HSC +2 - Economics Model Question Paper - 2014

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XII - Economics Important questions 2014

I. Choose the correct answer

1. The concept of Net Economic Welfare has been given by Samuelson
(a) Samuelson (b) Marshall (c) Adam Smith (d) Lionel Robbins

2. The author of wealth definition is : Adam Smith
(a) Alfred Marshall b) Lionel Robbins c) Adam Smith d) Samuelson

3. The basic force that drives the capitalist economy is Profit – motive
a) Planning b) Technology c) Government d) Profit – motive

4.Redtapism and corruption lead to Inefficiency of production
a) Inefficiency of production b) Inequality of income and wealth 

c) Absence of technology    d) Efficient use of resources

5. Utility is a Subjective / psychological concept
a) Social concept b) Subjective / psychological concept c) Political concept d) Scientific concept

6. Consumer surplus is Potential Price – Actual Price
a) Potential Price – Actual Price b) MUn = TUn –TUn-1 c) Demand = supply d) None

7. The degree of response of demand to change in price is Price elasticity of demand
a) Income elasticity of demand b) Cross – elasticity of demand
c) Price elasticity of demand d) All the above.

8. Law of Demand establishes inverse relationship between price and quantity
a) inverse relationship between price and quantity b) Positive relationship between price and quantity
c) Both                                                                d) None

9. Factors determining supply are : All the above
a) Production technology b) Prices of factors of production c) Taxes and subsidies d) All the above

10. Changes in quantity demanded occur Only when price changes
a. Only when price changes b. Due to change of taste c. both d. None

11. The time element in price analysis was introduced by Alfred Marshall
a. J.R. Hicks b. J.M. Keynes c. Alfred Marshall d. J.S. Mill

12. A successful entrepreneur is one who is ready to accept Risks
a. Innovations b. Risks c. deciding the location of the production unit d. none.

13. The initial supply price of land is Zero
a. Zero b. Greater than one C. Less than one d. Equal to one

14. real cost is All the above
a) pain and sacrifice b) subjective concept c) efforts and foregoing leisure d) All the above

15. Average fixed cost is obtained by dividing TFC/Q
a) TC/Q b) TFC/Q c) TVC/Q d) None

16. The firm and industry are one and the same under monopoly
a. perfect competition b. duopoly c. oligopoly d. monopoly

17.Perfect competition is a market situation where we have a single seller large number of sellers
a. a single seller b. two sellers c. large number of sellers d. few sellers

18. Profits are the reward for organisation
a) land b) capital c) labour d) organisation

19. The author of the concept of quasi – rent is Marshall
a) Adam Smith b) Marshall c) Ricardo d) Samuelson

20. The central problem in Macro Economics is Income and employment
a) Income and employment b) Price and Output c) Interest and Money d) None

21. The marginal propensity to consume ΔC/ΔY
a) ΔS/ΔY b) C/y . c) ΔP/ΔQ d) ΔC/ΔY

22. Currency with the public is known as M1
a) M1 b) M2 c) M3 d) M4

23. A situation marked by rising prices and stagnation in demand is known as stagflation
a) cost-push inflation b) demand – pull inflation c) stagflation d) wage – push inflation.

24. Tax revenue deals with the Kinds of taxes
a) Fees b) Kinds of taxes c) Revenue d) Non tax revenue

25. In ZBB every year is considered as a new year
a) base year b) financial year c) new year d) academic year

26. The federal form of government consists of    central, state and local government
a) central, state and local government b) central and state government

