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Balbharti Maharashtra State Board Class 11 Economics Important Questions Chapter 3 Partition Values Important Questions and Answers.

Maharashtra State Board 11th Economics Important Questions Chapter 3 Partition Values

1A. Complete the correlation:

Question 1.
Quartiles : 4 parts : : 10 parts : __________
Answer:
Deciles

Question 2.
10 parts : Deciles : : Percentiles : __________
Answer:
100 parts

Question 3.
Individual Data : __________ : : Discrete Data : \(\bar{x}=\frac{\sum f_{i} x_{i}}{n}\)
Answer:
\(\bar{x}=\frac{\sum x}{n}\)

Question 4.
Q₂ : Q₅₀ : : D₅ : __________
Answer:
Median

1B. Suggest the economic terms for the given statements:

Question 1.
The value that divides the data into hundred equal parts.
Answer:
Percentiles

Question 2.
Values that divide the data into the required number of equal parts.
Answer:
Partition values or Fractiles

Question 3.
Value of the middlemost observation in the data.
Answer:
Median

Question 4.
Extreme value on the lower side and higher side in magnitude.
Answer:
Outliers

Question 5.
Q₂ = D₅ = P₆₀
Answer:
Median

Question 6.
Partition value used in the measurement of test scores, health indicators, etc.
Answer:
Percentiles

Question 7.
Partition value is used to assess the performance of portfolio investment.
Answer:
Declies

1C. Arrange in proper order:

Question 1.
Steps to find Q₁ and Q₃ for continuous frequency distribution.
(a) Determine the quartile class
(b) Arrange the data in ascending or descending order.
(c) Find out cumulative frequency (cf)
(d) Write respective frequencies of the class
Options:
(1) a, b, c, d
(2) b, d, c, a
(3) b, c, d, a
(4) c, d, b, a
Answer:
(1) b, d, c, a

1D. Find the odd word out:

Question 1.
Percentile, Mercantile, Decile, Quartile
Answer:
Mercantile

Question 2.
Mean, Mode, Meridian, Median
Answer:
Meridian

Question 3.
P.C.Mahalanobis, Statistics Day, Fractile Graphical Analysis, Demand Analysis.
Answer:
Demand Analysis

Question 4.
Percentile, Health indicator, Quartile, Household income.
Answer:
Quartile

1F. Complete the following statement.

Question 1.
There are __________ deciles.
Answer:
nine

Question 2.
There are __________ percentiles.
Answer:
ninety-nine

Question 3.
There are __________ quartiles.
Answer:
three

Question 4.
50th percentile is equal to __________ deciles.
Answer:
fifth

Question 5.
25th percentile is equal to __________ quartile.
Answer:
first

Question 6.
Percentiles divide the series in __________ equal parts.
Answer:
hundred

Question 7.
Value that divides the data into 10 equal parts is called __________
Answer:
deciles

Question 8.
50th percentile is equal to __________
Answer:
5th decile

Question 9.
The value of the first quartile is __________
Answer:
\(\left(\frac{n+1}{4}\right)^{\text {th }}\) observation

Question 10.
The value of the 3rd quartile is __________
Answer:
\(3\left(\frac{n+1}{4}\right)^{\text {th } \text { Observation }}\)

Question 11.
Value that divides the whole set of observation into four equal parts is called __________
Answer:
Quartile

Question 12.
29th June is celebrated as __________
Answer:
Statistics Day

Question 13.
Value which divide the data into required number of equal parts are called __________
Answer:
partition values

Question 14.
Fractile graphical analysis, a statistical method was devised by __________
Answer:
Prof. P. C. Mahalanobis.

2. Distinguish between:

Question 1.
Quartiles and Deciles.
Answer:

Question 2.
Deciles and Percentiles.
Answer:

3. Solve the following:

Type – I: Problems Based on Quartiles

Question 1.
Find Q₁, Q₂ and Q₃ from the following data:
65, 82, 68, 67, 84, 83, 66, 69, 81, 70, 85
Answer:
Q₁ = 67, Q₂ = 70, Q₃ = 83

Question 2.
Find Q₁ and Q₃ from the following data:
3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15
Answer:
Q₁ = 6, Q₃ = 12

Question 3.
Find first and third Quartiles from the following data:

Answer:
Q₁ = 34, Q₃ = 40

Question 4.
Find Q₁, Q₂, and Q₃?

Answer:
Q₁ = 450, Q₂ = 550, Q₃ = 650

Question 5.
Find Q₁ and Q₃ from the following data:

Answer:
Q₁ = 250, Q₃ = 450

Question 6.
Find Q₄ and Q₃ from the following data:

Answer:
Q₄ = 20.33 , Q₃ = 35.25

Question 7.
Find Q₁, Q₂, and Q₃:

Answer:
Q₁ = 17.22, Q₂ = 27.41, Q₃ = 39

Type – II: Problems Based on Decile

Question 1.
Find D₄ and D₈ from the following data:
20, 26, 24, 32, 22, 28, 30, 36, 34
Answer:
D₄ = 26, D₈ = 34

Question 2.
Find D₁, D₄, and D₈ for the following data:
61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79.
Answer:
D₁ = 62, D₄ = 68, D₈ = 76

Question 3.
Find D₂ and D₄ from the following data:

Answer:
D₂ = 20, D₄ = 40

Question 4.
Find D₅ and D₉:

Answer:
D₅ = 4, D₉ = 5

Question 5.
Find D₅ for the following distribution.

Answer:
D₅ = 40.33

Question 6.
Find D₄ and D₆ from the following data:

Answer:
D₄ = 30, D₆ = 43

Type – III: Problems Based on Percentiles

Question 1.
Find Percentiles:
Calculate 50th Percentile from the following data:
20, 25, 30, 35, 40, 45, 50, 55, 60
Answer:
P₅₀ = 40

Question 2.
Calculate P₂₁ and P₉₇ for:

Answer:
P₂₁ = 3, P₉₇ = 8

Question 3.
Find P₉₀ from the following data:

Answer:
P₉₀ = 40

Question 4.
Calculate P₆₀ and P₈₀ from the following data:

Answer:
P₆₀ = 40, P₈₀ = 48.33

Type – IV: Comprehensive Problems

Question 1.
Find Q₁, D₅ and P₄₅ for the following data:

Answer:
Q₁ = 1862.64, D₅ = 2666.67, P₄₅ = 2500

4. State with reasons whether you agree or disagree with the following statements

Question 1.
Q₂ divides the series into equal parts.
Answer:
Yes, I agree with the statement.

• Quartiles are the values of data that divide the series or data into four equal parts.
• Each represents one-quarter of the data when arranged in ascending and descending order.
• These 3 values are called Q₁, Q₂, and Q₃.
• Q₂ is nothing but the median or the middlemost value.
• Hence, Q₂ divides the series into two equal parts.

Question 2.
The 25th percentile is equal to the first quartile.
Answer:
Yes, I agree with the statement.

• Percentile is the value that divides the series into 100 equal parts, while quartile divides the series into 4 equal parts.
• Therefore, the first quartile is equal to the 25th percentile.

Question 3.
There is no difference between quartiles, deciles, and percentiles.
Answer:
No, I do not agree with the statement.

• Quartiles are the values that divide the series into 4 equal parts, whereas deciles are the values that divide the series into 10 equal parts, while percentiles divide the series into 100 equal parts.
• Quartiles consist of 3 values, while deciles are of 9 values and percentiles are of 99 values.
• Hence, though quartiles, deciles, and percentiles are interrelated, they differ from each other.

Balbharti Maharashtra State Board Class 11 Economics Important Questions Chapter 5 Rural Development in India Important Questions and Answers.

Maharashtra State Board 11th Economics Important Questions Chapter 5 Rural Development in India

1A. Choose the correct option and rewrite the sentence:

Question 1.
Short term loans not exceeding two years are taken ___________
(a) to buy tractor
(b) to make improvements on land
(c) for meeting expenses on religious or social ceremonies
(d) for digging up of canals
Answer:
(c) for meeting expenses on religious or social ceremonies

Question 2.
Non-institutional sources of agricultural credit are related to ___________
(a) the loan provided by landlords, money-lenders, traders, etc.
(b) NABARD, which is an apex institution in rural credit structure.
(c) Rural Co-operative credit institutions.
(d) Commercial banks establish branches to provide credit.
Answer:
(a) the loan provided by landlords, money-lenders, traders, etc.

Question 3.
The service sector termed as ‘tertiary sector’ ___________
(a) has been subdivided into agriculture and allied activities.
(b) includes transport, restaurants, tourism, etc.
(c) is concerned with the processing of raw materials.
(d) consists of the plantation, forestry, fisheries, dairy, etc.
Answer:
(b) includes transport, restaurants, tourism, etc.

Question 4.
Rural development leads to an increase in rural incomes and standard of living.
(a) It is related to only agricultural development.
(b) Indian economy is predominantly an urban economy.
(c) Credit has to be used for personal consumption only.
(d) This helps in the eradication of poverty.
Answer:
(d) This helps in the eradication of poverty.

Question 5.
Agricultural policies have been reviewed from time to time.
(a) so as there are adequate savings to finance farming.
(b) as India’s economic growth depends upon agricultural development only.
(c) so as to provide adequate and timely finance to the rural sector.
(d) so as to restrict money lenders from charging a high rates of interest.
Answer:
(c) so as to provide adequate and timely finance to the rural sector.

1B. Complete the correlation:

Question 1.
Industrial Sector : Cottage Industries : : Service Sector : ___________
Answer:
Transport

Question 2.
___________ : Allied Activities : : Industrial Sector : Rural Industries.
Answer:
Agricultural Sector

Question 3.
Purchase of Tractor : ___________ : : Loans for Marriages : Unproductive Loans.
Answer:
Productive Loan

Question 4.
Institutional Sources : Regional Rural Banks : : ___________ : Money Lenders.
Answer:
Non-institutional Sources

Question 5.
Short term Credit Co-operatives : State Co-operative Banks : : Long term Credit Co-operatives : ___________
Answer:
State Co-operative Agriculture and Rural Development Banks.

