enrichment programme for economics class xii · chapter - 1 hots for this topic •what do you mean...

ENRICHMENT PROGRAMME

FOR ECONOMICSCLASS XII

BLUE PRINTS.NO.UNIT/TOPIC MCQ VSA SA II LAI LA3

TOTALMarks→ (1) (1) (3 ) (4) (6)

1. Introduction 6*1=6 6

2. Consumer equilibrium and

Demand1*1=1 3*1=3 6*2=12 16

3. Producer’s Behaviour and

Supply1*1=1 3*1=3 6*2=12 16

4. Forms of market and Price

Determination 1*2=2 3*2=6 4*1=4 12

5. NIA 3*1=3 6*2=12 15

6. Government Budget and the

Economy4*2=8 8

7.Determination of Income and

Employment1*2=2 4*1=4 6*1=6 12

8. Money and Banking 1*1=1 3*1=3 4*1=4 8

9. Balance of Payment 1*1=1 3*2=6 7

100

Design of the Question Paper

S.

No.

Typology of

Questions

VSA

One

mark

SA – I

Three

marks

SA-II

Four

marks

LA

Six

marks

TOTAL %

1 Remembering 2 1 2 2 25 25

2 Understanding 3 2 1 2 25 25

3 Application - 2 2 1 20 20

4 HOTS 2 2 - 2 20 20

5 Evaluation & MD 1 1 - 1 10 10

TOTAL 8*1= 8 8*3= 24 5*4= 20 8*6= 48 100(29) 100

TIPS TO SCORE HIGH• Believe in yourself.

• Follow a time-table.

• Set every day GOALS.

• Take care of your health.

• Practice daily.

• Draw diagrams properly and practice them as well.

• Give importance to PRESENTATION.

• TIME MANAGEMENT.

• Focus properly.

• Relax.

POINTS TO NOTECBSE has re-drawn a new blue print for its forthcoming board examination. The question paper design will be based on the blue print given in the Curriculum Booklet for 2015. It is important to re-iterate the following:

• There will be 29 questions in all.• There break-up of the number of questions is as follows:

1. 8 questions for 1 mark each.2. 8 questions foe 3 marks each.3. 5 questions for 4 marks each.4. 8 questions for 6 marks each.

• Microeconomics and macroeconomics will have equal weightage of 50 marks each.

UNIT WISE BREAK-UP

1 Introduction 6

2 Consumer’s Equilibrium and Demand 16

3 Producer Behaviour and Supply 16

4Forms of Market and Price Determination

under perfect competition with simple applications12

PART A: Introductory Microeconomics

UNIT WISE BREAK-UPPART B: Introductory Macroeconomics

1 National Income and Related Aggregates 15

2 Money and Banking 8

3 Determination of Income and Employment 12

4 Government Budget and the Economy 8

5 Balance of Payments 7

TYPOLOGY OF THE QUESTIONS

A Remembering 25%

B Understanding 25%

C Application 20%

D Higher Order Thinking 20%

EMultidisciplinary &

Evaluation10%

Please note that this is a divergence from previous years, as earlier application, HOTS and value based questions were of a smaller percentage.

POINTS TO NOTE

• It must be noted that the break-up of questions will not be equal across Microeconomics and Macroeconomics.

• Further, it must be noted that the sample paper is only indicative. The number of questions in the Microeconomics and Macroeconomics sections may actually change in the board examination but all other parameters will remain the same.

• There will be an internal choice in one question in the 3,4 and 6 mark questions in both Microeconomics and Macroeconomics.

ESTIMATED TIME TO ANSWER

TYPENUMBER OF

QUESTIONSMARKS

TOTAL

MARKS

Estimated

time a student

is expected to

answer

Long Answer

Questions8 6 48 60 Minutes

Short Answer

Questions-I5 4 20 36 Minutes

Short Answer

Questions – II8 3 24 36 Minutes

Very Short Answer

Questions8 1 8 15Minutes

TOPIC –WISE DISCUSSION

PART – A : Introductory Microeconomics

UNIT – I

INTRODUCTION

Meaning of Microeconomics and Macroeconomics

What is an economy? Central problems of an economy: what,

how and for whom to produce; concepts of production

possibility frontier and opportunity cost.

