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## Thursday, March 12, 2015

### AHSEC - CLASS 12: ECONOMICS MOST IMPORTANT QUESTIONS FOR MARCH EXAM

Part A
Introduction
Q. What is economics? Who is called father of economics?
Q. What is microeconomics and macroeconomics? Give one example of each and also mention two differences between them.
Q. Mention four central problems of an economy.
Q. What is Production possibility curve and opportunity cost? Explain them with example.
Q. Define in two lines: Positive economic analysis, normative economic analysis, Mixed economy.
Q. Distinguish centrally planned economy and a market economy.

Theory of Consumer Behaviour
Q. What do you mean by Price elasticity of demand? How it is measured and what are the factors determining it?
Q. What is budget line? Why does it slope downward?
Q. Explain the law of demand. What are their assumptions?
Q. What do you mean by Indifference curve? What are its properties? Show the indifference curve with the help of a diagram.

Q. What are exceptions to the law of demand?
Q. What is consumer’s equilibrium?  Explain the determinants of demand for a commodity.
Q. What is total and marginal utility? Distinguish between them. Explain the concept of utility function.
Q. Practical: Calculation of Price elasticity of demand, draw budget line,

Production and Costs
Q. What is the law of diminishing marginal product?
Q. Explain the law of return to factor with the help of total product and marginal product.
Q. What it the law of variable proportion?
Q. What is returns to scale? Explain with the help of diagram.
Q. What is iso-quant? Explain it graphically.
Q. What is Fixed Cost, Variable Cost, Total Cost, Marginal Cost and Opportunity cost? State their relationship and give one example of each.
Q. What is average and marginal revenue? State their relationship between average product and marginal product with the help of diagram.
Q. what does the average fixed cost curve look like? Why does it look so?
Q. What is producer’s equilibrium? How it is obtained? (MR=MC)
Q. Why is the long run average cost is U shaped?
Q. Practical: Calculation of TC, TVC, TFC, MC, AVC, ATC, and calculation of output when production function is given.

Forms of Market and Price determination
Q. What is perfectly competitive market? Mention its four features.
Q. What is Monopoly market? Mention its four features.
Q. what is Monopolist? Mention its four features.
Q. Explain the relationship between TR, AR and MR under perfect competition.
Q. Show the determination of market equilibrium with the help of demand and supply.
Q. How is equilibrium price affected by change in demand for the commodity?
Q. Giving reasons, distinguish between the behaviour of demand curves of firms under perfect competition and monopolistic competition.
Q. Practical: Calculation of equilibrium level of output, effects of shift in demand and supply.

Part B
National Income and Related Aggregate
Expected Marks: 1 + 2 + 4 + 6
Q. Explain value added method of Calculating GDP.
Q. Explain value Income method of Calculating GDP.
Q. Explain value Expenditure method of Calculating GDP.
(Out of these three, 1 question is almost sure carrying 6 marks)
Q. What is circular flow of income? Name its three related phases. Mention its three significance.
Q. Define flow. What is real flow and money flow? Distinguish between stock and flow.
Q. Define in two lines: GDP and NDP at market price and factor cost, Final Goods, Intermediate goods, Capital Goods, Consumer Goods.
Q. Define in two lines: National Disposable Income, Private Income, Personal Income and Personal Disposable income.

Determination of Income and Employment
Q. What is marginal propensity to consume and propensity to save? How they are related to each other?
Q. What do you mean by aggregate demand and aggregate supply? Mentions their components.
Q. Define investment. What are the factors affecting the level of investment in an economy?
Q. Define in two lines: Autonomous consumption, autonomous Investments, induced investment, ex-ante investment, ex-ante saving, ex-post investment, ex-post saving, Gross investment and net investment.
Q. What is investment multiplier? How investment multiplier and marginal propensity to consume is related?
Q. Practical: Calculation of income and investment multiplier when marginal propensity to save and consume is given.

Money and Banking
Expected Marks: 1+1 + 2 + 6
Q. Define Money. What are its characteristics? Mention its two primary and secondary functions.
Q. What is barter system? Mention its four limitations.
Q. What it Central Bank? Explain its functions. Why RBI is known as lender of last resort?
Q. What are commercial banks? Mention its four functions. Distinguish between commercial banks and central bank.
Q. Explain the quantitative and qualitative instruments used by the central bank to control the money supply and credit in the economy.
Q. How does a commercial bank creates money?
Q. Define in two lines: High Powered money, near money, Fat money, Fiduciary money, Full-bodied money, Narrow money and broad money,
Q. Describe the Speculative and Transaction demand for money.

The Government Budget: Functions and Scope
Expected Marks: 8
Q. What is Budget? Mentions its components. Discuss the objectives of a government budget.
Q. What do you mean by tax-revenue non-tax revenue? Mention its various sources. Distinguish between tax-revenue and not-tax revenue (2).
Q. Distinguish between capital receipts and revenue receipts.
Q. Explain various types of government expenditure. (Revenue, capital, plan, non-plan, development and non-developmental expenditure)
Q. What is fiscal deficit? What are its implications? Is fiscal deficit always disadvantageous?
Q. Explain the relationship between government deficit and government debt.
Q. Define balanced budget, surplus budget, deficit budget, revenue deficit, primary deficit.

Balance of Payments
Expected Marks: 8
Q. What do you mean by Balance of trade and Balance of Payment? Also distinguish between them.
Q. What are various components of Balance of Payments?
Q. What is fixed and flexible foreign exchange rate? Mention two merits and demerits of each.
Q. State the sources of demand and supply of foreign exchange.
Q. How is the exchange rate determined under a flexible exchange rate regime?