Economics is a critical subject for CBSE Class 12 students. To help you revise effectively, we’ve compiled 100 quick-fire questions and answers covering Microeconomics and Macroeconomics
Part A: Microeconomics
Introduction to Microeconomics
- Q: What is microeconomics?
A: It studies individual economic units like households, firms, and markets. - Q: Define opportunity cost.
A: The next best alternative foregone. - Q: Differentiate between positive and normative economics.
A: Positive economics deals with facts, while normative economics involves value judgments.
Theory of Consumer Behavior
- Q: State the law of diminishing marginal utility.
A: Marginal utility decreases as consumption of a good increases. - Q: Define indifference curve.
A: It represents combinations of two goods giving equal satisfaction to the consumer. - Q: What is the budget line?
A: A line showing all combinations of two goods a consumer can buy with their income. - Q: What is consumer equilibrium?
A: A situation where a consumer maximizes utility within their budget.
Demand and Supply
- Q: Define demand.
A: The quantity of a good a consumer is willing and able to buy at a given price. - Q: Write the formula for price elasticity of demand.
A: % Change in Quantity Demanded / % Change in Price. - Q: What are the types of elasticity of demand?
A: Perfectly elastic, perfectly inelastic, unitary elastic, elastic, and inelastic. - Q: State the law of supply.
A: Quantity supplied increases as price increases, ceteris paribus. - Q: Define market equilibrium.
A: A situation where quantity demanded equals quantity supplied.
Production and Costs
- Q: What is the production function?
A: A relationship between inputs used and output produced. - Q: Define total cost.
A: The sum of fixed costs and variable costs. - Q: What is marginal product?
A: The additional output produced by using one more unit of an input. - Q: Explain the law of variable proportions.
A: In the short run, as more of a variable input is added to a fixed input, marginal product eventually declines.
Market Structures
- Q: Name four types of market structures.
A: Perfect competition, monopoly, monopolistic competition, and oligopoly. - Q: What is price discrimination?
A: Charging different prices for the same product to different consumers. - Q: Define monopolistic competition.
A: A market structure with many sellers offering differentiated products. - Q: What is oligopoly?
A: A market structure with few sellers dominating the market.
Revenue and Profit
- Q: Define total revenue.
A: The total income earned from selling goods. - Q: Write the formula for profit.
A: Profit = Total Revenue – Total Cost.
Part B: Macroeconomics
National Income Accounting
- Q: Define national income.
A: The total value of goods and services produced within a country in a year. - Q: What is GDP at market price?
A: GDP including indirect taxes and excluding subsidies. - Q: Define NNP.
A: Net National Product is GDP minus depreciation. - Q: What are the methods of calculating national income?
A: Income method, expenditure method, and production method.
Money and Banking
- Q: Define money.
A: A medium of exchange, store of value, unit of account, and standard of deferred payment. - Q: What is M1 in the money supply?
A: Currency in circulation + demand deposits + other deposits with the RBI. - Q: Define monetary policy.
A: Measures adopted by the central bank to control the money supply and interest rates. - Q: What is repo rate?
A: The rate at which the central bank lends to commercial banks.
Income and Employment
- Q: What is aggregate demand?
A: The total demand for final goods and services in an economy. - Q: Define aggregate supply.
A: The total output of goods and services in an economy. - Q: What is involuntary unemployment?
A: A situation where people are willing to work but cannot find jobs.
Government Budget
- Q: Define government budget.
A: A statement of estimated receipts and expenditures over a fiscal year. - Q: What is primary deficit?
A: Fiscal deficit minus interest payments. - Q: Name two types of receipts in a budget.
A: Revenue receipts and capital receipts.
Balance of Payments
- Q: Define the current account.
A: It records trade in goods and services and unilateral transfers. - Q: What is foreign exchange rate?
A: The rate at which one currency is exchanged for another. - Q: Differentiate between fixed and flexible exchange rates.
A: Fixed rates are set by governments; flexible rates are determined by market forces.
Indian Economy
- Q: What was the Green Revolution?
A: An agricultural reform to increase food grain production using modern techniques. - Q: Define economic development.
A: A process of improving living standards and reducing poverty.
Part B: Macroeconomics (Continued)
Indian Economy on the Eve of Independence
- Q: What was the state of Indian agriculture during colonial rule?
A: It was stagnant, backward, and primarily subsistence-based. - Q: Name two major industries in pre-independent India.
A: Cotton and jute industries.
Economic Reforms
- Q: What is liberalization?
A: It refers to reducing government restrictions and control over economic activities. - Q: Define privatization.
A: It is the transfer of ownership and management from the public to the private sector. - Q: What is globalization?
A: Integration of the domestic economy with the global economy.
Poverty and Unemployment
- Q: What is absolute poverty?
A: A condition where people cannot meet their basic needs. - Q: Define disguised unemployment.
A: A situation where more workers are employed than needed, reducing productivity.
Human Capital Formation
- Q: Define human capital.
A: The stock of skills, knowledge, and health in individuals that contributes to productivity. - Q: Name two sources of human capital formation.