From PPC :

•Mostly the economy functions inside the PPC.•It is downward sloping curve (with reasons).•Difference between OC AND MOC.•Reasons for rightward shift in PPC.

Learn the concept of ‘For whom to produce’.

HOTS for this unit• Why is microeconomics called price theory and macro,

income theory?

• What is OC of a factor which has no alternative?

• What is meant by economizing resources?

• Does production necessarily takes place on a PPC? Explain.

• Causes of increasing MOC?

• Allocate the following as Micro or Macro:

– Government budget.

– Wheat production.

– GDP

– Consumer’s Equilibrium.

– Per capita income.

Value Based Question for this Unit

• Indian economy is not utilizing its available resources to the maximum possible extent. As a result, its PPC is placed at lower level compared to the potential level. What needs to be done in this period?

• The government has started promoting foreign capital. What is its economic value in the context of PPC?

• ‘How to Produce’ is one of the central problems of an economy. Our government is stressing on using labourintensive technique of production. Do you agree?

• Production in an economy is below its potential due to unemployment. Government starts employment generation schemes. Explain its effect using PPC?

UNIT – II

Consumer’s Equilibrium and Demand

Consumer’s equilibrium – meaning of Utility, MU, Law of

diminishing MU, condition of consumer’s equilibrium using MU

analysis.

Indifference Curve analysis of C’s Eq.- the consumer’s budget,

preference of the consumer and condition of C’s Eq.

Demand, Market demand, determinants of demand, demand

schedule, demand curve, movement along and shift in demand

curve;

Price elasticity – factors affect Ed; measurement of Ed –

Percentage, geometric and expenditure method.


CHAPTER - 1

• Who is a consumer?• The concept of MU and TU.• The law of diminishing MU• Consumer’s Equilibrium • Utility Analysis• Indifference Curve

– Meaning and properties.– Budget line and its properties.– Condition of Consumer’s Equilibrium.– Superiority of IC analysis.


CHAPTER - 1

HOTS for this topic

• What do you mean by convex preference?• Does each and every commodity possess utility?• Can utility be measured?• What is the MU of money? Explain.• A consumer consumes only two goods X and Y. At a

consumption level of these two goods, he finds the ratio of MU to price in case of X is higher than in case of Y. Explain the reaction of the consumer.

• Distinguish between Diminishing MU and MRS?


CHAPTER - 1

Value Based Question

• To satisfy the Utility of a person, he must buy as much as possible. Explain.

• Why should MRSxy = Px / Py? Explain.• Utility of water can never be in equilibrium?

Explain this concept?• Budget Line is a constrain only to poor people?• What is the significance of public utility goods

like drinking water or street lights?


CHAPTER - 2

• Meaning of Demand

• Determinants of Individual and Market Demand

• Statement and explanation of the LAW

• Reasons for the downward sloping Demand Curve

• Exception to the LAW

• Movement and Shift in the Demand Curve.


CHAPTER - 2

HOTS for this topic

• Which of the following statements about the demand for a good is complete? Give reasons:– Rani demands one dozen oranges every day.– Rani is prepared to buy 2 dozens oranges @ per dozen every day.

• Can demand for a good decrease even when income of its buyers rises?

• MU of a commodity decreases as more units of it are consumed. When should a consumer buy more of it?

• Derive the Law of Demand from the single commodity equilibrium condition ‘MU = Price’.

• What is the difference between Giffen good and inferior good?


CHAPTER - 2

Value Based Question

• Fee in public school have increased several times during the last decade. As a result, the demand for public school education by the poor has declined considerably. What steps the government is required to take in this regards?

