Study Module –Of
ECONOMICS
CLASS – XII
(2012 – 2013)
Chief Patron
Shri. S SRawat
Deputy Commissioner (Raipur region)
Patron
ShriSaseendran&ShriTajjuddin Sheikh
Assistant Commissioner (Raipur region)
Coordinator:- Akanksha Sharma
Principal KV Khairagarh
Resource Persons PGT Economics :-
Mr.D. B .Ram KV No.1 Raipur (Shift 2)
Mr.JogeshRana KV Bhawanipatna
Mr. K.K. Dash KV No.1 Raipur(Shift 1)
Ms.Prabha Seth KV Bilaspur
Mr. Sanjay KV Raigarh
Preface
A team of experienced teachers endeavour to bring out astudy module, for the session 2012-2013
The language is simple and comprehensive for students.
KendriyaVidyalayaSangthan
KENDRIYA VIDYALAYA SANGTHAN
RAIPUR REGION
The study material is being provided to the students hoping that this will benefit them and help in
gaining confidence before appearing in the board examinations& score 60% and above
Teachers are advised to make thorough use of this study material at the time of the revision so that
the students are proficient enough to score better percentile in the finals.
How to use this Study Material?
Dear children,
NOTE:
1.All students should Read and solve 5 previous years board papers
2.Read the Marking scheme given by CBSE
3.Read & learn CBSE sample papers given by CBSE along with marking
scheme
4.Practice Sums
5.Read questions from previous year papers & board papers given in
various books
6.Practice HOTS Questions
7.From this year value based questions will also come in
Exam.So practice them, eg. Q 11 & 19 of CBSE SAMPLE
PAPER GIVEN BELOW
*
* Here are some tips to use this study material while revision during preboards and finally in board
examination
* Go through the syllabus given in the beginning. Identify the units carrying more weightage
* Write down your own notes and make summaries with the help of this study material.
Tips for students
Suggested sequence in which students may REVISE topics
When revising keep marking topics learnt
1.Explanation of features of various markets, Unit 4
2.Functions of Central bank, Unit7
3.Credit control by Central bank ( CRR,SLR,Bank Rate, Open Market Operations) ,
Unit7
4.Components of Budget, Unit9
5.Fiscal De/cit & its implications, Unit9
6.Components of BOP, Unit 10
7.Phases showing relation between TP,AP,MP. , Unit3
8.Factors e8ecting Demand, Unit2
9. Change in demand & change in quantity demanded, Unit2
10.Factors e8ecting Supply, Unit3
11.Market equilibrium, Shi:s in Demand & Supply & e8ect on equilibrium, Unit4
12.Consumer equilibrium, Unit2
13.Functions of money, Unit7
14.Producer equilibrium, Unit3
15.Sums on elasticity of Demand or supply, Unit2 &3
16.De;ationary & in;ationary gap, Unit8
17.Sums from unit on determination of income, Unit8
18.Precautions in calculation of national income, Unit6
A*er studying above topics complete units
Unit Marks
1Unit 1: Introduction 4
2Unit 10: Balance of Payments 7
3Unit 4: Forms of Market and Price
Determination
10
4Unit 7: Money and Banking 8
5Unit 2: Consumer Equilibrium and Demand 18
6Unit 9: Government Budget and the Economy 8
7Unit 3: Producer Behaviour and Supply 18
8Unit 8: Determination of Income and
Employment
12
9Unit 6: National Income and related aggregates 15
Part A : Introductory Microeconomics
Unit 1: Introduction 10 Periods
Meaning of microeconomics and macroeconomics
What is an economy? Central problems of an economy : what, how and for whom to produce; concepts
of production possibility frontier and opportunity cost.
Unit 2: Consumer Equilibrium and Demand 32 Periods
Consumer‘s equilibrium – meaning of utility, marginal utility, law of diminishing marginal utility, conditions
of consumer‘s equilibrium using marginal utility analysis.
