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                                      ECONOMICS QUESTION BANK 

CHAPTER 1- DEVELOPMENT

Q1. “Average income is useful for comparison, but it may hide disparities. Support the statement with suitable arguments.                                                                                (3) 

Ans. (i) It does not tell us anything about the distribution of income. 

(ii) It does not measure various facilities and services that influence quality of life   ex-health and education facilities 

(iii)It’s affected by the size of population.

Q2. “Money cannot buy all the goods and services that a person may need to live well”. Explain the statement with suitable examples.                                                                                               (3)

Ans. (i) Income by itself is not a completely adequate indicator. 

(ii)Ex- money cannot buy a pollution- free environment.

(iii)  Cannot ensure that a person gets unadulterated medicines.

(iv)   It may also not to protect individual from infectious diseases.

Q3. “For development, people look at a mix of goals”. Support the statement with three suitable examples.                                                                                                                                        (3)

Ans. The developmental goals that the people have are not only about better income but also other important things in life.

(i)Respect for others 

(ii)Equal treatment

(iii)Freedom 

(iv)Security

(v)Safe working environment

Q3. How is the criterion used by the UNDP different from the World Bank for measuring the development of a country? Explain.                                                                                       (3)

Ans. The World Bank considers only the per capita income as the indicator of the development.

(i)Rich Countries-Countries with per capita income of US$ 49,300 per annum and above in 2019, are called high income or rich countries

(ii)Low Income countries -those with per capita income of US$ 2500 or less are called low-income countries. 

However, income by itself is not adequate.

(iii)The UNDP- Factors 

*  Health,

*  Education and

*  Per capita income.

 Q4. Suggest any three ways to improve public facilities in India.                                         (3)

(i)      Increase in the number of dispensaries, physicians, and nurses.

(ii)    Increase the expenditure of government in the health sector.

(iii)  Increasing the number of

 *Hospitals

*  Healthcare centres

*  Family welfare centres in rural areas.

(iv)  Organising free camps 

(v)    Spreading health awareness.

Q5. Why is sustainability important for development? Explain.                                           (3)

Ans. (i) It encourages the growth that minimizes environmental issues.

(ii)    Address the concerns of future generations

(iii)  Resource reserves should be maintained.

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Chapter 2 - Sectors of Indian Economy

Q1. Why primary sector was the most important sector of economic activity at initial development also explain.                                                                                                                                            (3)

Ans. (i) The primary sector was the most important sector of the economy because most of the people were employed in this sector.

(ii)    New methods of manufacturing were being introduced factories came up gradually secondary sector became important.

(iii)  To meet growing demands of service sector, it has become the most important sector.

Q4. How do we calculate GDP.                                                                                                          (3)

Ans. Gross Domestic Product:

(i)  The calculation of GDP is undertaken by central government ministry.

(ii)            The value of all final goods and services produced within a country during a particular year are calculated.

(iii)           The value of final goods and services in the three sectors are calculated by different government departments.

Q3. Why is the tertiary sector becoming more important in India? Explain.                                   (5)

(i)It composes more than 50% of India's GDP. 

(ii)    The need for tertiary is increasing as there is more need of services like financial institutions, educational institutions, etc. 

(iii)  It accounts for most of the national and per capita income of India.

(iv)   It created huge employment even for the uneducated and unskilled workers.

(v)    It is responsible to distribute its services and goods to different consumers.

Q4. In what ways Government can increase employment in the rural sector?                                   (5)

Ans. (i) Introducing mega projects- like new dams should be constructed and canals are also made.

(ii)    Introducing tertiary facilities in an area.

(iii)  To identify, promote and locate industries and services in semi-rural areas

(iv) It is also possible to set up industries that process vegetables and agricultural produce like potato, sweet potato

(v) by promoting tourism, or regional craft industry, or new services like IT.

Q5. Compare the economic activities of the private sector with that of the public sector.                (5) Ans. Comparison of economic activities in private sector and public sector:

(i)    Most of the assets of public sector are owned by the government while private sector is owned by individuals or group of individuals.

(ii)  Government provides all services in public sector while in private sector it depends on private owner.

(iii)           Government raises money for various activities through taxes while private sector collects money for the services they provide.

(iv) Activities in the private sector are guided by the motive to earn profits while public sector is not just to earn profits.

(v)  Railways, post office are examples of public sector while Tata Steel and Reliance are examples of private sector.      