1C. Suggest the economic terms for the given statements:

Question 1.
The strategy is designed to improve the economic and social life of a specific group of people.
Answer:
Rural Development

Question 2.
Division of Agricultural sector.
Answer:
tertiary sector

Question 3.
An industrial activity concerned with the processing of raw materials.
Answer:
final consumers

Question 4.
Sector concerned with services to business and the final consumer.
Answer:
traders, professionals and technicians

Question 5.
Loan not exceeding two years.
Answer:
economic growth

Question 6.
Loan up to a period of five years.
Answer:
purchase of fertilizers and HYV seeds

Question 7.
Loan for a period of more than five years.
Answer:
buying cattle or agricultural equipment

Question 8.
Justified loan related to agricultural production.
Answer:
Productive loan

Question 9.
A loan used for personal consumption.
Answer:
Unproductive loan

Question 10.
A banking institution to provide finance for agriculture and rural development.
Answer:
Government of India

1D. Find the odd word out.

Question 1.
Agricultural Sector – Plantation, Forestry, Fisheries, Restaurant
Answer:
Restaurant

Question 2.
Service Sector – Computer Service, Horticulture, Tourism, Restaurant
Answer:
Horticulture

Question 3.
Terms related to Rural Development in India – Public health, Literacy, Suppression of women power, Land reforms.
Answer:
Suppression of women’s power.

1E. Complete the following statements:

Question 1.
A strategy designed to improve the economic and social life of a specific group of people is called ___________
Answer:
Rural Development

Question 2.
The service sector is also termed as ___________
Answer:
Agriculture and Allied activities

Question 3.
The service sector involves services to business as well as ___________
Answer:
Industrial sector

Question 4.
The service sector is further classified into ___________
Answer:
Service sector

Question 5.
Appropriate strategies for rural development will lead to ___________
Answer:
Short term credit

Question 6.
Short term credit is required for ___________
Answer:
Medium-term credit

Question 7.
Medium-term credit is taken for ___________
Answer:
Long term credit

Question 8.
Purchase of tractor, land, seeds, etc are the examples of ___________
Answer:
Productive loan

Question 9.
Loan taken for expenditure on marriage or religious ceremony is called as ___________
Answer:
Unproductive loan

Question 10.
NABARD today is fully owned by ___________
Answer:
NABARD

1F. Choose the wrong pair:

Question 1.

Answer:
Wrong Pair: Enforcement of law and order – Eradication of poverty

Question 2.

Answer:
Wrong Pair: Infrastructure development – HYV seeds

Question 3.

Answer:
Wrong Pair: RRB’s – Cater to the needs of urban poor

Question 4.

Answer:
Wrong Pair: DCCB – Development Central Co-operative Banks

2. Identify and explain the concepts from the given illustrations:

Question 1.
Govind bought a bullock by taking a loan for a period of 5 years.
Answer:
Medium Term Loan.
The medium-term loan is taken for a period of 5 years and it is generally taken to buy cattle or agricultural equipment or digging up of canals.

Question 2.
Surekha established a handloom industry to cater to the needs of the rural poor in the village.
Answer:
Cottage Industry.
The cottage industry is a manufacturing activity carried in the house of an individual. It is a small-scale industry with a minimum amount of investment, making job opportunities for the rural people in the village.

Question 3.
Gulabrao took money from a landlord for the marriage of his son.
Answer:
Unproductive Loan.
The unproductive loan is taken for personal consumption purposes. It is not related to productive activities like loans taken for marriages or to perform religious ceremonies.

Question 4.
There was a considerable socio-economic change in ‘Jamdul’ village after the generation of electricity.
Answer:
Infrastructure Development.
Infrastructure development is a result of rural development programmes. It leads to further progress of an economy.

Question 5.
Nand Kumar started a cyber cafe near the bus stand to provide computer services.
Answer:
Service Sector.
The service sector involves the provision of services to businesses as well as services to final consumers like accounting
services, mechanical services, plumbing services, computer services, etc.

3. Assertion and Reasoning questions:

Question 1.
Assertion (A): Money lending has been a widely prevalent profession in villages.
Reasoning (R): Commercial Banks provide rural credit by establishing their branches in rural areas. Options:
(i) (A) is true, but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Answer:
(iv) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Question 2.
Assertion (A): Protection of Tenancy rights leads to a reduction in rural inequality.
Reasoning (R): Rural development ensures effective implementation of land reforms.
Options:
(i) (A) is true, but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Answer:
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).

Question 3.
Assertion (A): Short-term loans are not exceeding two years.
Reasoning (R): They are generally required for digging up canals.
Options:
(i) (A) is true, but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Answer:
(iv) Both (A) and (R) are true but (R) is not the correct explanation of (A).

Question 4.
Assertion (A): Literacy is a powerful instrument of socio-economic change.
Reasoning (R): Unproductive credit is economically justified.
Options:
(i) (A) is true, but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Answer:
(i) (A) is true but (R) is False.

4. Distinguish between:

Question 1.
Short Term Credit and Medium Term Credit.
Answer:

Question 2.
Medium-Term Credit and Long Term Credit.
Answer:

Question 3
Short Term Credit and Long Term Credit.
Answer:

Question 4.
Productive Loan and Unproductive Loan.
Answer:

Question 5.
Non-institutional Sources of Agricultural Credit and Institutional Sources of Agricultural Credit.
Answer:

5. Answer the following questions:

Question 1.
Explain Rural occupational structure.
Answer:
Rural development is necessary to improve the economic and social life of the rural people.
The rural occupational structure can be classified as follows:

• Agricultural sector
• Industrial sector
• Service sector

(a) Agricultural sector: The rural population in India is mainly engaged in the agricultural sector. It is sub-divided as agriculture and allied activities. Agriculture consists of small marginal and large farmers. Allied activities include plantation, poultry farming, fisheries, forestry, dairy, horticulture, mining, etc.

(b) Industrial sector: It includes economic activities related to the processing of raw materials and the manufacture of goods. Occupations related to construction work, electricity, banking, insurance, trade, finance, education, etc., also fall under the Industrial sector. It is further classified as a small-scale industry, cottage industry, and rural industry.

(c) Service sector: It is also called the tertiary sector. It includes services like accounting services, mechanic or plumbing services, banking and insurance, computer service, etc. It is further classified into traders, transport operators, professionals, and technical.

Question 2.
Write a short note on NABARD.
Answer:
NABARD:

• NABARD is the Apex banking institution. National Bank for Agricultural and Rural Development was established on 12th July 1982, with a paid-up capital of ₹ 100 crores. 50% contribution was paid by the government and 50% by RBI.
• NABARD plays an energetic role in strengthening and re-organizing the credit structure in the country.
• NABARD provides credit to agriculture, small-scale industries, cottage and village industries, handicrafts, and other allied activities.
• The money required by the primary agricultural credit societies is provided by NABARD. It reduces regional imbalances.
• Today, NABARD is fully owned by the Government of India. NABARD is connected to district and state co-operative banks and RRB’s (Regional Rural Banks) for rural development.

Question 3.
Explain the term Micro Finance Institutions (MFIs).
Answer:
Micro Finance Institutions (MFIs):

• They offer rural credit on concessional interest rates.
• The beneficiaries of this scheme are the marginal farmers, landless labourers, artisans, and craftsmen in the rural areas.
• However, small farmers are unable to access rural credit.
• It is due to its inflexible procedure and high transaction cost.
• Thus, NGOs (Non- government Organisations) help the rural poor.

Question 4.
Explain Rural Co-operative Credit Institutions.
Answer:
Agricultural credit is an important prerequisite for agricultural growth.
Classification of Rural Co-operative Credit Institutions are as follows:

The rural co-operative credit institutions are divided into short-term credit co-operatives and long-term credit co-operatives.

(i) Short-term credit Co-operatives provide short-term rural credit. They are based on a three-tier structure.
Primary Agricultural Credit Societies operate at the village level, DCCB at the district level, and SCB at the state level.

(ii) Long-term credit Co-operatives meet the long-term requirements of the farmers. They are organized at two levels. Primary Co-operative Agriculture and Rural Development Banks operate at the village level as an independent unit. State Co-operative Agriculture and Rural Development Banks operate at the state level through their branches in different villages. They provide credit to the rural and agricultural sectors for their development.

Question 5.
Explain Non-institutional Sources of Credit.
Answer:
Non-Institutional Sources of Credit:
Non-institutional sources of credit play a prominent role in supplying rural credit.
The important sources of non-institutional credit are as follows:
(i) Moneylenders: It is easy to obtain loans from money lenders as the lenders and borrowers are known to each other. Easy access, simple procedure, and no restriction on the use of land attract farmers towards this loan. However, money lenders mortgage the land and charge high rates of interest on credit. It may result in the indebtedness of farmers.

(ii) Other Private Sources: It includes traders, landlords, commission agents, relatives, and friends, etc. At present, the share of non-institutional finance is declining.

Question 6.
Explain the classification of agricultural credit on the basis of the time period.
Answer:
On the basis of tenure (time period), agricultural credit is classified as follows:

• Short Term credit
• Medium Term credit
• Long Term credit

(i) Short Term Credit: It is required for consumption and to carry out farming and other activities. It is for a period not exceeding 2 years. It is taken to meet expenses on purchasing fertilizer, fodder, HYV seeds as well as to meet religious expenses or expenses of social ceremonies. These loans are normally repaid after the harvest period.

(ii) Medium Term Credit: The period for these loans is up to 5 years. It is mainly needed to purchase cattle, equipment, to make improvements on the land, to dig up canals, etc.

(iii) Long Term Credit: When farmers borrow a loan for a period of more than 5 years, it is called a long-term loan. It is mainly used to buy additional land, irrigation, making permanent improvements on the land, etc.

Question 7.
Explain the classification of agricultural credit on the basis of purpose.
Answer:
Agricultural credit is an important prerequisite for agricultural growth.
On the basis of purpose there are two types of agricultural credit which is as follows:

• Productive loan
• Unproductive loan.