Indifference curve analysis of consumer’s equilibrium-the consumer‘s budget (budget set and budget
line), preferences of the consumer (indifference curve, indifference map) and conditions of consumer‘s
equilibrium.
Demand, market demand, determinants of demand, demand schedule, demand curve, movement
along and shifts in the demand curve; price elasticity of demand – factors affecting price elasticity of
demand; measurenment of price elasticity of demand – (a) percentage-change method and (b) geometric
method (linear demand curve); relationship between price elasticity of demand and total expenditure.
Unit 3: Producer Behaviour and Supply 32 Periods
Production function: Total Product, Average Product and Marginal Product.
Returns to a Factor.
Cost and Revenue: Short run costs – total cost, total fixed cost, total variable cost; Average fixed cost,
average variable cost and marginal cost-meaning and their relationship.
Revenue – total, average and marginal revenue.
Producer’s equilibrium-meaning and its conditions in terms of marginal revenue–marginal cost.
Supply, market supply, determinants of supply, supply schedule, supply curve, movements along and
shifts in supply curve, price elasticity of supply; measurement of price elasticity of supply – (a) percentage–
change method and (b) geometric method.
Unit 4: Forms of Market and Price Determination 22 Periods
Perfect competition – Features; Determination of market equilibrium and effects of shifts in demand
and supply.
Other Market Forms – monopoly, monopolistic competition, oligopoly – their meaning and features.
Unit 5: Simple applications of Tools of demand and supply 8 Periods
(not to be examined)
329
Part B : Introductory Macroeconomics
Unit 6: National Income and related aggregates 30 Periods
Some basic concepts: consumption goods, capital goods, final goods, intermediate goods; stocks and
flows; gross investment and depreciation.
Circular flow of income; Methods of calculating National Income – Value Added or Product method,
Expenditure method, Income method.
Aggregates related to National Income:
Gross National Product (GNP), Net National Product (NNP), Gross and Net Domestic Product
(GDP and NDP) – at market price, at factor cost; National Disposable Income (gross and net),
Private Income, Personal Income and Personal Disposable Income; Real and Nominal GDP.
GDPand Welfare
Unit 7: Money and Banking 18 Periods
Money – its meaning and functions.
Supply of money – Currency held by the public and net demand deposits held by commercial banks.
Money creation by the commercial banking system.
Central bank and its functions (example of the Reserve Bank of India).
Unit 8: Determination of Income and Employment 25 Periods
Aggregate demand and its components.
Propensity to consume and propensity to save (average and marginal).
Short–run equilibrium output; investment multiplier and its mechanism.
Meaning of full employment and involuntary unemployment.
Problems of excess demand and deficient demand; measures to correct them – change in government
spending, availability of credit.
Unit 9: Government Budget and the Economy 17 Periods
Government budget – meaning, objectives and components.
Classification of receipts – revenue receipts and capital receipts; classification of expenditure – revenue
expenditure and capital expenditure.
Measures of government deficit – revenue deficit, fiscal deficit, primary deficit:their meaning.
Fiscal Policy and its role (non evaluative topic)
Unit 10: Balance of Payments 14 Periods
Balance of payments account – meaning and components; balance of payments deficit-meaning.
Foreign exchange rate – meaning of fixed and flexible rates and managed floating.
Determination of exchange rate in a free market.
Recommended textbooks
1. Indian Economic Development, Class XI, NCERT
2. Introductory Micro Economics, Class XII, NCERT
3. Macro Economics, Class XII, NCERT
4. Supplimentary Reading Material in Economics, Class XII, CBSE
Note : The above publications are also available in Hindi Medium
330
DESIGN OF QUESTION PAPER
ECONOMICS
Class Ō XII
Marks Ō 100 Duration Ō 3 hrs.
