COUNCIL OF HIGHER SECONDARY EDUCATION, MANIPUR

The figures in the margin indicate full marks for the questions.

(i) Answer all the questions.

(ii) Marks are indicated against each question.

(iii) In each of the questions 1-10, there are four answers marked A, B ,C and D. only one of them is correct or the best. Choose the correct or the best answer by writing the serial letter with the serial number of the question.

(iv) Answer to questions 11-20 should be limited to a few words or a sentence each.

(v) Answers to questions 21.26 should be limited to about 50 (fifty) words each.

(vi) Answers to questions 27-34 should be limited to about 40 (forty) words each.

(vii) Answers to questions 35-38 should be limited to about 300 (three hundred) words each.

 The total volume of employment, income and output in an economy in the short-run depends on  1
A. both the aggregate demand function and the aggregate supply function
B. neither the aggregate demand function nor the aggregate supply function
C. the aggregate demand function
D. the aggregate supply function.  

 2. If a large part of the national income is concentrated. in a few hands the aggregate propensity to   1
A. consume will be high
B. consume will be low
C. save will be low
D. consume will remain constant.  

3. Commercial Banks create credit on the basis of          1    
A. the habit of the People for repay-ment
B. the rules and regulations made by the state
C. the bank notes issued by the Central Bank
D. the deposits they receive from the public.  

4. Which of the following principles of taxation is said to have been followed if the rate of tax falls with an increase in income        1
A. Proportional principal
B. Digressive principle
C. Regressive principle
D. Progressive principal.  

5. Utility in economics means        1
A. usefulness of a commodity
B. want satisfying power of a commodity
C. the desire for a commodity
D. the level of satisfaction given by a commodity.  

6. In which time period the force of demand plays a greater role in determining price ?    1
A. Market period
B. Short period
C. Long period
D. Very long period.  

7.   The most acceptable theory of profit is    1
A. Marxian theory of profits
B. Rent theory of profit
C. Risk and uncertainty theory of profit
D. Dynamic theory of profit.  

8.  "If the railways are making a loss on passenger traffic they should lower their fares". The suggested remedy would onlywork if the demand for rail travel had a price elasticity of    1
A. zero
B. greater than zero but less than one
C. greater than one
D. one.  

9. Which of the following is earned by a factor of production whose supply is almost fixed ?  1
A. Economic rent
B. Interest
C. Profits.
D. Wage.  

10.  Which of the following is not true with regard to profit ?  1
A. It may arise from introducing an innovation
B. It is always positive
C. It may be the reward for uncertainty
D. It may arise because of monopoly power of producer.

11. Under what circumstance will the Gross National Product be more than the Gross Domestic product ?    1

 12.  What will be the level of income in an economy if the aggregate demand is less than aggregate
supply ?      1

13. Give a reason why paper notes though not posses all the qualities of good money serve as a very effective unit of money.         1

14. Why is sales tax called an indirect tax?     1

15. Give a reason why the necessity for economic activities arises.     1  

16. What is break-even point of firm?     1

17. Which one of the factors of production is the most perishable ?      1

18. What is most important function of an entrepreneur ?     1  

19. What according to the liquidity preference theory determines the rate of interest?     1

20. What is the name of the wage paid according to the work done irrespective of time taken in doing it ?     1

21. Show the saving is equal to investment.          4  

22. Give four points of distinction between Commercial Bank and Central Bank.         4

23. Define a tax and indicate how it is different from other sources of public revenue.          4

24. What are the effects of Public expenditure on peoples ability to work and save and how can it be used as an effective tool to reduce disparities of income and wealth ? 2+2

25. Distinguish between fixed and circulating capital. Give an example each of the two.         2+2

26. Calculate the net domestic product (N. D. P ) of a country at factor cost with the help of data given below :(Rs. in crores )(i) G. N. P. at market prices 40,000(ii) Net indirect taxes 4,000(iii) Consumption of fixed capital 2,000(iv) Net factor income from abroad. 300      4  

27. What are the three sectors of the economy with reference to which national accounting is done ?         3

28.  Give three reasons why there are differences in wage rates.          3

29. Draw a demand curve from the following table :Price (Rs.) 10 8 6 4 2 Quantity (Units) 100 150 200 250 300.         3

30.  Define propensity to consume How is marginal propensity to consume different from average propensity to consume ?         1+ 2

31.  A consumer purchased 10 units of a commodity when its price was Rs. 5 per unit. He purchased 12 units of the commodity when its price fell to Rs. 4 per unit. What was the price elasticity of demand for this commodity at that price ?          3

32.  Suppose that a freely determined price of sugar is Re. 10 per kg. and the government fixes its controlled price at Rs. 8 per kg. At this price there is a shortfall of 20 quintals between the quantity demanded and quantity supplied. Give one possible consequence of this ? Show it with the help of a diagram.          1+2

33. Write three characteristics of land.             3

34. Why according to Ricardo is it said that rent has no influence on the price of corn?         3  

35.   What is real investment ? Write two determinants of investment ?             4+6

36.  Write four functions of money in a modern economy.             8

37.  State the definition of economics given by L. Robbins. Show how it makes an improvement upon the definition given by Marshall.          3 +5  

38. Explain with the help of a diagram how price is determined under Perfect Competition.         8

MODEL  ANSWER