(i) Productive loans: Productive loans are those which are related to agricultural equipment. Productive loans help to increase farmers’ income in the future.

(ii) Unproductive loans: Unproductive loans are used for personal consumption.
e.g. loans are taken for religious and social celebrations, birth and death ceremonies, expenditure on marriages, etc.
Unproductive loans increase the debt burden of the farmers.

6. State with reasons whether you agree or disagree with the following statements:

Question 1.
Unproductive loans are economically justified.
Answer:
No, I do not agree with the statement.

• Productive loans are economically justified as they are used for production purposes.
• Unproductive loans are used for personal consumption and are not related to productive activity.
• Eg. loans for expenditure on marriages or religious ceremonies.
• Thus, unproductive loans are not economically justified.

Question 2.
RRBs are set up as rural-oriented commercial banks with a low-cost profile of co-operatives.
Answer:
Yes, I do agree with the statement.

• RRBs cater to the needs of the rural poor.
• RRBs work with the professional decision and modern outlook of commercial banks.
• They are specialized banks established under RRB Act, 1976.
• Thus, we can say RRBs are rural-oriented commercial banks.

Question 3.
The interest charged by the money lenders is usually very low.
Answer:
No, I do not agree with the statement.

• Moneylenders are the private lenders of credit.
• They fall under the non-institutional sources of agricultural credit.
• They provide loans to farmers against land or other assets as collateral security.
• Thus, they charge a high rate of interest and mortgage the property of the cultivators.

Question 4.
Long Term Credit is for a period of up to 5 years.
Answer:
No, I do not agree with the statement.

• Long Term loans are generally taken by the farmers to buy farming equipment, tractor, additional land, to make permanent improvements on the land, or to pay old debts, etc.
• It is generally bigger in amount, hence, it is taken for a longer period of time for more than 5 years.
• A longer period makes repayment easier for the borrowers.
• Thus, it is taken for more than 5 years period.

7. Answer in detail:

Question 1.
Write the significance of Rural Development in India.
Answer:
The significance of Rural Development in India are as follows:

• Public Health and Sanitation: Rural development helps to improve sanitation and hygiene. It improves the quality of life.
• Literacy Rate: Rural development helps to increase the literacy rate. It helps to make provisions for educational facilities.
• Empowerment of Women: Rural development helps to reduce gender disparity. It also encourages women’s participation in community development programs.
• Enforcement of Law and Order: Rural development helps to safeguard the rights of the rural people.
• Land Reforms: Rural development results in effective implementation of land reforms like regulation
  of rent, protection of tenancy rights, etc. It reduces rural inequality.
• Infrastructural Development: Infrastructure refers to all those services and facilities which are necessary for economic growth. Rural development leads to infrastructural development, e.g. power generation, transportation, irrigation, banking, etc.
• Availability of Credit: Rural development also leads to an increase in financial institutions like credit societies, RRB’s, Cooperative banks, etc. The provision of credit helps the farmers to improve their standard of living.
• Eradication of Poverty: Due to rural development, there is an increase in rural incomes. It results in the eradication of poverty. In short, rural development is necessary for the overall development of the rural sector and to improve the quality of life.

Question 2.
Explain in detail the types of Agricultural Credit.
Answer:

On the basis of tenure (time period), agricultural credit is classified as follows:

• Short Term credit
• Medium Term credit
• Long Term credit

(i) Short Term Credit: It is required for consumption and to carry out farming and other activities. It is for a period not exceeding 2 years. It is taken to meet expenses on purchasing fertilizer, fodder, HYV seeds as well as to meet religious expenses or expenses of social ceremonies. These loans are normally repaid after the harvest period.

(ii) Medium Term Credit: The period for these loans is up to 5 years. It is mainly needed to purchase cattle, equipment, to make improvements on the land, to dig up canals, etc.

(iii) Long Term Credit: When farmers borrow a loan for a period of more than 5 years, it is called a long-term loan. It is mainly used to buy additional land, irrigation, making permanent improvements on the land, etc.

Agricultural credit is an important prerequisite for agricultural growth.
On the basis of purpose there are two types of agricultural credit which is as follows:

• Productive loan
• Unproductive loan.

(i) Productive loans: Productive loans are those which are related to agricultural equipment. Productive loans help to increase farmers’ income in the future.

(ii) Unproductive loans: Unproductive loans are used for personal consumption.
e.g. loans taken for religious and social celebrations, birth and death ceremonies, expenditure on marriages, etc.
Unproductive loans increase the debt burden of the farmers.

Question 3.
Explain the institutional sources of Agricultural Credit in India.
Answer:
The main aim of institutional sources of agricultural credit is to provide timely and adequate credit to farmers for increasing their agricultural productions.

Institutional sources of agricultural credit in India are as follows:
(i) National Bank for Agriculture and Rural Development (NABARD): It is at the top of banking institutions providing finance for agriculture and rural development, promotion of agriculture, small-scale industries, cottage, and village industries, handicrafts, etc. NABARD today is totally owned by the Government of India.

(ii) Rural Co-operative Credit Institutions:
It is divided into:

• Short-term credit co-operatives: This co-operative works through its three-tier structure i.e. PACS, DCCB, and SCB.
• Long-term credit co-operatives: These co-operatives look after the long-term credit requirements of the farmers.

It works through two banks i.e. Primary Co-operative Agriculture and Rural Development Banks and State Co-operative Agriculture and Rural Development Banks.

Primary Co-operative Agriculture and Rural Development Banks work at the village level as an independent unit while State Co-operative Agriculture and Rural Development Banks work at the State level through its branches in villages.

(iii) Commercial Banks (CBs): They provide rural credit by opening their branches in rural areas.

(iv) Regional Rural Banks (RRBs): Such banks are established under RRB Act, 1976. They are rural-oriented with a low-cost profile of co-operatives. They work with professional discipline and the modern outlook of Commercial banks.

(v) Micro Finance Institutions (MFIs): These are the institutions providing financial services to poor people or new businesses that cannot use traditional banking services. Such institutions are generally run by NGOs.

8. Read the following passage carefully and answer the questions given below:

Agriculture is the backbone of the Indian economy to bring about an increase in agricultural production, various programmes have been introduced through economic planning; like the expansion of irrigation facilities, infrastructural development, improving health & nutrition of the rural masses, increasing rural employment, etc.

Traditional agriculture relies heavily on indigenous inputs. Such as the use of organic manures, seeds, simple ploughs, bullocks & primitive agricultural tools.

Modern Technology in agriculture consists of Chemical fertilizers, pesticides, improved varieties of seeds including hybrid seeds, extensive irrigation, use of electricity, agricultural machinery, etc.

Modern technology has increased agricultural mechanization. As a result, industries supplying modern farm inputs have grown at a rapid rate. It has increased the demand for agricultural credit. It has improved productivity. So farmers have become market-oriented.

But, the effects of modern technology prevail only in certain selected areas & the rest of the country is not yet suitable for modern technology. Therefore, low-cost technology has to be introduced for overall rural development.

Question 1.
Highlight the programmes introduced to increase agricultural production.
Answer:
Through economic planning, various programmes have been introduced like the expansion of irrigation facilities, infrastructural development, improving the health and nutrition of the rural masses, increasing rural employment, etc.

Question 2.
What is the difference between traditional and modern technology?
Answer:
Traditional agriculture mainly depends upon indigenous inputs such as the use of organic manures, seeds, simple plough – bullocks, and primitive agricultural tools.

Modern technology in agriculture consists of chemical fertilizers, pesticides, improved varieties of seeds, including hybrid seeds, extensive irrigation, use of electric power, agricultural machinery, etc.

Question 3.
Why did farmers become market-oriented?
Answer:
Modern technology has increased agricultural mechanization. As a result, industries supplying modern farm inputs have grown at a rapid rate. It has increased the demand for agricultural credit. It has improved productivity. Hence, farmers became market-oriented.

Question 4.
Why is it necessary to introduce low-cost technology?
Answer:
The effects of modern technology prevail only in certain selected areas and the rest of the country is not yet suitable for modern technology. Therefore, low-cost technology has to be introduced for overall rural development.

Balbharti Maharashtra State Board Class 11 Economics Important Questions Chapter 4 The Economy of Maharashtra Important Questions and Answers.

Maharashtra State Board 11th Economics Important Questions Chapter 4 The Economy of Maharashtra

1A. Choose the correct option:

Question 1.
Revenue Divisions of Maharashtra
(a) Mumbai, Pune, Nasik, Palghar.
(b) Mumbai, Pune, Nasik, Aurangabad.
(c) Mumbai, Nasik, Amravati, Nagpur.
(d) Mumbai, Amravati, Nagpur, Nanded.
Options:
(1) a and d
(2) b and c
(3) a, b and d
(4) c, d, and b
Answer:
(2) b and c

Question 2.
Feature of Maharashtra Economy
(a) 2nd largest state in the country
(b) Most urbanized State.
(c) Unskilled manpower
(d) Most favoured destination for tourism
Options:
(1) c and d
(2) b, c, d
(3) a, b and d
(4) a, c and d
Answer:
(3) a, b and d

Question 3.
Problems in the economic development of Maharashtra
(a) Agricultural indebtedness.
(b) Abundant capital and marketing facilities.
(c) Abundant infrastructure facilities
(d) Regional imbalance
Options:
(1) a and d
(2) a, b and c
(3) b, c, and d
(4) a and c
Answer:
(1) a and d

Question 4.
Feature of industry in Maharashtra.
(a) Not potential to absorb excess labour
(b) Industrially advanced state.
(c) First choice of domestic and foreign investors
(d) Generates higher income and higher productivity.
Options:
(1) a and b
(2) b and c
(3) a, b, c
(4) b, c, and d
Answer:
(4) b, c, and d

Question 5.
Measures by Government for industrial development
(a) Creation of specialized Economic zone
(b) Implementation of MSICDP
(c) Discouraging Single Window Cell
(d) Introduction of MAITRI
Options:
(1) b and c
(2) a, b and c
(3) b, c, and d
(4) a, b and d
Answer:
(4) a, b and d

