Class : VI Sub : Economics (Non IAS)
UNIT – I
1. WHAT IS ECONOMICS?
IMPORTANCE AND NEED
I. Question and Answers:-
1. Point out a few of the economic problems faced by mankind.
A. Man has faced many economic problems since olden days. Some of the economic problems are :-
1. Poor people are faced with problems of food, clothing and shelter.
2. Shortage of essential commodities is a common feature.
3. Business man wants profits.
4. Government wants revenue.
5. Households are in debt because income is insufficient to meet their expenditure.
6. Governments are also faced with the same situation.
2. Explain the scope of economics.
A.
1. Economics is basically a science of wealth. It deals with how wealth is legally acquired and used productively for promoting human welfare.
2. It deals with production, consumption, distribution and exchange.
1. Production :- Producing goods is called production.
2. Consumption :- Satisfying the wants by using goods and services.
3. Exchange :- The goods and services are exchanged between the producers and consumers through money.
3. Describe the characteristics of human wants?
A. The characteristics of human wants are :-
1. Human wants are many.
2. Sky is the limit for them.
3. The satisfaction of one want leads to the birth of another.
4. Some wants are to be necessarily fulfilled i.e. food, shelter and clothing. Such wants are recurring.
5. There are alternative ways of wants satisfaction.
6. Wants compete with each other due to limited resources.
4. Differentiate between macro and micro economics ?
A. Differences between micro and macro economics are :-
MICROECONOMICS
1. It is concerned with resource allocation. It studies the behaviour of consumers and producers. It analysis the relative prices of goods and services.
2. The incomes and expenditures of households and business organisations are not always equal. Surpluses / deficits are generally found.
3. In any single business organisation if there is a wage cut, expenditure gets reduced, profit rises and employment increases.
4. Savings is always good for household (students also) and business organisation.
MACROECONOMICS
1. It deals with economic aggregates and averages. It studies national income and
per capita income and their trends.
2. World’s income and expenditure and world’s exports and imports are always equal. There cannot be any difference between them.
3. If wage cut is extended to a economy as a whole, aggregate demand falls, depression may emerge and unemployment tends to rise.
4. But it is not always applicable to the economy as a whole. During times of depression if there is an increase in saving, several harmful results occur.
II. Fill in the blanks :-
1. It is more than 200 years since the origin of economics took place.
2. Production, consumption, exchange and distribution are the main themes of micro economics.
3. According to macro economics savings leads to harmful results during the times of depression.
4. Macro economics was introduced in 1936 by the economist named J.M. Keynes.
5. Scarcity of resources leads to the problem of shortage of food.
6. Resources have alternative uses.
III. Choose the correct answer :-
1. Human wants are ( 2 )
1) Limited 2) Many 3) Easily fulfilled 4) Absent
2. Exchange is concerned with ( 4 )
1) Production 2) Market 3) Consumption 4) Distribution
3. Macroeconomics gives importance to ( 1 )
1) National income 2) Price theory
3) Profits and losses 4) Consumer satisfaction.
IV. Match the following :-
A.
1. Handloom good ( c ) a. Offices
2. Agricultural commodity ( b ) b. Cotton
3. Industrial product ( d ) c. Cloth
4. Government services ( a ) d. Sugar
B.
1. Land ( c ) a. Profit
2. Labour ( d ) b. Interest
3. Capital ( b ) c. Rent
4. Organisation ( a ) d. Wage
UNIT – II
THE STUDY OF ECONOMICS
IMPORTANCE & NEED
1. Point out the importance of economics.
A.
1. Economics is a social and human science.
2. It has a prominent place among the social sciences like politics, ethics, civics. sociology etc.
3. It is treated as the queen of Social Sciences.
4. Nobel prize has been instituted for economics since 1969.
2. Where is the need for the study of economics?
A. The study of economics is necessary in performing the duties of citizens, formulating plans, taking decisions on issues concerning production, maximising profits and consumer satisfaction and removal of poverty.
