SEBA Class 9 Economics: Basic Concepts of Economics
EXERCISE QUESTION
A) GIVE A VERY SHORT ANSWER:
1. The word 'economics' has been derived from the word of which language?
Answer: The word 'economics' has been derived from the Greek language.
2. The word 'economics has been derived from which word?
Answer: The word 'economics' has been derived from the Greek word 'Oikonomia'.
3. Who is the father of economics?
Answer: Adam Smith is known as the father of economics.
4. The words 'micro' and 'macro' have been derived from which words?
Answer: The words 'micro' and 'macro' have been derived from the Greek words 'Mikros' and 'Makros'.
5. Who has given the wealth-based definition of economics?
Answer: The wealth-based definition of economics was given by Adam Smith.
6. Who has given the welfare-based definition of economics?
Answer: The welfare-based definition of economics was given by Alfred Marshall.
7. In which book and when did Adam Smith give his definition of economics?
Answer: Adam Smith gave his definition of economics in the book "An Enquiry into the Nature and Causes of the Wealth of Nations" in the year 1776.
8. In which book and when did Alfred Marshall give his definition of economics?
Answer: Alfred Marshall gave his definition in the book "Principles of Economics", published in the year 1890.
9. In which book and when did Lionel Robbins give his definition of economics?
Answer: Lionel Robbins gave his definition in the book "An Essay on the Nature and Significance of Economic Science" in the year 1932.
10. Who said that the definition of economics given by Adam Smith is the 'Gospel of Mammon?
Answer: The definition of economics given by Adam Smith as the 'Gospel of Mammon' was said by Carlyle and Ruskin.
11. What is the power of a commodity to satisfy human wants called?
Answer: The power of a commodity to satisfy human wants is called utility.
13. What are the produced means of production called?
Answer: The produced means of production are called capital.
14. The words 'micro' and 'macro' have been derived from which words?
Answer: The words ‘micro’ and ‘macro’ have been derived from the Greek words ‘Mikros’ and ‘Makros’ respectively.
B) GIVE A SHORT ANSWER:
1. Write the definition of economics given by Adam Smith.
Answer: Adam Smith defined economics as "the science of wealth" in his book "An Enquiry into the Nature and Causes of the Wealth of Nations", published in 1776.
2. Write the definition of economics given by Marshall.
Answer: Cambridge economist, Alfred Marshall, in his book 'Principles of Economics', published in 1890, put forward a definition of economics based on the principles of welfare. According to him, "Economics is the study of mankind in the ordinary business of life".
3. Write the definition of economics given by Robbins.
Answer: Lionel Robbins defined economics as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."
4. What are the basic concepts of the definition of economics given by Robbins?
Answer: According to Robbins, "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."
This definition highlights three points these are:
1. Human wants are unlimited.
2. Resources to satisfy human wants are limited.
3. Scarce resources have alternative uses.
5. What is Microeconomics?
Answer: Microeconomics is the study of the economic behaviour of persons or organisations in an individual manner. It includes the behaviour of a consumer, a producer, a market, a creditor, or a saver.
6. What is macroeconomics?
Answer: Macroeconomics is the study of the aggregate economic behaviour of a country. It includes the study of the population, employment, industrialisation, agriculture, and the behaviour of all consumers and producers together.
7. Show the differences between free goods and economic goods.
Answer:
8. What is National Income?
Answer: The monetary value of all goods and services produced in a country in a financial year is known as national income.
9. What is Per Capita Income?
Answer: The per capita income of a country can be found out by dividing the total national income by the total population. In other words. Per capita income = National income/population of the country.
C) GIVE LONG ANSWERS:
1. Explain with examples the importance of the study of economics.
Answer: The study of economics is important because it helps us understand various economic activities and problems in our society. Its importance can be explained with the following examples:
1. A tax-paying citizen can understand how the government collects revenue, spends it and whether the revenue is being spent judiciously.
2. A social organiser or reformer can study the reasons for widespread poverty and understand that many of its causes are economic in nature.
3. As conscious customers, we can understand the reasons for the rise in prices of essential commodities.
4. Economics also helps us understand important issues such as globalisation, economic development and environmental economics.
Thus, the study of economics helps us understand important economic issues affecting individuals and society.
2. Which definition of economics is the most acceptable and why? Explain.
Answer: The most acceptable definition of economics is given by Lionel Robbins. He said that economics is the science that studies human behaviour as a relationship between ends and scarce means which have alternative uses. His definition explains the real economic problem in three important points:
1. Human wants are unlimited,
2. Resources are limited, and
3. Scarce resources have alternative uses.
These points lead to the problem of choice, where we have to decide how best to use the limited resources. That is why Robbins' definition is known as the scarcity definition.
3. Write about the scope of economics.
Answer: The scope of economics includes all the monetary activities of society. It does not include non-monetary activities. The main areas under the scope of economics are:
1. Consumption – The activities that lead to the satisfaction of our wants are known as consumption.
2. Production – The creation of useful commodities or services is known as production.
3. Distribution – Distribution in economics means the process by which produced goods and services are shared among the consumers.
4. Exchange – Exchange in economics means the process where individuals, regions, or countries trade goods with each other because no one can produce everything they need.
5. Money – Money in economics means a medium that removes the difficulties of the barter system and simplifies the process of exchange.
6. Income – Income in economics means the study of per capita income and national income, their production and distribution, and their relation with economic welfare.
7. Public Finance – Public Finance is the study of public revenue, public expenditure and public debt. It is an integral part of Economics.