Question 6.
Service Sector
(a) Provides service to the agricultural sector and farmers.
(b) Largest employment generating sector
(c) Consists of insurance, retail banking, education, etc.
(d) Provides service to the business sector and final consumers.
Options:
(1) b, c, and d
(2) a, c and d
(3) a and d
(4) c and d
Answer:
(1) b, c, and d

1B. Complete the correlation:

Question 1.
Sarva Shiksha Abhiyan : Free and compulsory education : : Sakshar Bharat Abhiyan : ___________
Answer:
Each one Teach one or Adult literacy

Question 2.
Kolhapur : Regional films : : Mumbai : ___________
Answer:
Bollywood

Question 3.
NRHM : Health determinants : : NUHM : ___________
Answer:
Sanitation and hygiene

Question 4.
Primary Tier : Primary Health Centres and Community Health Centres : : Secondary Tier : ___________
Answer:
sub-district hospitals and district hospital

Question 5.
Agricultural Sector : Agricultural Indebtedness : : Industrial Sector : ___________
Answer:
Regional Imbalance

Question 6.
Economic infrastructure : Communication : : ___________ : Education.
Answer:
Social Infrastructure

Question 7.
___________ : Sarva Shiksha Abhiyan : : Higher Education : Rashtriya Uctchatar Shiksha Abhiyan.
Answer:
Primary Education

Question 8.
‘Each one Teach one’ : ___________ : : Free of cost S.T. Bus service : Girls Education.
Answer:
Adult literacy

Question 9.
Tribal Education : Residential Ashram Schools : Inclusive Education : ___________
Answer:
Differently Abled Children

Question 10.
Primary Tier : Community Health Centres : : ___________ : Super Speciality Hospital.
Answer:
Tertiary Tier

1C. Suggest the economic terms for the given statements:

Question 1.
The backbone of the socio-economic development of any country.
Answer:
Education

Question 2.
Free and compulsory education to 6-14 years children.
Answer:
Right to Education (RTE)

Question 3.
MTDC has launched the scheme to bring different experiment projects like village tourism, safari, etc.
Answer:
Mahabhraman

Question 4.
Second largest populated state in the country.
Answer:
Maharashtra

Question 5.
Largest employment generating sector.
Answer:
Service Sector

Question 6.
Industrially advanced state.
Answer:
Maharashtra

Question 7.
Number of Districts in Maharashtra.
Answer:
Thirty-Six (36)

Question 8.
An industry that focuses on customer satisfaction.
Answer:
Hospitality

Question 9.
A district was well known for regional films.
Answer:
Kolhapur

Question 10.
City popularly is known as “Bollywood”.
Answer:
Mumbai

Question 11.
The first state in the country to receive RUSA grant of ₹ 20 crores.
Answer:
Maharashtra.

1D. Arrange in proper order:

Question 1.
Highest Populated States
(a) Maharashtra
(b) West Bengal
(c) Uttar Pradesh
(d) Bihar
Options:
(1) a, c, d, b
(2) c, a, d, b
(3) d, c, b, a
(4) c, b, d, a
Answer:
(1) c, a, d, b

Question 2.
Largest Geographical Area
(a) Uttar Pradesh
(b) Madhya Pradesh
(c) Rajasthan
(d) Maharashtra
Options:
(1) a, b, d, c
(2) c, a, d, b
(3) d, c, b, a
(4) c, b, d, a
Answer:
(2) c, b, d, a

Question 3.
Levels of Education
(a) Primary
(b) Higher Secondary
(c) Secondary
(d) Higher Education
Options:
(1) a, d, b, c
(2) b, d, c, a
(3) a, c, b, d
(4) c, d, b, a
Answer:
(3) a, c, b, d

Question 4.
Sector of Economy
(a) Quaternary
(b) Tertiary
(c) Secondary
(d) Primary
Options:
(1) d, c, b, a
(2) a, b, d, c
(3) b, a, c, d
(4) d, b, a, c
Answer:
(4) d, c, b, a

1E. Find the odd word out:

Question 1.
Use of chemical fertilizers, Soil degradation, Inadequate irrigation facilities, Textiles.
Answer:
Textile

Question 2.
Textile, Automobile, Pharmaceutical, Climatic changes.
Answer:
Climatic changes

Question 3.
Unskilled labour, Tourism, Lack of infrastructure, Outdated technology.
Answer:
Tourism

Question 4.
Energy, Transport, Communication, Agriculture.
Answer:
Agriculture

1F. Complete the following statements:

Question 1.
Maharashtra state has been divided into ___________ districts.
Answer:
36

Question 2.
Maharashtra is the ___________ largest populated state in the country.
Answer:
Second

Question 3.
The population of Maharashtra was ___________ crores during 2011.
Answer:
11.24

Question 4.
Maharashtra is the ___________ largest state in the country in terms of geographical area.
Answer:
third

Question 5.
Geographical area of Maharashtra is about ___________ lac sq.km.
Answer:
3.08

Question 6.
According to 2011 census the sex ratio of Maharashtra was ___________ females per 1000 males.
Answer:
929

Question 7.
According to 2011 census literacy rate of Maharashtra was ___________
Answer:
82.3%

Question 8.
The share of agriculture and allied activities of Maharashtra during 2001-02 was ___________
Answer:
15.3%

Question 9.
The share of agriculture and allied activities of Maharashtra during 2016-17 was ___________
Answer:
12.2%

Question 10.
Maximum use of chemical and pesticides leads to ___________
Answer:
soil degradation

Question 11.
The share of Industries of Maharashtra is about ___________
Answer:
18%

Question 12.
In Economy, service sector is the largest ___________ generating sector.
Answer:
employment

Question 13.
The basic requirement for economic development is ___________
Answer:
Infrastructure

Question 14.
The backbone of socio-economic development of any country is ___________
Answer:
education

Question 15.
During 2016-17 the expenditure on primary education of the Maharashtra government’s was ___________ crores.
Answer:
₹ 19,486

Question 16.
Number of aided Ashram school in the Maharashtra state is ___________
Answer:
556

1G. Choose the wrong pair:

Question 1.

Answer:
Wrong Pair: Share of the service sector – 10%

Question 2.

Answer:
Wrong Pair: Community health centers – 370

Question 3.

Answer:
Wrong Pair: Secondary Sector – Harvesting

Question 4.

Answer:
Wrong Pair: Districts of Maharashtra – 63

1H. Choose the correct pair:

Question 1.

Answer:
Correct Pair: (4) SEZ – Industrial Growth

Question 2.

Answer:
Correct Pair: (2) Service Sector – Largest Employment Generator

2. Identify and explain the concepts from the given illustrations:

Question 1.
In tribal areas, for their progress, many schools have started.
Answer:
Tribal Education.
Ashram School, an initiative by Government of Maharashtra, provide food, uniform, educational material and other concessions to the tribal student for encouraging higher studies. There are 556 aided Ashram Schools in the state.

Question 2.
Hotel industries give better service to their customers.
Answer:
Hospitality.
Hospitality is all about the art of entertaining or receiving guests. It means friendly and generous receptions and entertainment of guests, visitors, or strangers. Hospitality is a broader industry than other industries and has grown rapidly in Maharashtra due to the development of the tourism business in Maharashtra.

Question 3.
In the process of economic development, Transport plays an important role.
Answer:
Service Sector.
The service sector supports both the primary and secondary sectors but involves important services like banking, transport, hotel, energy, etc. It is the largest employment generating and fastest-growing sector of the economy.

3. Assertion and Reasoning – Choose the correct answer from the following:

Question 1.
Assertion (A) – Agricultural productivity is affected by climatic changes.
Reasoning (R) – To increase agricultural activity, the development of irrigation facilities is necessary.
(i) (A) is true but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are True, but (R) is not the correct explanation of (A).
Answer:
(iii) Both (A) and (R) are true and (R) is the correct explanation of (A).

Question 2.
Assertion (A) – Education is the backbone of social-economic development.
Reasoning (R) – There are 4 levels of education like primary, secondary, higher secondary, and higher education.
(i) (A) is true but (R) is False.
(ii) (A) is false, but (R) is True.
(iii) Both (A) and (R) are True and (R) is the correct explanation of (A).
(iv) Both (A) and (R) are True, but (R) is not the correct explanation of (A).
Answer:
(iii) Both (A) and (R) are True and (R) is the correct explanation of (A).

4. State with reasons whether you agree or disagree with the following statements:

Question 1.
There are some important features of the economy of Maharashtra.
Answer:
Yes, I do agree with the statement.

• Maharashtra is the second largest populated state in India.
• It is the third-largest state in terms of geographical area.
• It is the most urbanized state.
• The literacy rate was 82.3% for Maharashtra as per the 2011 census.
• As per the 2011 census, the sex ratio was 929 females per 1000 males.
• As per the Economic survey 2016-2017, the state had the highest growth of GSDP (Gross State Domestic Product)
• The state of Maharashtra has abundant natural resources, skilled man power, developed infrastructure, and is technological advancement.
• It is the most favoured destination for investment and Tourism.

Question 2.
The agricultural sector has no problems.
Answer:
No, I do not agree with the statement.
The agricultural sector is the backbone of the Indian Economy as well as Maharashtra state. But still, this sector is facing many problems such as:

• Decrease in the average size of land.
• Maximum use of chemical fertilizers and pesticides.
• Lack of capital.
• Agricultural indebtedness.
• Fewer irrigation facilities.
• Lack of marketing.
• Climatic changes.
• Adverse crop pattern.
• Increase in the number of small and marginal farmers.

5. Read the following passage and answer the questions given below:

Maharashtra Water Resources Regulatory Authority (MWRRA) is a Government of Maharashtra initiative founded in August 2005 and one of the key people is Mr. K.P. Bakshi as chairman. Administrative and legal reforms constitute broadly what is known as the Water Sector Reform. The institute is responsible for the regulation, allocation, management, and utilization of limited water resources in the state. The MWRRA was authorized to control and set water tariffs. All water regulation projects are abode to have clearance from MWRRA. This project could be from irrigation, industrial users, and urban and rural domestic consumers.