3. What sort of issues can be resolved by the study of micro economics?
A. The study of micro economics help us in resolving issues like the problems of consumer regarding the purchase of goods, the quality of goods to be purchased, when and where to purchase.
4. Economics is both light bearing and fruit bearing. Explain.
A.
1. The study of economics is light bearing and fruit bearing.
2. It is illuminating.
3. It helps to understand the economic issues, international event and development of country.
4. It indicates scientific out look and promotes individual, social and national development.
5. Its study promotes the knowledge of science and technology.
II. Fill in the blanks:-
1. Economics is one of the important social sciences.
2. Nobel prize is instituted for economic science since 1969.
3. Of the 600 crores of population 100 crores of the people are in poverty.
4. 5 years plans are being implemented since 1951 in India.
5. If priority is given to consumer goods in production the economic growth of the country will be increased.
UNIT – III
WHAT DO YOU STUDY IN ECONOMICS?
CONSUMPTION AND PRODUCTION OF GOODS AND SERVICES
1. What is meant by consumption?
A. Consumption means deriving satisfaction by the use of goods and services.
2. What are the characteristics of social goods?
A.
1. Some goods and services are called social goods.
2. Roads, bridges, parks and defence are the examples of social goods.
3. They are produced by government only.
4. They are consumed by all. But no one comes forward for their production.
5. If any person produces them, all are ready to consume.
6. None can prevent them.
3. Explain the law of Diminishing Marginal Utility ?
A. Law of Diminishing Marginal Utility :- Utility derived by human beings by the use of goods and services is not constant. If a consumer uses a commodity continuously its marginal utility decreases. Marginal utility is the additional satisfaction derived by the use of an extra unit of a commodity or a service. It is illustrated by the following example.
No. Total Utility (in units) Marginal Utility (in units)
1 15 15
2 25 10 (25-15)
3 32 7 (32-25]
4 36 4 (36-32)
5 38 2 (38-36)
6 39 1 (39-38]
7 39 0 (39-39)
By this table we can understand that the first banana gives us the great satisfaction. The second banana also gives us the satisfaction but it is less than the first one. The third one gives us still less satisfaction and so on. Fall in Marginal Utility due to continuous consumption of a commodity is known as the law of Diminishing Marginal Utility.
Diminishing Marginal Utility Curve :
Fig (Graph):
In this figure bananas are shown on the ‘X’ axis and marginal utility on the ‘Y’ axis. It tells us that the consumption of bananas more and more decreases the marginal utility.
4. What are the factors on which labour supply depends?
A. Supply of labour :- Service rendered by workers is called labour. In any country labour supply depends upon the following three aspects :-
1. Total population in the country
2. The proportion of the population willing to join the workforce.
3. Number of hours worked in an year.
5. What are the influences that effect labour efficiency ?
A. Labour efficiency depends upon the following factors :-
1. Climate :- More work is turned out during winter than in summer.
2. Health :- If the management provides good medical and health facilities, labour efficiency will be increased.
3. Peace of mind :- Peace of mind is necessary to the workers. If the management or government provides them the social security regarding the workers worries and uncertainties of their future, workers are more efficient in their work.
4. Surroundings :- Labour efficiency increases if the surroundings of their work and living are clean, healthy, peaceful, delightful and accident free (safe).
5. Education and training :- If workers are trained and skilled, their efficiency will be increased.
6. Division of labour :- If work is under taken according to the principle of division of labour based on one’s own skills and abilities, efficiency goes up.
II. Fill in the blanks:-
1. One of the factors of production is organisation, land, labour, capital.
2. The service rendered by workers is called labour.
3. Creation of utilities is production
4. Additional utility derived in consumption is called law of diminishing marginal utility.
STANDARD OF LIVING
1. What are the factors on which a community's standard of living
depends?
A. Factors affecting the standard of living are:
a. If there is no food, clothing and shelter then standard of living will
be low.
b. In order to raise the standard of living, goods and services that
provide comforts and luxuries should be made available in plenty.
Hence standard of living depends upon several factors that operate
in the economic system.
2. What is called the standard of living?
A. Individuals, households and the entire community satisfying their
wants by utilizing the goods and services is called the standard of
living .It is also called the level of living.