1. Weightage by type of questions
Type Number of
questions
Marks Total Estimated time a
candidate is expected to
take to answer
Long answer questions 6 6 36 60 minutes
Short answer questions I 6 4 24 36 minutes
Short answer questions II 10 3 30 50 minutes
Very short answer questions 10 1 10 15 minutes
2. Weightage by content
Unit No. Unit Title Marks
1 Introduction 4
2 Consumer Equilibrium and Demand 18
3 Producer Behaviour and Supply 18
4 Forms of Market and Price Determination 10
5 National Income and Related Aggregates 15
6 Money and Banking 8
7 Determination of Income and Employment 12
8 Government Budget and the Economy 8
9 Balance of Payments 7
10 Total 100
331
3. Difficulty level of the question paper
Level Marks % age of the
total marks
A. Easy
(Can be attempted satisfactorily by students who
have gone through the study material)
30 30
B. Average
(Can be attempted by students who have regularly
studied the study material but may not have given
sufficient time to writing.
50 50
C. Difficult
(Can be attempted by top students)
20 20
4. Scheme of Options
There is no overall choice. However, there is an internal choice in one question of 6
marks, one question of 4 marks and one question of 3 marks in each section. Thus
there will be internal choice to 6 questions.
5. Value based questions
The question paper will contain value based question/questions to the extent of
5 marks.
332
SAMPLE QUESTION PAPER
ECONOMICS
Class XII
Maximum Marks: 100 Time: 3 hours
BLUE PRINT
Sl.
No. Content Unit Forms of Questions
Very Short
Answer (1 Mark)
Short Answer
(3,4 Marks)
Long Answer
(6 Marks) Total
1. Unit 1 1 (1) 3 (1) – 4 (2)
2. Unit 2 1 (2) 3 (2) 4 (1) 6(1) 18 (6)
3. Unit 3 1 (1) 3 (1) 4 (2) 6 (1) 18 (5)
4. Unit 4 1 (1) 3 (1) 6 (1) 10 (3)
5. Unit 6 – 3 (3) 6 (1) 15 (4)
6. Unit 7 1 (2) – 6 (1) 8 (3)
7. Unit 8 1 (2) 4 (1) 6 (1) 12 (4)
8. Unit 9 – 4 (2) – 8 (2)
9 Unit 10 1 (1) 3 (2) – 7 (3)
Sub-Total 10 (10) 30 (10) 24 (6) 36 (6) 100 (32)
Notes:
1. Figures within brackets indicate the number of questions and figures outside the brackets
indicate marks for each question.
2. The question paper will include Valuebased questions to the extent of five marks.
333
Sample Question Paper
Economics
Class Ō XII
Time Ō 3 Hours. Maximum Marks Ō 100
Instructions
1. All questions in both the sections are compulsory.
2. Marks forquestions are indicated against each.
3. QuestionNos. 1-5 and 17-21 are very short-answer questions carrying 1 mark each. They
are required to be answered in one sentence each.
4. QuestionNos. 6-10 and 22-26 are short-answer questions carrying 3 marks each. Answer
to them should not normally exceed 60 words each.
5. Question Nos. 11-13 and 27-29 are also short-answer questions carrying 4 marks each.
Answer tothem should not normally exceed 70 words each.
6. Question Nos. 14-16 and 30-32 are long-answer questions carrying 6 marks each.
Answer tothem should not normally exceed 100 words each.
7. Question Nos. 11 and 19 are value based questions.
8. Answer should be brief and to the point and the above word limit be adhered to as far as
possible.
334
Section A
1. State two features of resources that give rise to an economic problem. (1)
2. What happens to total expenditure on a commodity when its price falls and its
demand is price elastic? (1)
3. What happens to equilibrium price of a commodity if there is an ŎKPETGCUGŏ_ KP_KVU_
FGOCPF_CPF_ŎFGETGCUGŏ_KP_KVU_UWRRN[! (1)
4. Give the meaning of equilibrium market price of a good. (1)
5. What is meant by cost in economics? (1)
6. State any three factors that can ECWUG_CP_ŎKPETGCUGŏ_KP_FGOCPF_of a commodity.(3)
7. Will the supply at a point on a positively sloped, straight line supply curve be
unitary elastic, elastic or inelastic? (3)
8. Explain why is production possibility frontier concave.
OR
Explain the cGPVTCN_RTQDNGO_őJQY_VQ_RTQFWEG_Œ (3)
9. How does the nature of a commodity influence its price elasticity of demand?
Explain. (3)
10. Calculate the price elasticity of demand for a commodity when its price increases
by 25% and quantity demanded falls from 150 units to 120 units. (3)
11.