A: Education and healthcare.
Infrastructure
- Q: What is economic infrastructure?
A: Infrastructure that supports economic activities, such as transport and power. - Q: Name two components of social infrastructure.
A: Education and health facilities.
Rural Development
- Q: What is rural development?
A: Improving the quality of life and economic well-being of people living in rural areas. - Q: Name any two rural development programs in India.
A: MGNREGA and Pradhan Mantri Gram Sadak Yojana.
Environment and Sustainable Development
- Q: Define sustainable development.
A: Development that meets present needs without compromising future generations. - Q: What is meant by renewable resources?
A: Resources that can be replenished naturally over time, such as solar energy.
Economic Planning
- Q: What is economic planning?
A: It is a conscious effort by a government to allocate resources to achieve specific economic goals. - Q: Name the first plan adopted by India.
A: The First Five-Year Plan (1951-1956).
Demographics and Population
- Q: Define population explosion.
A: Rapid and excessive growth in population. - Q: Mention one effect of overpopulation on economic development.
A: It leads to unemployment and pressure on resources.
Miscellaneous Questions
- Q: Define market equilibrium.
A: It is a state where demand equals supply. - Q: What is a fiscal policy?
A: It involves government spending and taxation to influence the economy. - Q: Name two instruments of monetary policy.
A: Repo rate and open market operations. - Q: What is an indirect tax?
A: A tax levied on goods and services, like GST. - Q: What is structural unemployment?
A: Unemployment due to changes in the structure of the economy.
Additional Revision Questions
Microeconomics
- Q: Define average cost.
A: Total cost divided by the number of units produced. - Q: What is a price ceiling?
A: A legal maximum price set by the government. - Q: What is a price floor?
A: A legal minimum price set by the government.
Macroeconomics
- Q: Define circular flow of income.
A: It shows the movement of income between firms and households in an economy. - Q: What is capital formation?
A: Accumulation of capital assets for future production.
Indian Economy
- Q: What is meant by economic growth?
A: Increase in the output of goods and services over time. - Q: Name two causes of poverty in India.
A: High population growth and lack of education. - Q: Mention two benefits of globalization for India.
A: Increased foreign investments and access to advanced technology.
Environment
- Q: What are non-renewable resources?
A: Resources that cannot be replenished, like coal and petroleum. - Q: What is the greenhouse effect?
A: Trapping of heat by greenhouse gases, leading to global warming.
Questions 76-100
Quick Definitions
- Q: What is a monopoly?
A: A market with a single seller. - Q: Define economic problem.
A: The problem of scarcity of resources and choice.
Data Interpretation
- Q: What is inflation?
A: Persistent rise in the general price level. - Q: Name one measure to control inflation.
A: Tight monetary policy.
Indian Context
- Q: What is the role of agriculture in Indian GDP?
A: It contributes significantly to employment and GDP. - Q: Define industrial policy.
A: Government measures to regulate and promote industrial development.
Higher-Level Thinking
- Q: What is deficit financing?
A: Borrowing by the government to finance its deficit. - Q: Mention one negative effect of privatization.
A: It may lead to monopoly power.
Part C: Remaining Questions
Microeconomics
- Q: What is marginal revenue?
A: Marginal revenue is the additional revenue earned by selling one more unit of a good. - Q: What is the shape of the demand curve under perfect competition?
A: Horizontal, perfectly elastic. - Q: Define average variable cost.
A: Variable cost divided by the quantity of output produced. - Q: What happens to price in a monopoly if demand increases?
A: Price typically increases as the monopolist adjusts to maximize profits. - Q: What is the relationship between AR and MR in a monopoly?
A: AR is greater than MR because the monopolist must lower the price to sell additional units.
Macroeconomics
- Q: What is meant by factor income?
A: Income earned by factors of production, like wages, rent, interest, and profit. - Q: What is disposable income?
A: Income available to households after paying taxes. - Q: Define the primary deficit.
A: Fiscal deficit minus interest payments. - Q: What is the multiplier effect?
A: The process by which an initial change in spending leads to a larger change in national income. - Q: What is stagflation?
A: A situation of stagnant economic growth combined with inflation.
Indian Economy
- Q: What is the Infant Mortality Rate (IMR)?
A: The number of infant deaths per 1,000 live births in a year. - Q: Define life expectancy.
A: The average number of years a person is expected to live. - Q: Name any two measures to reduce poverty in India.
A: Employment programs like MGNREGA and direct benefit transfers. - Q: What is the significance of small-scale industries in India?
A: They generate employment and contribute to export earnings. - Q: Define green GDP.
A: GDP adjusted for environmental costs and resource depletion.
Environment and Sustainable Development
- Q: What is the Kyoto Protocol?
A: An international agreement to reduce greenhouse gas emissions. - Q: What is carrying capacity?
A: The maximum population that the environment can sustain without degradation.
Final Thoughts
These 100 quick revision questions and answers cover essential concepts from Class 12 Economics, helping you prepare efficiently for your exams. For best results, review these questions regularly, and practice applying the concepts in real-world scenarios and case studies.
