MODERN SCHOOL NOIDA

ECONOMICS
Class- XII
UNIT WISE/ CHAPTER WISE ASSIGNMENT
Introductory Micro Economics

UNIT- 1 - INTRODUCTION

Q-1 Explain the central problems of an economy. (3)

Q-2 Name the technical term used to denote the rate at which the quantity of output of one
good is sacrificed to produce one more unit of the other good. Explain it with the help of
a numerical example. (3)
Q-3 Answer the following questions :- (4)
i) What does a rightward shift in production possibilities curve indicate? Explain.
ii) What does a point lying below the PPC highlight? Explain.
Q-4 What is the effect on MRT as we move downwards along a PPC? (3)
Q-5 Explain the properties of production possibility curve. (4)
Q-6 Economic slow down in some parts of the world has adversely affected demand for Indian
experts. What will be its effect on the production possibilities frontier of India? Explain. (3)
Q-7 Construct a hypothetical production possibility schedule showing & comment on shape of
PPC. (6)
 Increasing MRT
 Constant MOC
 Diminishing MRT
Q-8 Differentiate between posture & normative economics. (4)
Q-9 Differentiate between Micro economic &Macroeconomics. (4)

UNIT- 2 - Consumer Equilibrium & Demand

Q-1 Define utility. Explain the difference between cardinal and ordinal utility. Give
examples in cash case. (3)
Q-2 Explain the conditions of Consumer’s equilibrium in case of a single good. Use a
marginal utility schedule. (6)
Q-3 Give meaning of Consumer’s equilibrium. A consumer consumes only two goods.
What are the conditions of consumer’s equilibrium in the utility approach? Explain
the changes that will take place when the consumer is not in equilibrium. (6)
Q-4 Explain the distinction between budget line & budget constraint. (3)
Q-5 Give the meaning of marginal rate of substitution (MRS) . What happens to MRS
when consumer moves downwards along the IC ? Give reasons for your answer. (4)
Q-6 Distinguish between demand by an individual consumer and market demand of
that good. Also state the factors leading to fall in demand by an individual
consumer. (4)
Q-7 What is an ‘inferior good’? In what manner is the demand curve of an inferior
good affected when income of the consumer increases? (3)
Q-8 Define price elasticity of demand. When is the demand said to be (i) inelastic, ii)
perfectly inelastic, iii) elastic ? (4)
Q-9 How is the price elasticity of demand of a commodity affected by the number of
its substitutes? Explain. (3)
Q-10 A consumer consumes only two goods. Why is the consumer in equilibrium when
he buys only that combination of the two goods that is shown at the point of
tangency of the budget line with an indifference curve? Explain. (6)
Q-11 Define a budget line. What does the absolute value of the slope of budget line
measure? (3)
Q-12 What is the impact of the following on the demand curve of good XP . Give
reasons.
i) Consumer’s income rises and good X is a normal good.
ii) Consumer’s income falls and good X is an inferior good.
iii) Price of complementary good Y rises.
Q-13 Explain any four factors affecting price-elasticity of demand. (6)
Q-14 A consumer buys 14 units of a good at a price of Rs. 8 per unit. At price of Rs. 7 per
unit he spends Rs. 98 on the good. Calculate price elasticity of demand by the
percentage method. Comment upon the shape of demand curve based on this
information. (4)
Q-15 Differentiate between “Change in demand” and change in quantity demanded.
Q-16 Define ‘Law of demand’. State its assumptions. (3)
Q-17 Differentiate between ‘griffin goods’& ‘normal goods’. (3)
Q-18 Explain any two reasons for the operation of law of demand. (4)
Q-19 Explain any four factor affecting market demands. (6)
Q-20 A consumer consumes two goods X & Y. What will happen if MUX/PX is greater
than MUY/PY? (3)
UNIT- 6 - Money and Banking

