2nd PUC Economics Textbook Answers Introduction to Micro Economics
Here in this page we have given Economics Textbook for 2nd Year Pre University Course (2nd PUC) Solution for Chapter 1 Introduction to Micro Economics. Here 2nd PUC Economics Textbook Answers full Solution by Teachers.
Introduction to Micro Economics
Multiple Choice Questions
1.) The branches of the subject Economics is
a) Wealth and welfare
b) production and consumption
c) Demand and supply
d) micro and macro
Ans.a) Wealth and welfare
2.) Who coined the word ‘Macro’?
a) Adam Smith
b) J M Keynes
c) Ragnar Frisch
d) Karl MarxAns
Ans.c) Ragnar Frisch
3). Who is regarded as Father of Modern Macro Economics?
a) Adam Smith
b) J M Keynes
c) Ragnar Frisch
d) Karl Marx
Ans.b) J M Keynes
4.) Identify the other name for Macro Economics.
a) Price Theory
b) Income Theory
c) Market Theory
d) Micro Theory
Ans.b) Income Theory
5.) Macro economics is a study of ___________________.
a) individuals
b) firms
c) a nation
d) aggregates
Ans.d) aggregates
6.) Indicate the contribution of J M Keynes to economics.
a) Wealth of Nations
b) General Theory
c) Capital
d) Public Finance
Ans.b) General Theory
7.) A steady increase in general price level is termed as_____________.
a) wholesale price index
b) Business Cycle
c) Inflation
d) National Income
Ans.c) Inflation
8.) Identify the necessity of Economic policies.
a) to solve the basic problems
b) to overcome the obstacles
c) to achieve growth
d) all the above
Ans.d) all the above
9.) Indicate the fundamental economic activities of an economy.
a) Production and Distribution
b) Production and Exchange
c) Production and Consumption
d) Production and Marketing
Ans.c) Production and Consumption
10). An economy consists of
a) consumption sector
b) Production sector
c) Government sector
d) All the above
Ans.d) All the above
11). Identify the economic system where only private ownership of production exists.
a) Capitalistic Economy
b) Socialistic Economy
c) Globalisic Economy
d) Mixed Economy
Ans.a) Capitalistic Economy
12.) Economic system representing equality in distribution is _________.
a) Capitalism
b) Globalism
c) Mixedism
d) Socialism
Ans.d) Socialism
13). Who is referred as ‘Father of Capitalism’?
a) Adam Smith
b) Karl Marx
c) Thackeray
d) J M Keynes
Ans.a) Adam Smith
14.) The country following Capitalism is ________________ .
a) Russia
b) America
c) India
d) China
Ans.b) America
15.) Identify The Father of Socialism.
a) J M Keynes
b) Karl Marx
c) Adam Smith
d) Samuelson
Ans.b) Karl Marx
16.) An economic system where the economic activities of a nation are done both by the private and public together is termed as_____________.
a) Capitalistic Economy
b) Socialistic Economy
c) Globalisic Economy
d) Mixed Economy
Ans.d) Mixed Economy
17.) Quantity of a commodity accumulated at a point of time is termed as ____________..
a)production
b) stock
c) variable
d) flow
Ans.b) stock
18.) Identify the flow variable.
a) money supply
b) assests
c) income
d) foreign exchange reserves
Ans.c) income
19.) Identify the sectors of a Two Sector Model.
a) Households and Firms
b) Private and Public
c) Internal and External
d) Firms and Government
Ans.a) Households and Firms
20.) The Circular Flow Model that represents an open Economy.
a) Two Sector Model
b) Three Sector Model
c) Four Sector Model
d) All the above
Ans.c) Four Sector Model
Answer the following questions in one or two sentences
21.) Define Macro Economics.
Ans.Macro economic means the study of aggregate economic . Marco work derived for the Greek work Makros . It means large. In marco economic we basically study the national income, employment and output.
22.) Define the term ‘Inflation’.