• Demand for necessary commodity increases even if the price increases- how far is the Law of demand relevant?

• Demand for the commodity depends on the price of the commodity?

• Normal good can be inferior goods to two different persons?• Should people buy more of a commodity to hoard?


CHAPTER - 3

• Meaning of Elasticity of Demand

• Degrees or Types of ED.

• Price elasticity measured at the point of intersection of two demand curve.

• Methods of measuring Ed.

• Percentage method.

• Total expenditure method.

• Geometric method.

• Factors determining Ed.

• Numericals


CHAPTER - 3

‘HOTS for this topic:

• When price of a good is reduced to half, its quantity demanded gets doubled. Calculate its Ed?

• Why is market demand more elastic than individual demand?

• Explain why there is direct relationship between price and total expenditure when demand is price inelastic?

• Is the ED equal on all points of a straight line demand curve? Give reasons?

• Draw (a) a demand curve which has unit Ed everywhere, and (b) another which has unit elasticity only at a single point.

UNIT – III

PRODUCER’S BEHAVIOUR AND SUPPLYProduction function: TPP, APP and MPP.

Return to a factor.

Cost and revenue : Short run costs- TC, TFC, TVC, AFC, AVC, ATC

and MC – meaning and their relationship.

Revenue : - TR, AR and MR.

Producer’s Equilibrium – meaning and its conditions- in terms of

MR and MC.

Supply, market supply, determinants of supply, supply schedule,

supply curve, movement along and shifts in supply curve.

Price elasticity of Supply – measurement (a) percentage and (b)

geometric method.

PRODUCER’S BEHAVIOUR AND SUPPLYCHAPTER - 1

• Meaning of supply• Difference between stock and supply• Factors affecting supply• Explanation of Law of supply• Change in QS and change in Supply• Causes of change in supply• Price elasticity of supply

– Meaning– Types of Es.– Methods of measuring Es.


HOTS for this topic:

• What is the shape of the supply curve during the Market period?

• Why is the supply of eggs inelastic?

• Are the following true:– An increase in input price shifts the supply curve to the right.– Any reduction in excise tax rate shifts the supply curve to the

right.– Price elasticity associated with a straight line supply curve

intersecting the x-axis in its positive region is greater than one.– An upward movement along the same supply curve indicates

increase in supply.


VALUE BASED QUESTIONS

1. Demand for electricity has ‘increased’. However supply cannot be increased due to lack of resources. Explain the elasticity of electricity in relation to its use?

2. Tax rate on non-profit institutions should be marginalized so as to earn revenue for the government. What is your view on it?

3. Is profit the only motto of any producer to produce a commodity?

4. India is spending a major part of its export earnings on the import of oil from other countries. This has put to a huge stress on our foreign exchange reserves. How can the supply for oil be increased?

5. Inflation is related to the price and supply of oil? Analyse?


• The concept of production.

• Meaning of Production Function

• Types of production function

• The concept of:– TPP

– APP

– MPP

• The Law of VARIABLE Proportions– Statement of the Law

– Explanation

– Assumptions of the LAW

– Causes of the operation of the Law

• Relations between TPP, APP AND MPP and shape of all the three curves.


HOTS for this topic:• What does point of inflexion on TPP indicate?

• Can APP rises even when MPP falls? Explain.

• Giving reasons state whether the following statements are true or false?

• When there are diminishing returns to a factor, TPP always decreases.

• TPP will increase only when MPP increases.

• TPP and MPP both decline in a situation of diminishing returns.

• Producer would not like to operate in the Ist and in the 3RD Phase of the LAW?

• NUMERICALS ON CALCULATING TPP, APP AND MPP

• Identify the three phases in the law of variable proportion from the following data:

Units 1 2 3 4 5

TPP 10 22 30 35 30


Value Based Question:• The producer can always be in the I phase of the

LAW?

• How will the Economic slowdown affect the TPP?

• The Law of Variable Proportion functions only for Agricultural sector?