Q-1 Explain the concept of money supply and its components. (3)
Q-2 Why are the banks required to keep only a fraction of deposits as cash reserves? (3)
Q-3 Why are the banks required to keep only a fraction of deposits as cash reserves? (3)
Q-4 Suppose initial fresh deposits with banks = Rs. 25,000 and legal reserve rates =
20%. How much total money will be created in the economy? (3)
Q-5 What is a central bank? Explain “ Bank of Issue” function of a central bank. (3)
Q-6 What is meant by bank rate? What will be the effect of a rise in bank rate on money
supply? (3)
Q-7 Differentiate between cash reserve ratio and statutory liquidity ration. (3)
Q-8 What is ‘money multiplier’? (3)
Q-9 What is meant by open market operation? How does it reduce the money supply in
the economy. (2)
Q-10 Explain the process of money creation by the commercial with the help of a
numerical example. (6)
Q-11 Explain the following functions of the central bank :-
 a) Bank of Issue b) Banker’s bank
Q-12 Explain any two quantitative & any two qualitative monetary measures to control
credit creation. (6)

UNIT- 7 - Money and Banking

Q-1 Distinguish between a) en-ante measures and en-post measures, b) autonomous

investment and induced investment, and c) autonomous consumption and induced
consumption. (3)
Q-2 Distinguish between aggregate supply and aggregate demand. Also state the
components of aggregate demand in a two sector economy. (4)
Q-3 Define marginal propensity to consume. What is the minimum and maximum value
of marginal propensity to consume. (3)
Q-4 Define average propensity to save. What is the relationship between average
propensity to consume and average propensity to save? Explain. (3)
Q-5 Draw a straight line consumption curve. From it derive a savings curve explaining
the process. Show on this diagram : a) the level of income at which APC is
equal to one b) a level of Income at which APC is negative. (6)
Q-6 What is saving function? How is it derived from the consumption function? (3)
Q-7 Give the meaning of involuntary unemployment and voluntary unemployment.
What is the significance of the difference between involuntary and voluntary
unemployment? (3)
Q-8 Distinguish between full employment equilibrium and under employment
equilibrium. (3)
Q-9 Define deflationary gap. Show it with the help of diagram. What will be its effecton
output, employment & prices. (4)
Q-10 Give the meaning of excess demand. State the implication of deficient demand. (3)
Q-11 In an economy planned savings is greater than planned investment. Explain how the
economy achieves equilibrium level of national income. (3)
Q-12 How is ‘saving’ and ‘investment’ approach derived from the ‘aggregate demand and
supply’ approach of income determination? Explain. Use diagram. (6)
Q-13 What changes will take place in the economy if aggregate demand exceeds
aggregate supply if- (6)
i) The economy has not reached the full employment level and
ii) The economy has reached the full employment level.
Q-14 In an economy, autonomous consumption is Rs. 100 crore and autonomous
investment is Rs. 60 crore. In this economy, with every increase in income, 80% of
it is spent on consumption. Calculate the additional investment required to reach the
full employment level of income of Rs. 1000 crore. (6)
Q-15 What is investment multiplier? Explain its forward working with the help of an
example. (6)
Q-16 Distinguish between inflationary gap and deflationary gap. State two measures by
which these can be corrected. (6)
Q-17 From the following information about an economy , calculate i) 15 equilibrium
level of national income, and ii) savings at equilibrium level of national income.
Consumption function : C= 200 + 0.9 Y &I= 3000. (6)
Q-18 In an economy, with every increase in income 70% of the increased income is
spent on consumption. Suppose a fresh investment of Rs. 300 crore takes place in
the economy. Calculate the following :-
i) Change in Income ii) Change in Savings.

UNIT-VIII , Govt. Budget and the Economy

Q-1 Explain the objectives of resource allocation & income distribution in a govt.
budget. (4)
Q-2 Give the meaning of ‘non-debt capital receipts’? Give two examples. (3)
Q-3 Explain the basis of classifying government receipts into revenue receipts and
capital receipts. Which type of these receipts are borrowings by government and why? (3)
Q-4 What is the basis of classification of taxes into direct tax and indirect tax? (3)
Q-5 Distinguish between plan and non plan expenditure. (4)
Q-6 State the meaning of (i) balanced budget, ii) surplus budget, iii) deficit
budget. (3)
Q-7 What is meant by fiscal deficit? How is the fiscal deficit financed? (3)
Q-8 Categorise the following government receipts into revenue and capital receipts.
Give reasons-
i) Receipts from sale of shares of a public sector undertakings.
ii) Profits and dividend received from public sector undertakings.
iii) Tax receipts
iv) Cash grants in aid from foreign countries and international
v) Market borrowings.
vi) Recovery of loans granted by the central govt. (6)
Q-9 Can there be a fiscal deficit without revenue deficit ? (4)
Q-10 Explain the economic value it reflects- (6)
a)Tax rate on higher income group have been increased.
b) Govt. has started spending more on providing free services like education and
health to the poor.
c)Govt. raise its expenditure on producing public goods.