Ans.Inflation basically means the steady increase in general price level.
24.) Classify the economies based on status of development.
Ans – The economies classify on based on status of development as follows Developed, underdeveloped, undeveloped and developing economies.
25.) What do you mean by Capitalism?
Ans – capitalism is the economic system which means Capitalistic Economy. In such type of economic there are full freedom is given to sellers.
26.) Define ‘Economic Model’.
Ans – model is basically means the real or simplified representation of situation. Economic use such model toshow the economic activities.
27.) ‘Circular Flow of Income’ – Define
Ans – The circular flow of income is a modal of economic. It help to show the flow of income, good into the economy.
Answer the following questions in about a paragraph
28.) State the importance of Macro Economics
Ans – The important of Macro economic as follows.
i.) There is need to understand the aggregate economic and to study the economic as whole. Macro economic help to study the aggregate economic and due to this we can make proper strategies and solve the economic problems at aggregate level.
ii.) Macro economic important it help to understand the future problem, need and challenges at whole level .
iii.) Macro economic opposite to use scientific
investigation to understand the reality.
iv.) The meaningful comparison and analysis of economic indicators will be easy by macro economic.
v.) Macro economics helps to avoid economic crises by formulating the suitable policies.
29.) Describe the different types of economic systems.
Ans – There are main three type of economic systems as follows
1.) Capitalistic Economy.
2.) Socialistic Economy .
3.) Mixed Economy.
capitalistic economy and socialistic economy both are opposite to each other. Under capitalistic economy there is full freedom is given to sells they can formulas there own policies and the use of raw materials or resources are depends upon the selles. The decision about the allocation of resources also take by seller. Under capitalistic economy there is only profit motive. There is choice to the buyer because in such type of economic seller only have profit motive hence they make products as per the own the buyer. But socialistic economy is completely different by capitalistic economy . In socialistic economy all policies and resources are control by government. There is no any freedom is given to seller all decision are taken by government. The decision about allocation of resources are completely depends upon the government. There is no any choice to customers also the things provide by government they must accept no choice. Mixed economy is mixture of capitalistic and socialistic economic. Under mixed economic all the best function are involved of capitalistic and socialistic.
30). Outline the major merits of capitalism.
Ans – The merits of capitalism as follows
1.) Automatic Working:In capitalistic economy there is no any intervention of government. The seller have full power of management and allocation of resources in economy. Hence the economy works automatically.
2.) Efficient Use of Resources:In capitalistic economy there is full power is given to sell for allocation and management of resources and there is only motive is profit hence to earn large profit seller use resources efficiently.
3.) Incentives for Hard work: In capitalism economy there is only motive to earn large profit and hence for large profit seller work hard and more efficient.
4.) Economic Progress:In capitalism the production and productivity level is so high due to profit motive.
5.) Consumers Sovereignty: In capitalism to earn large profit the seller mainly focused on to satisfied the consumer wants.
6.) Higher Rates of Capital Formation:To earn large profit the seller allocated the resources properly this lead to saving and increase in investment it leads to higher rate of capital formation.
7.) Development of New Technology: In the capitalism economy there is only profit motive hence to earn large profit the new technology are invented and the quality of products increases.
31.) Indicate the demerits of socialism.
Ans -The demerits of socialism as follows
1.) Red Tapism and Bureaucracy: In socialism economy the majority decision are taken by government and needs approver form many official and for such approval need signature of multiple officers and hence files are move for one table to another it takes so much time and leads to red tapism.
2.) Absence of Incentive:In socialism decision are taken by government and the decision about allocation of resources also taken by government. In such economy there is no freedom to seller and not any profit motive because they not have decision making power and hence there is absence of incentive. Therefore, productivity also suffers.
3.) Limited Freedom of Choice:In socialism allocated of resources power is in hades of government hence government produces such product which have important. Government not produces as per the want of people and hence consumer not have freedom of choice .