• Should the producer stop in the SECOND phase of the LAW?

• All producers can avoid the third phase of the LAW?


• Cost function

• Cost of production and cost of the economy

• Short run cost:

– Fixed and variable cost

– TFC , TVC and TC

– AFC , AVC and ATC

– MC

• Relation between all the cost curves and their shapes

• REVENUE CURVES:

– TR, AR and MR

– In relation to perfect competition and imperfect competition

• EMPHASIS ON DIAGRAM AND NUMERICALS

PRODUCER’S BEHAVIOUR AND SUPPLYCHAPTER – 3 (HOTS)

• Why does ATC falls as output rises?

• Why is ATC > AVC?

• When AR is increasing why is MR > AR?

• Can MR be negative? If yes. When?

• Explain the behavior of TVC?

• Short run MC can be estimated either from TC or from TVC? Explain.

• What changes should take place in TR so that:

• MR is positive and constant.

• MR is positive and falling.

• Why is AR called the demand curve?

• State the relationship between MR and AR?

• Which part of the MC is called the supply curve?

PRODUCER’S BEHAVIOUR AND SUPPLYCHAPTER – 3

Value Based Question:

• Real cost should be incurred by the employers’?

• Only upward slope of the MC is known as the Supply curve?

UNIT – IV

THEORY OF THE FIRM UNDER PERFECT

COMPETITION

Forms of Market and price determination Under

Perfect competition with simple applications.

Perfect competition – features, determination of

market equilibrium and effects of shifts in demand

and supply.

Other market forms: monopoly, monopolistic

competition, oligopoly- their meanings and features.

Simple applications of tools of Demand and Supply:

Price ceiling, price floor.

THEORY OF THE FIRM UNDER PERFECT COMPETITION

CHAPTER - 1

• Forms of Market

• Meaning

• Types:

– Perfect Competition

– Monopoly

– Monopolistic competition

– Oligopoly.


CHAPTER - 1

• What makes monopolistic competition different from perfect competition?

• Give examples of monopoly and pure oligopoly?

• Give example of differentiated oligopoly?

• What do you mean by natural monopoly?

• Distinguish between competitive and non-competitive markets?

• Mention one feature of monopoly present in perfect market as well?

• Explain how price exceeds MC in monopoly or monopolistic competition?

• Why is the demand curve under monopolistic competition more elastic than under monopoly?

• A firm under PC can sell any quantity of output at a given price while monopoly firm has to reduce the price if it wants to sell more? Why?

• Distinguish between price discrimination and product differentiation?

HOTS FOR THIS TOPIC


CHAPTER - 1

• Under monopoly, the barriers to entry and exit of firms lead to absence of competition in the market. Do you think this is necessary in certain areas?

• Indian railway is an example of state monopoly. Explain how state monopoly has benefitted the people?

• Why should the government regulate the operation of the monopolist?

• Why should the government provide public goods?

• Oligopoly tries to play with the emotions of the people?



CHAPTER - 2

• Meaning of equilibrium price.

• Determination of equilibrium price and quantity.

– What happens when there is excess demand.

– What happens when there is excess supply.

• Shifts in Demand and Supply and Equilibrium Price

– Shift in demand

– Shift in supply

– Simultaneous changes in demand and supply.

• Special cases of equilibrium

• Simple applications of demand and supply.

• Ceiling price and price floor.


CHAPTER - 2

• Why does the equilibrium price not increase when there is decrease in its supply and its demand is perfect elastic?

• Does increase in demand necessarily cause rise in price? Explain.

• How does a change in number of consumers of a commodity affect its equilibrium price and equilibrium quantity?

• What is rationing in the context is price ceiling? State two adverse results of rationing?

• How will equilibrium price be achieved when there is Excess demand / Excess supply?

HOTS FOR THIS TOPIC


CHAPTER - 2

• Due to excess demand, land prices have increased manifold during the recent past. The dreams of building of own house for a lot of people remains unfulfilled. Suggest two measures for the fulfillment of own house dream.