c) state and local government            d) above all

II Fill in the blanks 

  1. Strictly speaking production refers to the creation of__________ utilities

  2. An example of cosmopolitan wealth is _____________ ocea

  3. Production possibility curve is also known as ________ Transformation / production possibility frontier

  4. The prime motive of socialist economy is _______________ Social /COLLECTIVE WELFARE

  5. An indifference curves is __________ to the origin “Principles of Economics"

  6. The rate of change of supply to a change is price is ___________ Elasticity of supply.

  7. Adding up of individual consumers schedule is __________ Market demand schedule

  8. Modern economists divide time periods into ______ and ________ Short period and long period

  9. ___________ is limited by the extent of market. Division of labour

10. Land and labour are called ____________ factors primary

11.____________ is man-made physical goods used to produce other goods. capital

12.The perfect competitive firms are ___________ price-take

13.Transfer earnings refer to _____________ cost opportunity

14. Money wages are also known as ____________ wages nominal

15. __________ refers to the cash holdings of the people. Liquidity Preference

16. The equation of exchange (MV = PT) was given by Irving Fisher

17. Monetary policy is usually effective in controlling _____________ inflation

18. tax is a blend of progressive tax and proportional tax. digressive

19. the absence of direct and proportional benefit is ________ quid pro – quo

20. Galloping inflation is also known as _____________ hyper-inflation or run-away inflation

III. Match the following

1. First Nobel prize                        Tinbergen and Frisch
2. Wealth                                       Stock
3. opportunity cost                         next alternative forgone 
4.  private property                        Laissez faire economy
5. “Principles of economics”           Marshall
6. Luxuries Diamond,                     Jewels
7. Segment between two points      Arc
8. Cross-elasticity is zero               X and Y are not related
9. Long period supply curve          More elastic
10. Excess demand                         D > S
11. Division of labour                      Adam Smit
12. bundle of risks                          Hawley
13. Exertion of body or mind          Marshall
14. MCn TCn                              – TCn-
15. Profit                                       TR – TC
16. Consumer sovereignty               perfect competition
17. monopolistic competition           E.H. Chamberlin
18. Dynamic Theory of profit          Clark
19. K                                             1/1-MPC
20. Y                                             C + S
21. Keynes                                    Liquidity Preference
22. cheap money policy                  Low rate of interest
23. Value of money                        Purchasing power of money one another
24. Progressive tax                        Best tax system
25. Balanced budget                    Tax rate decreases

 IV. Answer each one of the questions in a word or two :

1. What is the other name for money income ? nominal income
2. What is the method that Ricardo made use of ? Inductive method
3. What is the basic force that drives a capitalist economy ? Profit Motive
4. Name any two successful socialist economies. China and Cuba
5. What is the other name for budget line ? Price – ratio line
6. What is the other name for the law of Equi-Marginal Utility Gossen’s second law
7. How does the demand change during boom and depression ?
   During boom demand increases and during depression demand
8. How does the demand change during boom and depression ?
   During boom demand increases and during depression demand
9. Give the formula for point method
   ep = lower segment of the demand curve / upper segment of the demand curve
10. Give an example for fixed input ? Heavy machinery / building
11. What are the determinants of shift in demand curve ? Income, taste, price of substitutes
12. State the Cobb-Douglas production function. Q = b La Cb
13. Give the condition for producer’s equilibrium ? MRTS xy = Px / Py
14. State the Cobb-Douglas production function. Q = b La Cb
15. How will you calculate AC ? TC/q
16. Who undertakes the public utilities? state
17. What is the essential feature of monopolistic competition? product differentiation
18. In which year the MRTP Act was passed? 1969
19. State J.B. Say’s Law of Market. Supply creates its own demand
20. Give the formula for Multiplier K = 1 / 1-MPC
21. Who is the author of the “General Theory of Employment, Interest and Money”? Keynes
22. When is dear money policy followed ? during inflation
23. Name the bank which controls money supply in a country. central bank
24. What is public debt ? borrowing from the public
25. Give the expansion for VAT value added tax

                                                                      PART - B

3- Marks Questions

1. Distinguish between change in demand and shift in demand.
2. What are the basic issues of any society?
3. Name the important general economic systems?
4. List the basic features of socialism
5. Is India a mixed economy?
6. What is opportunity cost?
7. What is equilibrium price?
8. Distinguish between change in demand and shift in demand
9. What are the determinants in shift in supply?
10. Differentiate the short period from the long period
11. Write a short note on market period
12. Name the types of utility
13. Define labour.
14. What is meant by division of labour?
15. What are the forms of capital?
16. What is Production function? What are its classification?
17. Bring out the distinction between short run and long run.
18. Define opportunity cost.
19. What are economic cost?
20. Define Marginal cost.
21. Mention the relationship between MC and AC

                                          PART - C

1. Give a note on long run average cost curve
2. Explain the relationship between AR and MR curve
3. Explain the short run average cost curves
4. Explain the marginal cost with suitable illustration
5. Explain the relationship between SAC and SMC.
6. Draw the flow chart to depict the essence of Keynes theory.
7. What are the criticisms of Say’s Law?
8. Describe the consumption function with a diagram
9. What are the determinants of consumption other than income?
10. What are the assumptions of Keynes’ Simple Income Determination?
11. Explain the canons of taxation
12. What are main sources of tax and non-tax revenue of the state government ?
13. Define Budget. Explain the balanced and unbalanced budget.
14. What are the limitations of fiscal policy ?
15. Differentiate between the direct and indirect taxes ?    

                                           PART - D

1.   Discuss the nature and importance of economic laws 
2.   Discuss the nature and scope of economics
3.   Describe the Law of Diminishing Marginal Utility with a diagram?
4.   Explain Consumer's Surplus with the help of diagram and bring out its importance and its criticism
5.  Explain the characteristics of human wants 
6.  Discuss the law of demand
7. Explain the methods of price elasticity of demand in detail?
8. Explain the advantages and disadvantages of Monopoly
9. Examine Recardian theory of rent
10. Discuss the objectives and instruments of monetary policy