Question 1.
What is the government of Maharashtra’s initiative on water resources?
Answer:
Maharashtra Water Resources Regulatory Authority (MWRRA) is an initiative taken by the government of Maharashtra.

Question 2.
What is the function of MWRRA?
Answer:
The main function of MWRRA is as follows:
It is responsible for the regulation, allocation, management, and utilization of limited water resources in the state of Maharashtra.

Question 3.
In which year MWRRA is formed and who is the key person?
Answer:
MWRRA is formed in August 2005 and the name of the key person is Mr. K.P. Bakshi who is the chairman.

Question 4.
Do you think MWRRA is authorized to set water tariffs? Kindly explain.
Answer:
Yes, MWRRA is authorized to control and set water tariffs. All water regulation projects are abode to have clearance from MWRRA. This project could be from irrigation, industrial users, and urban and rural domestic consumers.

Balbharti Maharashtra State Board Class 11 Economics Important Questions Chapter 2 Money Important Questions and Answers.

Maharashtra State Board 11th Economics Important Questions Chapter 2 Money

1A. Choose the correct option:

Question 1.
Qualities of Money
(a) General Acceptability
(b) Durability
(c) Non-divisibility
(d) Portability
Options:
(1) a, c, d
(2) a, b, c
(3) a, b, d
(4) b, c, d
Answer:
(3) a, b, d

Question 2.
Difficulties in Barter System
(a) Problem of Double coincidence of wants
(b) Lack of common measure of value
(c) Difficulties in the storage of goods
(d) Divisibility of goods possible
Options:
(1) b, c, d
(2) a, b, c
(3) a, b, c, d
(4) a, b, d
Answer:
(2) a, b, c

Question 3.
Statement related to Barter System
(a) Exchange of goods for goods
(b) Mobile Phone, Tablet, Smart Cards, Digital Wallet
(c) Problem of deferred payments
(d) Lack of common measure of value
Options:
(1) a, c, d
(2) a, b, c
(3) b, c, d
(4) b, d
Answer:
(1) a, c, d

Question 4.
Statement not related to Standard coins
(a) Face value greater than the intrinsic value
(b) It is also called as full-bodied coins
(c) It is made of gold or silver
(d) Face value is equal to intrinsic value
Options:
(1) a, b, c
(2) b, c
(3) a, b, d
(4) b, c, d
Answer:
(4) b, c, d

Question 5.
Not a Commodity money
(a) Feathers
(b) Tusk
(c) Aluminium
(d) Animal skin
Options:
(1) b, a
(2) c, d
(3) c
(4) a, c
Answer:
(3) c

Question 6.
Features of non-legal tender money
(a) No legal compulsion
(b) Cheques, Bill of exchange, etc
(c) Generally, used by people for final payment
(d) It is backed by law
Options:
(1) a, c, d
(2) a, b, c
(3) b, d
(4) b, c, d
Answer:
(2) a, b, c

Question 7.
Secondary functions of money
(a) Standard of Deferred payments
(b) Store of value
(c) Medium of Exchange
(d) Transfer of value
Options:
(1) b, c
(2) a, b, c
(3) a, b, d
(4) b, c, d
Answer:
(3) a, b, d

Question 8.
Contingent functions of money
(a) Imparts liquidity to wealth
(b) Measurement of National Income
(c) Basis of Credit
(d) Estimation of macro-economic variable
Options:
(1) a, b, c
(2) b, c, d
(3) a, c, d
(4) a, b, c, d
Answer:
(4) a, b, c, d

Question 9.
Concept of Black money
(a) Money not accounted for
(b) tax evaded money
(c) encourages bribery, hoarding, etc
(d) discourages illegal activities
Options:
(1) a, d
(2) b, c, d
(3) a, b, c
(4) a, b, d
Answer:
(3) a, b, c

Question 10.
Features of Bank money
(a) Refers to deposits saved by people
(b) Demand draft, cheque, etc
(c) Legal tender money
(d) Nonlegal tender money
Options:
(1) a, b, d
(2) b, c, d
(3) a, c, d
(4) b, d
Answer:
(1) a, b, d

1B. Complete the correlation:

Question 1.
Bills of exchange : Credit money : : Feathers : __________
Answer:
Commodity Money

Question 2.
Primary function of money : Medium of exchange : : __________ : Deferred payment.
Answer:
Secondary functions of money

Question 3.
Commodity money : Metals, Rice : : __________ : Credit card.
Answer:
Plastic money

Question 4.
Standard coins : Gold, silver : : __________ : Cheap metal.
Answer:
Token coins

Question 5.
India : Rupees : : __________ : Dollar.
Answer:
USA

Question 6.
Animal money : Oldest form of money : : __________ : Latest form of money.
Answer:
Electronic money

Question 7.
Currency notes : Unlimited legal tender : : Token coins : __________
Answer:
Limited legal tender

Question 8.
U.K. : Pound : : __________ : Yen
Answer:
Japan

Question 9.
Credit Cards : Plastic Money : : Digital Wallet : __________
Answer:
Electronic money

Question 10.
₹ 1 note : __________ : : ₹ 100 note : Reserve Bank of India.
Answer:
Govt, of India

1C. Suggest the economic terms for the given statements.

Question 1.
A financial institution that accepts deposits of money from the public.
Answer:
Bank

Question 2.
Exchange of goods for goods without the use of money.
Answer:
Barter system

Question 3.
Coins whose face value is higher than their intrinsic value.
Answer:
Token coins

Question 4.
Coins whose face value is equal to their intrinsic value.
Answer:
Standard or Full-bodied coins

Question 5.
Money that is backed by law and cannot be refused in transactions by anybody.
Answer:
Legal tender money

Question 6.
Money is generally used by the people but there is no legal compulsion of accepting it.
Answer:
Nonlegal tender money

Question 7.
Payment to be made at a future date.
Answer:
Deferred payment

Question 8.
Name the function of money when it serves as a medium of exchange and measure of value.
Answer:
Primary functions

Question 9.
Tool to control black money.
Answer:
Demonetization

1D. Arrange in proper order:

Question 1.
Evolution of money
(a) Paper money
(b) Animal money
(c) Plastic money
(d) electronic money
Answer:
b, a, c, d

Question 2.
Function of money
(a) Transfer of value
(b) Medium of exchange
(c) Store of value
(d) Basis of credit
Answer:
b, c, a, d

1E. Find the odd word out.

Question 1.
Definitions of money not given by
(a) Walker
(b) Crowther
(c) Marshall
(d) Seligman
Answer:
(c) Marshall

Question 2.
Not a good quality of money
(a) Homogeneity
(b) Portability
(c) Cognizability
(d) Changing the value of money
Answer:
(d) Changing the value of money

Question 3.
Not a standard of deferred payment
(a) Paper money
(b) Commodity money
(c) Bills of exchange
(d) Demand drafts
Answer:
(b) Commodity money

Question 4.
Not a metallic money
(a) silver
(b) stones
(c) aluminium
(d) nickel
Answer:
(b) stones

1F. Complete the following statements:

Question 1.
Money is anything that is generally accepted as a means of exchange and at the same time __________
Answer:
acts as a measure and store of value

Question 2.
Token coins are those whose face value __________
Answer:
is higher than their intrinsic value

Question 3.
Cow, sheep, horse, etc. used as a means of exchange are __________
Answer:
commodity money

Question 4.
Money that is backed by law and cannot be refused in the transaction are called __________
Answer:
legal tender money

Question 5.
Any two qualities of good money __________
Answer:
recognizability, divisibility

Question 6.
Money used for purchases and transactions globally is __________
Answer:
electronic money

Question 7.
In India, one rupee note and all coins are issued by the __________
Answer:
Government of India

Question 8.
Currency notes of higher denominations are issued by the __________
Answer:
Central Bank (RBI)

Question 9.
Money is a link between __________
Answer:
Present and future

Question 10.
Payments to be made at a future date is called __________
Answer:
deferred payments

Question 11.
In the case of token coins, intrinsic value is __________
Answer:
less than its face value

Question 12.
The most liquid asset is __________
Answer:
money

Question 13.
Introduction of money removed __________
Answer:
the difficulties of the barter system

Question 14.
Money that leads to political, economic and social instability in a country is __________
Answer:
Black money

Question 15.
Bank draft is an example of __________
Answer:
Bank money

Question 16.
In India, paper currency is known as __________
Answer:
Legal tender money

Question 17.
Use of Debit and Credit cards are examples of __________
Answer:
Plastic money

Question 18.
“Money is what money does”, this definition is given by __________
Answer:
Prof. Walker

1G. Choose the wrong pair:

Question 1.

Answer:
Wrong Pair: Standard coin – face value more than intrinsic value.

Question 2.

Answer:
Wrong Pair: Electronic money – Gold coins

Question 3.

Answer:
Wrong Pair: Secondary function of money – Medium of Exchange.

1H. Choose the correct option:

Question 1.

Options:
(A) 1 – e; 2 – b; 3 – a; 4 – d; 5 – c
(B) 1 – b; 2 – a; 3 – d; 4 – c; 5 – e
(C) 1 – c; 2 – d; 3 – a; 4 – b; 5 – e
(D) 1 – a; 2 – d; 3 – c; 4 – e; 5 – b
Answer:
(C) 1 – c; 2 – d; 3 – a; 4 – b; 5 – e

Question 2.

Options:
(A) 1 – a; 2 – b; 3 – c; 4 – e; 5 – d
(B) 1 – d; 2 – e; 3 – c; 4 – b; 5 – a
(C) 1 – c; 2 – e; 3 – d; 4 – a; 5 – b
(D) 1 – e; 2 – c; 3 – b; 4 – a; 5 – d
Answer:
(B) 1 – d; 2 – e; 3 – c; 4 – b; 5 – a

Question 3.