• India produces oil but its consumption requirements are much greater and thus are an importer of oil. What can be done to reduce the consumption –production gap?

• Nearly a decade ago, there was a massive gap between demand and supply of telephone service. This gap does no longer exist. How has this benefitted the consumer?

• Through price ceiling, the government intends to help the consumers, but it creates shortage of goods due to excess demand at control price. What should the government do then?

• What is the economic value of fixing the MSP by the government?


TOPIC –WISE DISCUSSION

PART – B : Introductory Macroeconomics

UNIT – VI

NATIONAL INCOME ACCOUNTINGNational income and its related aggregates

Some basic concepts of macroeconomics: consumption goods, capital

goods, final goods, intermediate good; stock and flows; gross

investment and depreciation.

Circular flow of income: Methods of calculating NI – value added or

production method, Expenditure method and Income method.

Aggregates of NI:

GNP, NNP, GDP AND GNP – at Market price and factor cost; National

Disposable Income gross and net; private income; personal income and

personal disposable income.

Real and Nominal GDP

GDP AND Welfare.

UNIT – 6

HIGH ORDER THINKING SKILLS

• Give an example of an activity that contributes to economic welfare but not included in GDP?

• Give an example of externality which reduces welfare of the people?

• Who incurs final consumption expenditure?• If net CT to abroad is Rs. 40 crore and current transfers from

abroad is Rs 10 crore. Find the CT to abroad?• Distinguish between old age pension and retirement pension with

respect to the estimates of NI?• Can NI at constant price > then NI at current price?• Value added at factor cost = factor payments. Explain?• Identify intermediate and final goods• Stock and flow• Domestic and National product.

UNIT – 6


• Give one example of externality which reduces welfare of the people?

• While estimating GDP, the social costs in terms of environment damages are not calculated. Do you think these costs should be included?

UNIT – VII

MONEY AND BANKING

Money – its meaning and functions

Supply of money – Currency held by the public and net

demand deposits held by commercial bank.

Money creation by the commercial banking system.

Central banking and its functions; bank of issue,

government bank, banker’s bank, controller of credit

through SLR, CRR and Reverse Repo, open market

operation , margin requirement

UNIT – 7

HIGH ORDER THINKING SKILLS• What is the difference between ‘borrowing rate’ and ‘lending rate’?

• What is Prime Lending Rate?

• Money has separated the acts of ‘sale’ and ‘purchase’. Explain?

• What is bank money?

• What is the difference between bank rate and repo rate?

• Give the full form of Repo rate? – Re- purchase option

• Why demand deposit is considered money and not time deposit?

• Why is LIC and Post Office not considered as banks?

• What is Legal Reserve Ratio? Sate its components?

• Distinguish between CRR and LRR?

• Why only a small percentage of Total Deposits is is kept by the banks as reserves?

• What is money multiplier? How is it related to LRR?

• Why commercial banks are called producers of money?

UNIT – 7

VALUE BASED QUESTIONS• The RBI is working towards bringing every

household under the ambit of banking sector? Explain why?

• Mention one way by which people would benefit from banking services?

• Since 2009-10, the RBI has raised the Repo rate 13 times. Why is repo rate so often revised?

• What is the importance of money to the government?

UNIT – 7

VALUE BASED QUESTIONS• Explain how the commercial bank helps in

the process of Capital Formation?

• Why do we deposit our money in banks? Explain its economic value?

• State one advantage of credit card over cash?

• Suppose all the customers of a commercial bank withdraw their deposits at the same time. What can the Central Bank do in such situation of financial crises?

UNIT – VIII

DETERMINATION OF INCOME AND

EMPLOYMENT

Aggregate demand and its components.

Propensity to consume and propensity to save (average and

marginal)

Short-run equilibrium output; investment multiplier and its

mechanism.

Meaning of full employment and involuntary unemployment.