Demand for electricity has”increased”. However supply cannot be “increased” due to to lack of resources. Explain
how, in any two ways, demand for electricity can be “decreased”
(4)
12. Explain the relation between marginal revenue and average revenue when a firm is
able to sell more quantity of output:
(i) at the same price.
(ii) only by lowering the price.
OR
Explain the effect of the following on the supply of a commodity:
(a) Fall in the prices of factor inputs.
(b) Rise in the prices of other commodities. (4)
335
13. On the basis of the information given below, determine the level of output at which
the producer will be in equilibrium. Use the marginal cost Ō marginal revenue
approach. Give reasons for your answer.
Output (Units) Average Revenue (Rs) Total Cost (Rs)
1 7 8
2 7 15
3 7 21
4 7 26
5 7 33
6 7 41 (4)
14. Why does the difference between Average Total Cost and Average Variable Cost
decrease as the output is increased? Can these two be equal at some level of
output? Explain. (6)
15. Explain the implications of the following features of perfect competition:
(a) large number of buyers and sellers
(b) freedom of entry and exit to firms (6)
16. A consumer consumes only two goods. For the consumer to be in equilibrium why
must marginal rate of substitution be equal to the ratio of prices of the two goods?
Explain.
OR
A consumer consumes only two goods. Why is the consumer in equilibrium when
he buys only that combination of the two goods that is shown at the point of
tangency of the budget line with an indifference curve? Explain.
The following question is for the blind candidates only in lieu of őQT_ RCTVŒ_QH_
question No.16
Explain when a consumer, consuming only two commodities X and Y, attains
equilibrium under the utility approach.
(6)
(6)
336
Section B
17. Give the meaning of involuntary unemployment. (1)
18. What is the relationship between marginal propensity to save and marginal
propensity to consume? (1)
19. The market price of US Dollar has increased considerably leading to rise in
prices of the imports of essential goods. What can Central Bank do to ease the
situation? (1)
20. State the two components of money supply. (1)
21. What is Cash Reserve Ratio? (1)
22. From the following data about a firm, calculate the fiTOŏU_net value added at factor
cost:
(Rs in Lac)
(i) Subsidy 40
(ii) Sales 800
(iii) Depreciation 30
(iv) Exports 100
(v) Closing stock 20
(vi) Opening stock 50
(vii) Intermediate purchases 500
(viii) Purchase of machinery for own use 200
(ix) Import of raw material 60 (3)
23. Give the meaning of Nominal GDP and Real GDP. Which of these is the indicator
of economic welfare and why? (3)
24.
Ŏ/CEJKPGŏ_RWTEJCUGFKU_CNYC[U_C_HKPCN_IQQF_ŏ_&Q_[QW_CITGG!_)KXG_TGCUQPU_HQT_[QWT_
answer. (3)
25. Explain the effect of depreciation of domestic currency on exports. (3)
337
OR
Explain the effect of appreciation of domestic currency on imports.
26. Distinguish between the current account and the capital account of Balance of
Payments. Is import of machinery recorded in current account or capital account?
Give reasons for your answer. (3)
27. What is a government budget? Give the meaning of :
(a) Revenue deficit
(b) Fiscal deficit (4)
28. Categorise the following government receipts into revenue receipts and capital
receipts. Give reason for your answer.
(a) Receipts from sale of shares of a public sector undertaking.
(b) Borrowings from public.
(c) Profits of public sector undertakings.
(d) Income tax received by government. (4)
29. Explain equilibrium level of national income using Savings and Investment