Options:
(A) 1 – a; 2 – b; 3 – c; 4 – d; 5 – e
(C) 1 – d; 2 – e; 3 – a; 4 – b; 5 – c
(B) 1 – c; 2 – b; 3 – a; 4 – e; 5 – d
(D) 1 – e; 2 – d; 3 – c; 4 – b; 5 – a.
Answer:
(D) 1 – e; 2 – d; 3 – c; 4 – b; 5 – a

2. Distinguish between:

Question 1.
Barter Economy and Money Economy.
Answer:

Question 2.
Metallic Money and Paper Money.
Answer:

Question 3.
Standard Coins and Token Coins.
Answer:

Question 4.
Legal Tender Money and Non-Legal tender Money.
Answer:

3. Answer the following:

Question 1.
Write any two most commonly accepted definitions of money.
Answer:
Some most commonly accepted definitions are as follows:

• Prof. Walker – “Money is what money does”.
• Prof Crowther – He has given the most acceptable definition. “Money is anything that is generally accepted as a means of exchange and at the same time, acts as a measure and as a store of value”.

Question 2.
What are the qualities of good money?
Answer:
Qualities of good money are as follows:

• General Acceptability: It must be generally accepted as a medium of exchange.
• Stability of Value: The purchasing power of money should be stable because money serves as a store of value.
• Cognizability: It must be easily recognizable or identifiable. For E.g. Notes of different denominations must be of different sizes, colours, etc., so that they can be easily identified.
• Durability: Money should be durable also. Its value should not fluctuate too much.
• Divisibility: Money should be divisible into units of smaller denominations.
• Portability: It should be easy to handle and carry from one place to another.
• Homogeneity: Money of the same denomination should be identical in shape, size, colour, etc.

Question 3.
What is meant by
(i) Black money
(ii) Electronic money
Answer:
(i) Concept of black money: Black money is unaccounted money which is illegally obtained and not declared for tax purposes. It encourages illegal activities, corruption, bribes, etc. This creates an obstacle to economic development.

(ii) Electronic Money: It is also called E-money. It is a monetary value that is stored and transferred electronically through mobile phones or tablets or smart cards or computers. It is backed by Central Bank and is used for purchases and other transactions globally.

Question 4.
What are the advantages of cashless payments or plastic money?
Answer:
Advantages of cashless payments or plastic money:

• It reduces the burden of carrying cash while traveling.
• It is easy to use plastic money like debit cards and credit cards.
• It will restrict the inflow of duplicate money as cash is not used at all.
• Fear of loss of money while traveling will not be there. If the card is lost we can inform our banks and get all transactions stopped.
• Corruption and black money transaction will be controlled as all transactions will be done through banks which will bring transparency to our transactions.
• We also get a credit period if payments are made through credit cards.

4. State with the reasons whether you agree or disagree with the following statements:

Question 1.
Money is the most liquid asset.
Answer:
Yes, I agree with the statement.

• Money is the most liquid asset because it is generally acceptable.
• It is a 100% liquid asset in the sense that it can be converted into any type of asset with no loss in its value
• Money helps to transfer immovable properties like land by selling it at one place and purchasing similar property at another place or from one person to another without any difficulty.
• In other words, it makes illiquid assets like land, buildings, etc., into liquid assets.
• Money as a store of value is also the most liquid asset, as compared to other assets like diamonds, houses, land, etc.

Question 2.
Money has no store of value.
Answer:
No, I do not agree with the statement.

• Money performs an important function as a store of value.
• Although wealth can be stored in a form other than money, money is the most convenient form in which wealth can be stored. Since money is the most liquid asset, it can be used for future use whenever needed.
• Money can be stored without the loss in its value.
• This was not possible under barter exchange because goods could not be stored for a long time and there could be lost in the value of commodities.
• This function of money enables people to save a part of their income and store it for future use.
• Savings lead to capital formation which in turn will lead to the economic development of a country.

Question 3.
There are no disadvantages to paper money.
Answer:
No, I do not agree with the statement.
Although paper money has many advantages and it has economized the use of precious metals it suffers from the following disadvantages:

• The government may over the issue when there is a deficit in the budget and this may lead to inflation.
• It is less durable as compared to metallic money.
• It can be circulated only in the domestic economy, it is not useful for international trade.

Question 4.
Credit Money can be refused.
Answer:
Yes, I agree with the statement.
Credit money can be refused because

• Credit money refers to Bank money.
• Bank money is not legal tender money.
• No one can force to accept this money.
• It is not punishable if it is not accepted.
• Hence, Credit Money can be refused.

Question 5.
Plastic money can play an important role in eradicating corruption in India.
Answer:
Yes, I agree with the statement.
More and more use of plastic money can help in eradicating corruption in India in the following ways:

• Every transaction detail is recorded by the bank when the transaction is done through plastic money.
• None of the money transactions are illegal as these take place through banks.
• At the international level, all the conversion of Indian currency into dollars or Swiss dollars can be recorded with transactions done through plastic money.
• It’s only when transactions take place in cash, bribery and other illegal activities take place.
• But the use of plastic money is easy to use, easy to keep records, and hence will help in removing corruption.

5. Answer in detail:

Question 1.
Define barter system. What are the difficulties faced by people under this system?
Answer:
Barter system refers to the system where goods are exchanged for goods without the use of money. Difficulties of barter system:
(a) Problem of double coincidence of wants: Lack of double coincidence of wants means when two persons may not desire to purchase each other’s goods. For example Mr. A has wheat and wants salt. So Mr. A has to search for Mr. B who wants wheat and has salt, otherwise, the exchange would not be possible.

(b) Lack of common measure of value: In olden times there was no common unit in terms of which the value of goods could be measured.

(c) Indivisibility of certain goods: There was a problem of exchange when a person had large commodities which could not be divided into smaller units Eg. 1 goat = 20 kg rice. If a person wanted 5 kg of rice, the goat could not be cut and exchanged.

(d) Difficulty in the storage of goods: It was necessary to store goods for future use but as most of the things were perishable, it was difficult to store.

(e) Problem of making deferred payments: It means a payment to be made in the future. For E.g. taking a loan and making a payment in the future was not possible in the barter system. So, to overcome these difficulties of the barter system, people invented some other kind of money.

Question 2.
What are the different stages in the evolution of money? Or Explain the different types of money.
Answer:
The evolution of money has passed through various stages with the development of civilization.
Following are the various stages of money which evolved gradually with the need and time:
(a) Animal money: In the primitive age (prehistoric period) animals like cows, goats, sheep, etc. were used as a common medium of exchange. In hot climatic countries cow, ox, etc. were chosen as a medium of exchange.

(b) Commodity money: In certain countries, commodities like shells, wheat, rice, tobacco, wool, fur, salt, etc. were used as money. In cold countries, skin and fur were used as a medium of exchange. But due to the lack of uniformity and storage, metallic money was evolved.

(c) Metallic money: With the progress of civilization, precious metals like gold and silver came into use as money. Initially, metallic money was imperfect in size, shape, weight, etc. But the scarcity of precious metals gave rise to the of use of metallic coins.

(d) Metallic coins: Use of metals led to the introduction of coins. Rulers in olden times affixed their seal on metallic money. These coins were of two types.

• Standard or full-bodied coins : Coins for which the face value is equal to its intrinsic (metal) value are known as standard or full-bodied coins. E.g. gold and silver coins.
• Token coins: Coins for which the face value is greater than intrinsic value are known as token coins. E.g. coins made of nickel, copper, aluminium, etc. In India token coins are of ₹ 1, ₹ 2, ₹ 5, and ₹ 10. But difficulties in the transportation of token coins gave rise to paper money.

(e) Paper money: Paper money is made of paper. In India all currency notes of ₹ 5, ₹ 10, ₹ 50, ₹ 100, ₹ 200,
₹ 500, and ₹ 2000 are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. Paper money has a very small intrinsic value of its own.

(f) Bank money or Credit money: Bank money refers to bank deposits. This can be withdrawn or transferred on demand by means of cheque, demand draft, etc. These are not legal tender money, but through credit instruments, money can be transferred from one place to another and from one person to another. Today most of the big payments are made or received through cheques.

(g) Plastic money: In recent years due to the advancement of technology use of plastic money like credit cards, debit cards also have become very popular.

(h) Electronic money: It is the most recent development of money. Funds are electronically transferred through mobile phones, smart cards, etc. With this invention, transactions through worldwide have become very easy and popular.

Question 3.
Explain in detail the main functions of money.
Answer:
Functions of money can be broadly divided into the following 3 groups:

• Primary functions
• Secondary functions
• Contingent functions.

(a) Primary Functions:

• Medium of exchange: The most important function of money is to make buying and selling of goods and services possible in the market ie. it serves as a medium of exchange. Thus, money facilitates the sale and purchase of goods in the
• market.
• Measure of value or unit of account: Price is the value of a commodity or service expressed in terms of money. Hence it becomes easier for anyone to compare or know the value of any two or more commodities.

Different countries use different currencies to express the value of their commodities. E.g. Rupee in India, Pound in the UK, Dollar in the USA, etc. Thus, money as a measure of value helps in estimating the cost, revenue, and profits of the business firms.

(b) Secondary Functions

• Standard of deferred payment: Deferred payments are the payments that are to be made at a future date. Buying and lending were not possible in a barter economy. Now, this function of money develops financial and capital markets and helps in the growth of the economy.
• Store of value: Money acts as a store of value. It is a convenient form in which we can store the value or savings for future use. According to J.M. Keynes, money is a link between the present and future. .
• Transfer of value: Money helps to transfer values from one place to another or from one person to another due to its general acceptability. One can sell his movable or immovable belonging at one place and buy at another place. Values can thus be transferred. In modern times people generally use cheques, electronic transfers, etc instead of using currency notes for transferring values.

(c) Contingent Functions:

• Measurement of National Income: Country’s National Income accounting is possible only because of money as a unit of account.
• Basis of credit: Modern economy is based on credit i.e. promise to pay. Hence lending and borrowing activities are made easy by using money. Money Provides a base for the creation of credit money.
• Estimates of macroeconomic variables: Macroeconomic variables such as Gross National Product (GNP), total investments, total savings, taxes, etc. can be easily estimated in money terms.
• Imparts liquidity: Money is the most liquid asset which can be easily converted into any other asset. For example land, machinery, shares, etc. can be bought and sold in terms of money.