Problems of excess demand and deficient demand; measures to

correct them- change in Government spending, availability of

credit.

UNIT – VIII

DETERMINATION OF INCOME AND EMPLOYMENT

• The rise of THE GREAT DEPRESSION OF 1930’S• Distinguish between simple Keynesian theory and

Classical theory.• Component of AD and its meaning:

– Consumption and its equation.– Saving and its equation.– Income and its equation.

• DIAGRAMS AND EQUILIBRIUM• Investment

– Induced and autonomous Investment– MPC, APS, MPS AND APC

• Components of AS and its meaning

CHAPTER – 1

UNIT – VIII

DETERMINATION OF INCOME AND EMPLOYMENT

CHAPTER – 2

• EQUILIBRIUM IN AD and AS

• Money Multiplier

CHAPTER – 3

• Measures to correct the Excess Demand and Deficient Demand

UNIT – 8


• Can consumption exceed income? If yes, what is the saving then?

• Under what situation is APC >1 and APC < 1?

• Distinguish between APC and MPC? The value of which of these can be greater than one and when?

• Can APS be negative?

• What can be the minimum and maximum value of MPC?

UNIT – 8

HIGH ORDER THINKING SKILLS• What is the implication of K = ∞?

• Explain the principle of Effective Demand? Use diagram?

• Distinguish between full employment equilibrium and underemployment equilibrium?

• Distinguish between excess and deficient demand?

• Are the following statement true or false:– Excess demand does not affect the level of output?

– During deficient demand, equilibrium is determined at full employment?

– Deficient demand spreads voluntary employment?

– During inflationary situation, the central bank aims at increasing the cost of borrowing money?

UNIT – 8


• Name one step the government can take through its fiscal measures to check inflationary tendencies?

• Is voluntary unemployment beneficial for the economy?

• Explain any two fiscal measures to rectify the problem of deficient demand?

• What is the reason behind autonomous consumption?

• Savings are good for the individual but not for the economy? State the value behind this statement?

UNIT – IX

GOVERNMENT BUDGET AND THE ECONOMYGovernment Budget- meaning and objectives and components.

Classification of receipts- revenue receipts and capital receipts;

classification of expenditure – revenue and capital.

Measures of government deficit – revenue, fiscal and primary

deficits and their meaning

UNIT – X

BALANCE OF PAYMENTBalance of payment accounts- meaning and components; BOP

deficit- meaning.

Foreign exchange rate- meaning of fixed, flexible and managed

floating.

Determination of foreign exchange rate in the free market.

UNITS – 9 & 10


• What do you understand by deficit financing?

• What does a low primary deficit indicate?

• What happens when fiscal discipline is not maintained?

• Which two sources – borrowing or deficit financing is considered better to meet fiscal deficit? Give reasons?

• Can there be fiscal deficit without a revenue deficit?

• What is the difference between devaluation and revaluation?

UNITS – 9 & 10

HIGH ORDER THINKING SKILLS• Explain the effect of depreciation of domestic

currency on exports?

• Name any two types of economic activity that causes international transaction?

• Give two examples each of factor payment and non-factor payment on account of invisible trade?

• Explain how deficit in the BOP adversely affect the economy of the country?

• ‘BOP always balances’. Does that mean a situation of zero net liability to the ROW?

• Which transactions are written on the credit side of the BOP accounts?

UNITS – 9 & 10

VALUE BASED QUESTIONS• The market price of US $ has increased considerably

leading to rise in prices of the imports of essential goods. What can the Central Bank do to ease this situation?

• Medical tourism is developing very fast in India. If Indian government devalues its currency, how will it affect the foreigners who come to India for medical treatment?

• State economic value of direct tax over indirect tax?

• How does outsourcing worked as a source of valuable foreign exchange for the country?

• How does the rising BOP deficit affect the economy?

THE END

enrichment programme for economics class xii · chapter - 1 hots for this topic •what do you mean...

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