3. What is meant by per capita income?
A. Like an individual having income, a nation also has income. This is
called the National Income. If the National Income is divided by the
total population, per capita income is obtained.
4. How do population growth and inflation act on level of living?
A. (1) Population growth : If there is growth in population, the
mouths to be fed will increase. The National Income is to be distributed among more number of people. The per capita income comes down and the standard of living also decreases.
(2) Inflation : Continuous rise in prices is inflation. It leads to the decrease in real wages. People have to pay more for few commodities. The income of an individual may not be sufficient to meet his needs. Some of his wants may be necessary things and the others may be comforts.
5. "Poverty is vicious circle". Explain.
A. In a developing country like India many people are under poverty line. Poverty is a curse. It is a vicious circle.
1. Poverty leads to the decline in the standard of living.
2. It gives rise to social unrest.
3. It brings down the efficiency in work. We cannot expect more
work from a hungry belly.
4. If poverty increases, the problem of the government mounts up.
5. There will be no scope for savings when more people are below
poverty line. If there are no savings, there will neither be
investments nor development.
6. Poverty increases the foreign debt.
7. Poor people cannot get credit.
8. Poverty is the root cause of the class conflict , illiteracy , unemployment and crimes
9. The Five Year Plans have reduced the poverty line from 52% in
1972 to 30% in 1987-1988.
UNIT - III
WHAT DO YOU STUDY IN ECONOMICS
V. NATIONAL INCOME AND ITS DISTRIBUTION
1. State how national income is calculated?
A. National income is the total or the aggregate amount of the final
goods and services produced in an economy during a period of one
year. The value of all the goods is obtained by multiplying the
quantity of goods with their prices. The value of the services may be
computed in terms of money. By adding both the values, the value
of the national income is obtained.
2. What is national income?
A. National Income: Economists have defined national income in
different ways.
1. Some defined it as the aggregate income of all the house holds in
the country during a particular period of time.
2. Some defined it as the aggregate of the final goods and services
produced in an economy during a period of one year.
3. What are the factors that affect the rate of rent ?
A. Rent is the amount paid mostly in cash to the landlord for the use
of his land by the tenant. Some times it is also paid in kind by the
tenants. The factors that affect the rate of rent are:
1. Rent is paid to the agricultural land.
2. This agricultural rent depends on the location and fertility of land
and the crops raised on it.
3. If the prices of agricultural products go up, rents also increase.
4. Rent is also paid to urban land and buildings.
5. This depends upon their location and surroundings.
6. Growth of population affects rate of rent and it increases with its
rise.
4. Trace the influences operating on the rate of Interest .
A. 1. Interest is the amount paid by the persons who take money from
money lenders.
2. Rate of interest is influenced by place, time, use, confidence and
capacity to repay the loan.
3. Rate of interest is related to general price level.
4. If the price level goes up the rate of interest also increases
5. If there is a fall in general price level, interest rate decreases.
6. Quantity of money influences thus.
7. If the quantity of money increases, interest rate falls.
8. If it decreases interest rate goes up.
5. Why do the differences in wages arise?
A. 1. Wages are earned incomes for the supply of labour.
2. The demand of labour determines the level of salary/wage in any
industry.
3. The differences in wages are more evident in agriculture.
4. Women are paid less than men workers.
5. In some types of work such as stone breaking, very low wages
are paid.
6. Wages also rise due to rise in the spread of education and
technical knowledge among the workers.
6. How do profits emerge?
A. Profit is said to be the residual after payment of rent, wages and interest. This is obtained by the organisers if they run the organisation efficiently.
1. The amount of payment depends on the efficiency of the
organisers.
2. Some organisers receive excessive profits by indulging in unlawful activities, such as stock, piling of essential goods and selling them in black market. Such a method causes harm to the progress of the society.
3. Excessive profits can be obtained if wages are unduly reduced. Due to this, inequalities increase causing damage to social welfare.
4. Inflation causes harm to workers and rewards entrepreneurs
with profit.
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