8. Welfare Economics – Welfare economics means the study of the individual and collective welfare that comes from consumption, production, and distribution activities.
9. Environmental Economics – Environmental economics is the part of economics that studies how industrialisation has broken the balance of the environment. It also looks for ways to fix this problem and restore the environmental balance.
10.Efficiency – In economics, efficiency means the proper use of scarce resources to build society.
PART-1
PART-2
EXERCISE QUESTION
GIVE VERY SHORT ANSWER:
1. Define:
(a) Poverty
Answer: Poverty refers to a state in which an individual is unable to fulfil even the basic necessities of life, such as food, clothing, housing, education and health facilities.
(b) Unemployment
Answer: Unemployment refers to a situation in which people are willing and able to work at the existing wage rate, but do not get work.
(c) Density of population
Answer: Density of population means the number of people living per square kilometre of an area.
(d) Sex ratio
Answer: Sex ratio means the number of females per 1000 males.
2. What is poverty line? What is the poverty line in rural and urban areas?
Answer: Poverty line is a cut-off point on the line of distribution, which divides the population of a country into poor and non-poor. It is used to measure the extent of poverty in a country.
According to the calorie-based definition given by the Planning Commission of India:
· Rural areas: 2400 calories per person per day.
· Urban areas: 2100 calories per person per day.
A person consuming less than these minimum calorie requirements is defined as poor.
3. What percentage of the total land area of the world is in India?
Answer: India accounts for 2.4% of the world's geographical area.
4. Which state of India has the highest sex ratio and how much it is?
Answer: Kerala has the highest sex ratio among the states of India, with 1084 females per 1000 males.
5. What is the density of population of Assam?
Answer: The density of population in Assam is 397 people per square kilometre.
6. What is disguised unemployment?
Answer: Disguised unemployment refers to a situation where people look as if they are employed, but they do not have any role in the total production. For example, if a job can be carried out by two people but five people are employed for the same job, the extra three people are said to be disguised unemployed.
7. What is inflation?
Answer: Inflation refers to a situation of persistent and appreciable rise in the general price level. During inflation, there is a rise in prices and a decline in the value of money.
8. What are the causes of inflation?
Answer: The main causes of inflation are:
1. Demand-pull inflation: It occurs when there is an increase in the demand for commodities by consumers, but there is no corresponding increase in the supply of commodities.
2. Cost-push inflation: It occurs due to a rise in the cost of production. It mainly arises due to:
o Rise in wages
o Rise in profits
o Burden of taxes on commodities.
GIVE LONG ANSWERS:
1. Discuss the main causes for the problem of rapid growth of population in India.
Answer: The rapid growth of population is an important problem faced by India. The main reasons for the growth of population are:
1. High birth rate: A high birth rate is one of the important reasons for the rapid growth of population.
2. Illiteracy: Illiteracy contributes to the rapid growth of population.
3. Poverty: Poverty is another important reason for the growth of population.
4. Lack of social consciousness: Lack of social consciousness among people contributes to population growth.
5. Lack of population education: The absence of proper population education is also a reason for the rapid growth of population.
Thus, high birth rate, illiteracy, poverty, lack of social consciousness and lack of population education are the main reasons for the rapid growth of population in India
2. What is proverty? Explain how the poverty line determines poverty?
Answer: Poverty refers to a state in which an individual is unable to fulfil even the basic necessities of life, such as food, clothing, housing, education and health facilities.
The poverty line is a cut-off point on the line of distribution that divides the population of a country into poor and non-poor. It is used to measure the extent of poverty. People having income below the poverty line are called poor, while those having income above it are called non-poor. According to the calorie-based definition given by the Planning Commission of India, a person is defined as poor if the minimum calorie requirement is not met: 2400 calories per person per day in rural areas and 2100 calories per person per day in urban areas.
3. What is inflation? Discuss the main effects of inflation.
Answer: Inflation refers to a situation of persistent and appreciable rise in the general price level. During inflation, there is a rise in prices and a decline in the value of money.
The main effects of inflation are:
1. Fixed income earners are affected most adversely because the prices of commodities increase while their income or wages do not increase. As a result, they face financial problems.
2. Inflation adversely affects savings because people have to spend more on consumption and are left with less money for saving.
3. The value of saved assets decreases because the value of money falls during inflation.
4. Inflation adversely affects the export sector. As domestic prices rise, the international demand for domestic commodities goes down, resulting in a decline in exports.
4. What is unemployment? What are its different types? Mention the main causes of this problem.
Answer: Unemployment refers to a situation in which people are willing and able to work at the existing wage rate, but do not get work. It is confined not only to unskilled workers but also includes skilled workers who fail to get jobs for a long period.
Different types of unemployment are:
1. Rural unemployment:
o Seasonal unemployment: People are unemployed during a particular season but are employed for the rest of the year.
o Disguised unemployment: People appear to be employed but do not have any role in the total production.
2. Urban unemployment:
o Industrial unemployment: People who do not find employment in industries.
o Educated unemployment: People who do not find job opportunities despite having the required educational qualifications.
The main causes of unemployment are:
1. High rate of population growth: The rapid growth of population increases unemployment because employment opportunities have not been able to keep pace with the increase in population.
2. Jobless growth: The gap between the rate of growth of national income and the rate of employment is increasing. Such a situation leads to an increase in unemployment.
3. Stagnant agricultural development: In a predominantly agricultural country like India, the rate of growth of agriculture is not up to expectations. As a result, unemployment occurs among people engaged in agriculture.
4. Slow rate of industrialisation.
5. Faulty educational system.
6. Low capital formation, poverty and lack of proper planning.