4.) Concentration of Power:In socialism decision taking power only in hand of government and private sector are not have any decision-making power due to this there is misuse the power by government
32.) Enumerate the features of mixed economy.
Ans – The feature of mixed economy as follows.
1.) Ownership of Property and Means of Production: In mixed economy there is same power are distribution between government and private sectors. Mixed economy government and private sector work together.Means of production and properties are owned both of them. Both are have same rights .
2.) Coexistence of Public and Private Sectors:Mixed economy contains all the best feature of socialism and capitalism and hence government and private sector both working together.private sector take decision tomaximize profits and government take decision for public welfare.
3.) Economic Planning:All types of economic plans are make by central planning authority which control by government. All type of economy planing decisions are take by private and public sector together. All the sectors in economy function accordingly the objectives, priorities and targets given by the plan.
4.) Solution to Economic Problems : The basic problems of economy what to produce, how to produce, forwhom to produce and how to distribute are solved through the price mechanism in case of private sector as well as state intervention in case of government.
5.) Freedom and Control:In mixed economy both private and government sector work together hence economy work also distributed. private Sector has some freedom like they have right to allocation of own resources, produce goods and services as per use of price mechanism for profit motive and distribute the same, the overall control on the economic activities are in hand of government for public Welfare.
33.) Distinguish between Capitalism and Globalism.
Capitalism | Globalism |
1.this system means of production are privately owned. | 1.this system economics activities of a nation are connected and inter dependent on each other nation. |
2.this system for national development | 2.this system global development |
3.it is called as command economy | 3.its also called as a extended capitalism. |
34.) Briefly explain the two sector circular flow model.
Ans – The sector circular flow of income model show the economic connection between the two sector. The two sector circular flow model shows the flows of income , goods and services and factors of production between two sector by way of buying and selling in each other. There are two sector such as household sector and firm sector.The household sectors is sole buyer and supplier of goods and service. It spend there wholeincome purchase goods for business sector. The household sector earn income by providing or supplying the factor of production to firm sector which products by them and firm sector also earn money form household sector by way of providing factors of production to household sector. Such that the both sector selling and buying factors of production form each other and earning income. Hence it’s called circular flow model in which income, factors of production and goods and services flow circular for one to another.The household sector provide there factors of production to firm sector and firm sector supply there output to householdsector.
Answer the following questions in one page
35.) Discuss the scope of Macro Economics.
Ans -The scope of macro economic covered in the following areas.
1.) National Income: In macro we study at aggregate level.The study of national income is basic aspects of macro economic analysis. The analysis of national income help to understand the long term trend of growth process of economy.
2.) Inflation: The basic meaning of inflation is steady increase in price level.The price index are use for calculate the general price level .
3.) Business Cycle: All types of economy face the problem of business cycle. The stages of business cycle such as boom, recession, depression and recovery shall impact the economy hence study of such business cycle is important.
4.) Poverty and Unemployment: Poverty and Unemployment is the major problem which face by rich nations economy. This is one of the economic paradoxes. The clear understand about unemployed and poverty is important for economy as aggregate level.
5.) Economic Growth: Only by the study of marco economy help to understand the economy growth and development. Economic growth take place at large and aggregate level it covered under macro economic.
6 ).Economic Policies:Economic policies are important for solve the economic problems. The proper economic policies help to solve basic economic problems such as what to produce, how to produce , whom to produce and the provision for future.
37.) Compare the features of capitalism and socialism.
· Capitalism | · Socialism |
· Capitalism economy system is private ownership | · Socialism economy system is public ownership |
· The important motive of production of goods and services in a capitalism system is earning profit | · The important motive of production of goods and services in a socialism system is welfare of the public. |
· The distribution of income is unequal in a capitalism system | · The distribution of income is equal in a socialism system |
· The major problem in capitalism system is inequality | · The major problem in a socialism system is equal |
· In capitalism system government role is Internal regulation only. | · In socialism system government role is complete involvement |
Also See: 2nd PUC English Textbook Question Answer