6. Case Study:

Read the passage and answer the following questions:

Shiv is working in the USA and his old parents live in Mumbai. Every month he transfers money from there in father’s bank account and also pays all their utility bills from there.

Question (a).
What type of money is used by Shiv?
Answer:
Shiv uses an electronic, mode of money for transferring money from the USA.

Question (b).
Write any one way how parents can withdraw cash?
Answer:
Parents of Shiv can withdraw money by means of a cheque or withdrawal slip.

Question (c).
Suggest anyone App that can be used by parents.
Answer:
Parents in Mumbai can use the app – called “Google Pay”.

Balbharti Maharashtra State Board Class 11 Economics Important Questions Chapter 1 Basic Concept in Economics Important Questions and Answers.

Maharashtra State Board 11th Economics Important Questions Chapter 1 Basic Concept in Economics

1A. Choose the correct option:

Question 1.
Key points in Adam Smith’s definition:
(a) Non-intervention of the Government.
(b) Capital & Wealth accumulation.
(c) Study of an ordinary man.
(d) Economics is a science of wealth.
Options:
(1) a, b and c
(2) a and b
(3) a, b and d
(4) b, c, and d
Answer:
(3) a, b and d

Question 2.
Statement incorrect with reference to Robbins definition:
(a) Means have specific uses.
(b) Welfare-oriented definition.
(c) Wants are unlimited.
(d) Means are scarce.
Options:
(1) a, b and c
(2) a and b
(3) c and d
(4) a, b and d
Answer:
(2) a and b

Question 3.
Statements related to National Income:
(a) Money value of goods and services produced in a year.
(b) It reveals the total economic performance of a nation.
(c) It is a macroeconomic concept.
(d) Income received by the person from all sources.
Options:
(1) a, b and d
(2) a, b, c, and d
(3) a, b and c
(4) b, c, and d
Answer:
(3) a, b and c

Question 4.
Aspects considered in microeconomics:
(a) Micro means small.
(b) It deals with the behaviour of the individual economic units.
(c) It covers the study of the entire economy.
(d) It includes national income.
Options:
(1) a, b and c
(2) a and b
(3) b, c, and d
(4) a, b and d
Answer:
(2) a and b

Question 5.
Statements related to features of Land:
(a) Resources available on, below, and above the surface.
(b) It is a natural factor of production.
(c) It is a man-made factor of production.
(d) It earns rent as a reward.
Options:
(1) a, b
(2) a, b, c, d
(3) a, b, d
(4) c, d
Answer:
(3) a, b, d

Question 6.
Statements related to features of Labour:
(a) Physical or mental effort undergone.
(b) It earns wages as a reward.
(c) Playing football for self-satisfaction.
(d) Gives coaching for football in XYZ school.
Options:
(1) a, c
(2) a, b, d
(3) a, b, c, and d
(4) b, d
Answer:
(2) a, b, d

Question 7.
Statement not related to Kenneth Boulding definition of Macro Economics:
(a) Macro Economic deals with totality or aggregate.
(b) Macro Economic deals with individual output.
(c) Macro Economic deals with National Income.
(d) Macro Economic deals individual price level.
Options:
(1) a, b, c
(2) c, d
(3) b, c
(4) b, d
Answer:
(4) b, d

1B. Complete the correlation:

Question 1.
Chemistry : Natural Science : : Economics : __________
Answer:
Social Science

Question 2.
Natural Science : __________ : : Social Science : Inexact
Answer:
Exact

Question 3.
Adam Smith : Wealth of Nation : : Kautilya : __________
Answer:
Arthashastra

Question 4.
Land : __________ : : Labour : Wages
Answer:
Rent

Question 5.
Necessity : Water : : __________ : Air conditioned car.
Answer:
Luxury

Question 6.
National Income : Macro economics : : Personal Income : __________
Answer:
Micro economics

Question 7.
Goods : Chalk : : __________ : Teaching
Answer:
Services

Question 8.
Prof. Marshall : Welfare oriented definition : : __________ : Scarcity oriented definition.
Answer:
Prof. Robbins

Question 9.
Wages : Fixed income : : Profit : __________
Answer:
Fluctuating income

Question 10.
Economic Want : Medicine : : Non-Economic Want : __________
Answer:
air/sun-shine

1C. Suggest the economic terms for the given statements:

Question 1.
Unemployment is created due to cyclical fluctuations.
Answer:
Cyclical Unemployment

Question 2.
Continuous fall in overall prices in an economy.
Answer:
Depression

Question 3.
Continuous rise in the general price level in an economy.
Answer:
Inflation

Question 4.
The aggregate monetary value of all final goods and services produced in a country during a year.
Answer:
National Income

Question 5.
Want satisfying capacity of a commodity.
Answer:
Utility

Question 6.
Earnings are received by a person from all sources.
Answer:
Personal Income

Question 7.
Leftover income after payment of taxes etc.
Answer:
Personal Disposable Income

Question 8.
Income is received in the actual currency of the country.
Answer:
Money Income

Question 9.
Wants which are satisfied at the individual level.
Answer:
Individual Wants

Question 10.
An economic study of a particular firm, a particular household, etc.
Answer:
Micro Economics

Question 11.
A great statesman, philosopher during Mourya Period.
Answer:
Kautilya

Question 12.
Wants that are meant for pleasure and enjoyment.
Answer:
Luxuries

Question 13.
Wants that are basic in nature.
Answer:
Necessities

Question 14.
Income received without indulging in any productive activity.
Answer:
Unearned Income

Question 15.
Increase in Real National Income of the country over a long period of time.
Answer:
Economic growth

Question 16.
Real captain of industry.
Answer:
Entrepreneur

1D. Find the odd word out:

Question 1.
Mathematics, Economics, Physics, Chemistry
Answer:
Economics

Question 2.
Psychology, Sociology, Economics, Chemistry
Answer:
Chemistry

Question 3.
Adam Smith, David Ricardo, J.M.Keynes, J.S. Mill.
Answer:
J. M. Keynes

Question 4.
Food, Medicines, Sunshine, Toothpaste
Answer:
Sunshine

Question 5.
Washing machine, AC – Car, Pressure Cooker, Geyser.
Answer:
AC – Car

Question 6.
Land, Interest, Labour, Entrepreneur
Answer:
Interest

Question 7.
National Income, National Output, Individual Income, Aggregate Supply.
Answer:
Individual Income

Question 8.
Investment, Want, Utility, Wealth.
Answer:
Investment

Question 9.
Rain, Air, Sunrays, Book.
Answer:
Book

Question 10.
Rent, Labour, Interest, Profit.
Answer:
Labour

1E. Complete the following statements:

Question 1.
Commodity which satisfies human wants is called __________
Answer:
Utility

Question 2.
Actual transfer of goods from one person to another is termed as __________
Answer:
Physical transfer

Question 3.
Income which is paid as per terms and condition is called as __________
Answer:
Contractual Income

Question 4.
Anything which has market value and can be exchanged for money is termed as __________
Answer:
Wealth

Question 5.
Adam Smith defines Economics as __________
Answer:
A Science of wealth

Question 6.
Scarcity oriented definition of economics was given by __________
Answer:
Lionel Robbins

Question 7.
Wealth oriented definition of economics was given by __________
Answer:
Prof. Alfred Marshall

Question 8.
Kautilya authored the Indian Political treatise called __________
Answer:
the ‘Arthashastra’

Question 9.
Paul Samuelson referred economics as __________
Answer:
“Queen of Social Science”

Question 10.
Psychology, Sociology, Political Science are the examples of __________
Answer:
Social Science/Abstract Science

Question 11.
Kautilya is also known by the name __________
Answer:
Chanakya or Vishnugupta

Question 12.
The term microeconomics and macroeconomics was coined by __________
Answer:
Sir Ragnar Frisch

1F. Choose the wrong pair:

Question 1.

Answer:
Wrong Pair: Prof. Alfred Marshall – Father of Economics

Question 2.

Answer:
Wrong Pair: Adam Smith – Scarcity Oriented Definition

1G. Choose the correct pair:

Question 1.

Options:
(a) 1 – d; 2 – c; 3 – a; 4 – b
(b) 1 – b; 2 – c; 3 – d; 4 – a
(c) 1 – c; 2 – b; 3 – d; 4 – a
(d) 1 – a; 2 – d; 3 – b; 4 – c
Answer:
(c) 1 – c; 2 – b; 3 – d; 4 – a

2. Identify and explain the concepts from the given illustrations:

Question 1.
Mangesh saves ₹ 200/- every month out of his pocket money.
Answer:
Savings.
Saving is a part of income, which is kept aside to meet future needs. In the above illustration, since Mangesh is foregoing his current consumption, it forms his part of savings.

Question 2.
People drink water when they are thirsty because water has the capacity to satisfy thirst.
Answer:
Utility.
The utility is a power of a commodity or service which satisfies human want. In this case, water has utility, as it satisfies the thirst of people.

Question 3.
A farmer sold 2 kg rice for ₹ 100/-
Answer:
Exchange.
It refers to the worth of a commodity or a service expressed in terms of a commodity. In the above case farmer exchanges rice i.e. commodity for cash.

Question 4.
₹ 45,000/- remained in the hands of Mr. Shah from his income, after paying tax.
Answer:
Personal Disposable Income.
It is that part of a personal income that is left over after the payment of direct taxes. In the above case, ₹ 45,000 forms part of Mr. Shah’s Personal Disposable Income, as it is leftover income after payment of his tax.

Question 5.
Raju’s mother purchased a blanket. It helps her to keep warm during winter.
Answer:
Necessity Want and Utility.
Want is referred to as a need of a person. Here, in the above case, the blanket is a need of Raju’s mother, which falls under necessity want.
The utility is a power of a commodity or service to satisfy human wants. Here, in the above case, the blanket provides utility to Raju’s mother by giving her warmth during winter.

