights given to consumers:

(i) Right to be informed.

(ii) Right to choose.

Ans: 1: The right to information is defined as 'the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices' in the Consumer Protection Act of 1986.

2: The definition of the Right to Choose as per the Consumer Protection Act 1986 is 'the right to be assured, wherever possible, to have access to a variety of goods and services at competitive prices'. According to this right, every consumer has the right to choose the goods or services of his or her likings. The right to choose means an assurance of availability, ability, and access to a variety of products and services at competitive prices, and competitive price means just or fair price.

Question 10

(a) Explain five circumstances under which the law of demand does not operate.

Ans: The law of demand states that, all other factors being equal, as the price of a good or service increases, the quantity demanded decreases, and conversely, as the price decreases, the quantity demanded increases. However, there are circumstances under which this law may not hold true:

1. Veblen Goods: In the case of Veblen goods, higher prices may actually increase demand because the higher price is perceived as a sign of quality or status. For example, luxury items like designer clothes or luxury cars may be in higher demand as their prices increase.

2. Giffen Goods: Giffen goods are a type of inferior good where an increase in price can lead to an increase in demand. This occurs when the income effect outweighs the substitution effect. For example, if the price of a staple food like rice increases significantly, the poor might buy more of it because they can no longer afford more expensive alternatives.

3. Expectation of Future Price Changes: If consumers expect the price of a good to increase significantly in the future, they may buy more of it now, even at a higher price, to avoid paying even more later. This can lead to an increase in demand despite a price increase.

4. Limited Availability or Scarcity: When a good is perceived to be scarce or in limited supply, consumers may buy more of it at any price, leading to an increase in demand regardless of price changes.

5. Necessities: For certain goods that are considered necessities, like food, medicine, or basic clothing, consumers may continue to buy them even as the price increases because they are essential for daily living. This is often referred to as inelastic demand.

(b) State five differences between the Central Bank and a Commercial Bank.

Ans: 

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