Q-11 From the following data about a govt. budget find a) Revenue deficit b) fiscal
deficit and c) primary deficit.
(In Rs. Crore)
i) Tax Revenue 1037
ii) Revenue expenditure 2811
iii) Interest receipts 400
iv) Dividends and profits on investment 600
 v) Recovery of loans 135
vi) Capital expenditure 574
vii) Sale of shares in PSUs 100
viii) Interest payments on accumulated debts 1013

Q-12 In the govt. of India’s budget for the year 2013-14, the finance minister proposed to
raise the excise duty on cigarettes. He also proposed to increase income tax on individual
earning more thatnRs 1 Crore per annum.
Identify and explain the types of taxes proposed by the finance minister was the
objective only to earn revenue for the govt.? What possible welfare objectives could the
govt. be considering?(6)

UNIT-IX Foreign Exchange rate and Balance of Payment

Q-1 Distinguish between debit and credit in BOP account. (3)

Q-2 What is invisible trade? Name any two invisible items of current account of BOP. (3)
Q-3 What is meant by ‘unilateral transfers’? Give examples. (3)
Q-4 Give the meaning of BOP deficit. How is it financed? (3)
Q-5 What does balance of payments account show? Distinguish between the two parts
of the balance of payments account on the basis of their components. (4)
Q-6 Define flexible, fixed and managed floating exchange rate. (3)
Q-7 State any two sources of rightward shift of demand curve of foreign exchange.
Explain with diagram 15 effect on exchange rate. (6)
Q-8 What is the role of a central Bank in the following exchange rate ? (3)
i) Fixed exchange
ii) Floating exchange
iii) Managed floating
Q-9 Are the following entered (i) on the credit side or the debit side and (ii) in the
current account or capital account in the BOP account? You must give reason for your
answer :- (6)
a)Investment from abroad
b) Transfer of funds to relatives abroad
c)Borrowings from abroad
d) Imports of petroleum, oil and lubricants.

Q-10 Distinguish between Balance of trade and balance of payments. (3)

Q-11 Suppose the present foreign exchange rate is 1$ = Rs. 50 . It rises to 1 $ = Rs.60
leading to rise in prices of imports of essential goods. How can RBI help in bringing
down the foreign exchange rate which is very high? (3)
Q-12 If rupee-dollar exchange rate changes form 1 $= Rs. 55 to 1 $ = Rs. 60, what will be
the effect on net export and aggregate demand? (4)
Q-13 If India has higher inflation that USA, Indian currency will be depreciating or
appreciating? Explain. (3)
Q-14 Should a current account deficit be a cause for alarm? Explain. (3)
Q-15 What is the effect of increase in national income ( or aggregate demand ) on foreign
exchange rate ? Explain. (3)
Q-16 Explain the distinction between autonomous and accommodating transactions in
balance of payment. Give an example of each. Also explain the concept of balance of
payment ‘deficit’ in this content. (6)

 Prepare a rough lay out for the economics project work on any one of the following
topics;-
bharatmala project ; make in india ; cryptocurrency ; digital india ; jan dhan yojana ; start
up india ; gst; demonetisation ; self help group ; inflation ;. human development index
;foreign direct investment ; special economic zone ; digital money will replace paper money ;
outsorucing – a boon to india? ; reliance jio – changing the game in india’s telecom market;
bitcoin; rbi; oligopoly; perfectcompetition; theory of demand; theory of supply; govt. budget;
foreigh exchange; balance of payment; production possibility curve; money multiplier;
investment multplier;

 prepare all the units/chapters for selection test.