Question 6.
Alka uses a washing machine to wash clothes.
Answer:
Comforts Want.
A commodity that provides comfort to our life is termed comfort goods. In the above case, the washing machine provides comfort to Alka, as she does not need to wash clothes with her hands anymore.

Question 7.
Sahil utilized his bank balance to start a fruit shop.
Answer:
Investment.
Investment refers to the creation of capital assets through the mobilization of savings. In the above case, Sahil mobilizes his bank savings into investment in a fruit shop.

Question 8.
National income estimates help to measure the economic performance of a country.
Answer:
Macro-economics.
Macroeconomics means studying the economy at a large or whole. It includes the study of total employment, total savings, total consumption, aggregate supply, aggregate demand, etc. In the above case, the study of the whole country’s income leads to the measurement of the economic performance of a country.

Question 9.
A carpenter makes furniture and earns wages.
Answer:
Labour.
Labour means any kind of physical or mental effort/exertion undergone during the process of production against a certain reward. In the above case, labour makes furniture and earns wages as a reward.

Question 10.
Tanvi goes to the office in an air-conditioned car.
Answer:
Luxury.
The commodity which satisfies the want of pleasure and enjoyment means luxury goods. In the above case, the air-conditioned car is treated as a luxury good.

3. Distinguish between:

Question 1.
Fixed Income and Fluctuating Income.
Answer:

Question 2.
Value-in-use and Value-in-exchange.
Answer:

Question 3.
Contractual Income and Residual Income.
Answer:

Question 4.
Money Income and Real Income.
Answer:

Question 5.
Land and Labour.
Answer:

Question 6.
Land and Capital.
Answer:

Question 7.
Natural Sciences and Social Sciences.
Answer:

Question 8.
Economic Growth and Economic Development.
Answer:

Question 9.
Labour and Entrepreneur.
Answer:

Question 10.
Economic Wants and Non-economic Wants.
Answer:

4. Answer the following:

Question 1.
Explain various factors of production.
Answer:
Production means the creation of utility.
There are four factors of production. They are land, labour, capital, and entrepreneur.
They are explained as follows:

(i) Land: In economics, the land is a wider concept. It is the primary, natural and original factor of production. According to Prof. Marshall, land means all natural resources, available on, above, and below the surface of the earth.
E.g. On the surface of the earth – mountains, rivers, forests, etc.
Above the surface of the earth – air, sunshine, etc.
Below the surface of the earth – gold, silver, coal, etc.
E.g. A landlord gets rent for the productive use of land.

(ii) Labour: Labour is a living factor of production. It is the most active and human factor of production. Any physical or mental effort undergone during the production process to earn a reward is called labour. The remuneration of labour is wages. E.g. a labourer working in a factory.

(iii) Capital: Capital refers to produced means of production. It is the stock of capital assets that yield income. Capital earns interest for its productive use. Capital is a man-made factor of production.
E.g. machinery, raw material, etc.

(iv) Entrepreneur: The entrepreneur is the organizer and the controller of a business. He combines all the factors of production. He supervises the production process. He is a special kind of labourer who gets rewarded in the form of profit. An entrepreneur is regarded as a real captain of the industry.

Question 2.
Write a note on Kautilya’s views on Economics.
Answer:
Kautilya was traditionally known as ‘Chanakya’ or ‘Vishnugupta’. He is identified as the pioneer in the field of Political Science and Economics in India.
He was a teacher, philosopher, economist, and royal advisor of the Mourya Empire.
He wrote the ancient Indian Political treatise named “Arthashastra”, where Artha’ means ‘Wealth’ and ‘Shastra’ means ‘Science’. It covers various aspects of the political, social, economic, and military organization of the past economy.

Key-points based on Kautilya’s views are as follows:

• The role of the State or Government is crucial. The state should regulate economic activities.
• He focused on creating wealth as a means, to ensure the welfare of the state.
• He stated a great need for efficient administrative machinery for good governance.
• Compilation of Political ideas into Arthashastra.
• Kautilya attached great significance to public finance.

Question 3.
Explain ‘Trade Cycle’ in economics.
Answer:
The Trade cycle is also called the ‘business cycle’. It takes place due to fluctuations in business.
There are ups and downs in overall economic activities. These fluctuations arise due to inflation and depression.
It can be explained with the help of the following diagram.

Inflation means a continuous rise in the general price. Depression is a continuous fall in overall prices and lowering down economic activities in general.
In the given diagram, the ‘X’-axis indicates the time period and the ‘Y’-axis shows the level of economic activity. Line ab shows a steady growth path.
Various phases of the business cycle or trade cycle like Prosperity, Recession, Depression, Recovery, and Inflation indicate fluctuations in economic activities.
When unemployment is created due to the trade cycle (cyclical fluctuation), it is called cyclical unemployment. It is temporary in nature.

5. State with reasons whether you agree or disagree with the following statements:

Question 1.
Profit is a contractual income.
Answer:
No, I do not agree with the statement.

• Contractual income is that income that is paid as per the terms and conditions of payment.
• Profit is not a contractual income.
• It is residual income because profit is the earning of an entrepreneur.
• It is the income that is left over after making payments to all factors of production.
• Profit may not be always positive.
• It can be zero or even negative.
• Thus, it is a fluctuating income.

Question 2.
The concepts of economic development and economic growth are interrelated but not the same.
Answer:
Yes, I agree with the statement.

• Economic development and economic growth go hand in hand. They are interrelated but they do not mean the same.
• Economic growth refers to an increase in a country’s real output of goods and services, whereas economic development refers to the progressive changes in the socio-economic structure of a country.
• Also, economic growth considers the quantitative aspect whereas economic development considers the qualitative aspect.
• Again, economic growth is possible without economic development but, economic development is not possible without economic growth.
• Hence, economic development is a wider term and economic growth is a part of it which makes them two different concepts.

Question 3.
An entrepreneur plays an important role in the economic development of a country.
Answer:
Yes, I agree with the statement.

• In the history of developed countries, it has been shown that entrepreneurs have played a very important role in economic development. Hence quality entrepreneurship is a crucial indicator of economic development.
• Economic development requires a class of talented entrepreneurs because they are the ones who keep the wheels of the economy moving.
• An entrepreneur is a person who has the ability to recognize business opportunities.
• He is a person with some special qualities such as the ability to innovate, do hard work, have the vision, risk-taking capacity, social responsibility, positive thinking, etc.

Question 4.
There is no difference between individual wants and collective wants.
Answer:
No, I do not agree with the statement.

• Individual wants refer to those wants which are satisfied at the individual level. While collective wants are those wants that are satisfied at the general level or macro level.
• A doctor using a stethoscope is an example of individual wants while people travelling by train or bus is an example of collective want.
• Thus, there is a difference between individual wants and collective wants.

Question 5.
Microeconomic and macroeconomic are two different phenomena.
Answer:
Yes, I agree with the statement.

• Microeconomics deals with the economic behaviour of small units while macroeconomics deals with the economic behaviour of large units.
• Microeconomics uses the slicing method while macroeconomics uses the lumping method.
• Microeconomics is based on partial equilibrium analysis, while macroeconomics is based on general equilibrium analysis.
• The microeconomic analysis is also called a “Price theory” while macroeconomic analysis is also called an “Income theory”.
• Thus, microeconomics and macroeconomics are two different phenomena.

6. Answer in detail:

Question 1.
Explain the basic concepts of microeconomics.
Answer:
“Micro Economics is the study of particular firms, particular households, individual prices, wages, incomes, individual industries, particular commodities”.

Basic Concepts of Micro Economics:
(i) Want: Want denotes a feeling of ‘lack of satisfaction. This feeling enables the individual to satisfy his want.
Characteristics of wants:

• Wants are unlimited.
• Wants are recurring in nature.
• Wants differ with age.
• Wants differ with gender.
• Wants differ due to preferences.
• Wants differ with seasons.
• Wants differ due to culture.

Classification of Wants:
Wants can be classified into.

• Economic and Non-economic want.
• Individual Wants and Collective wants.
• Necessities, Comforts, and Luxuries.

(ii) Goods and Services:
Anything that satisfies human wants is termed as a ‘good’ and has material existence while services also satisfy human wants but do not have any material existence.

(iii) Utility: Want satisfying power of a commodity is called utility.

(iv) Value: Value has two approaches in economics, i.e. ‘value-in-use and ‘value in exchange’.

• Value-in-use: It refers to the worth of a commodity or it is the usefulness of a commodity.
• Value-in-exchange: It refers to the worth of a commodity or a service expressed in terms of another commodity.

(v) Wealth: Wealth refers to “anything which has market value and can be exchanged for money.” A commodity must possess the following characteristics to be wealthy.

• Utility
• Scarcity
• Transferability
• Externality

(vi) Personal Income: Earnings received by a person from all sources is called his personal income.

(vii) Personal Disposable Income (PDI): It is that part of personal income which is left over after payment of direct taxes such as income tax, wealth tax, etc.

Question 2.
Explain the various types of income.
Answer:
Following are the various types of income.
(i) Fixed income: Income that remains stable over a period of time is called fixed income. It is always positive.
E.g. rent, wages, etc.

(ii) Fluctuating income: Income that is not fixed but keeps on changing is called Fluctuating income.
E.g. profit. It can be positive, negative, or zero.

(iii) Money income: Income received in the actual currency of the country is called Money income. It is the income in cash.
E.g. ₹ 70,000.

(iv) Real income: The purchasing power of money income is called Real income.
E.g. Commodities purchased out of money income.

(v) Contractual income: Income paid as per the terms and conditions of the contract is called Contractual income.
E.g. rent, wages, etc.

(vi) Residual income: Income that is left over after making payments to all factors of production is called residual income.
E.g. profit.

(vii) Earned income: Income obtained after participating in the productive activity is called Earned income.
E.g. rent, wages, interest, profit.

(viii) Unearned income: Income received from all sources without indulging in any productive activity is called Unearned income.
E.g. windfall gains, lottery prizes.

(ix) Economic activity: Economic activities can be classified into four types which include production, distribution, exchange, and consumption.