Q6. Public sector contributes to the economic development of India. Justify the statement.              (5) Ans: (i) It promotes rapid economic development through creation and infrastructure.

(ii)    It creates employment opportunities.

(iii)  It generates financial resources development.

(iv)   It is ensuring equality of income, wealth and thus, a balanced regional development.

(v)    It encourages development of small, medium and cottage industries.

(vi)   It ensures easy availability of goods at moderate rates.

(vii) Contributes to community development, Human Development Index, i.e., health and educational services

 Q7. Describe the working conditions of Unorganised sector.                                                            (5)

(i)         There are no rules and regulations followed.

(ii)       Jobs are low paid and often not regular.

(iii)      No provision of overtime is there, and no paid holidays or leave is given. 

(iv)      Employment is not secure. People can be asked to leave without reason.

(v)        Some kind of work is seasonal in nature and temporary workers are employed. They become unemployed after the season is over.

(vi)      No other facilities like provident fund, gratuity or sick leave are given.

(vii)    Working conditions are often poor. No allowances are given.

(viii)  No medical benefit is given

  Chapter 3 – Money and Credit 

Q1. Explain the three important terms of credit.                                                                           (3)

Ans. (i) Collateral- Collateral refers to an asset like a building or vehicle. 

(ii)    Documentation- like income and employment records, etc.

(iii)  Interest rate- both the parties decide the terms of credit.

Q2. Credit can play a positive role." Support the statement with arguments.                           (3)

(i)        It helps industrialists as capital investments to revive their failing industry or start up a completely new venture.

(ii)      For farmers, loans help them buy new seeds before the sowing season.

(iii)    It helps to buy houses and vehicles.

Q3. Why do banks and cooperative societies need to lend more? Explain.                                (3)

 Ans. (i) This would lead to higher incomes.

(ii)    People could borrow cheaply for a variety of needs. 

(iii)  They could grow crops and set up small- industries etc.

(iv)  Cheap and affordable credit is crucial for the country’s development.

(v)    To save and reduce the dependence on informal sources of credit

(vi)  It is important that the formal credit is distributed more equally so that the poor can benefit from the cheaper loans.

Q4. Examine any three situations in which credit pushes the borrower into a debt-trap.       (3)

Ans. Credit and debt-trap:

(i)      Loans from the informal sector could lead to debt trap.

(ii)    Lack of planning results in debt.

(iii)  Difficulty in repaying loans due to certain circumstances.

(iv)   Higher interest rate.

Q5. Explain the significance of The Reserve Bank of India in the Indian economy.                  (5) Ans. (i) It supervises the functioning of formal sources of loans.

(ii)    The banks maintain a minimum cash balance out of the deposits they receive.

(iii)  The RBI monitors that the banks maintain the cash balance

(iv)  The RBI sees that the banks give loans not just to profit-making businesses and traders but also, to small-scale industries etc.

(v)    Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.

 Q.6 Explain the role of Self-Help Groups (SHGs) in rural society.                                          (5)

Ans. (i) The idea is to organise rural poor, in particular women, into small self-help groups.

(ii)    A typical SHG has 15-20 members

(iii)  Saving per member varies from Rs 25 to Rs 100 or more.

(iv)   Members can take small loans.

(iv) The group charges interest on these loans but this is still less than what the moneylender charges. (v) After a year or two, if the group is regular in savings, it becomes eligible for availing loan from the bank.

Q7. Credit sometimes pushes the borrower into a situation from which recovery is very painful." Support the statement with examples.                                                                                          (5)

(i)      In case of rural area if crop fails due to natural factors, it will be difficult to repay.

(ii)    In case of failure of a business it will be difficult to repay interest.

(iii)  In situations with high risks, credit might create further problems for the borrower.

(iv)   In the situation when borrower is unable to pay previous loan and he takes new loan.

(v)    Loans taken by poor people from informal lenders sometimes, lead them to debt trap because of high interest rate.

Chapter- Globalisation

 Q1. Elaborate the effects of liberalisation on the Indian Economy.                                                 (3) Impacts of Liberalisation:

(i)    Competition would improve the performance of producers within the country.

(ii)  Barriers on foreign trade and foreign investment were removed to a large extent. 

(iv)This meant that goods could be imported and exported easily.

(v)    foreign companies could set up factories and offices to boost up production.

(vi)  It allows making decisions freely. 

(vii)         The competition would improve the performance of producers within the country since they have to improve their quality.

Q2. How has technology stimulated the globalisation process? Explain with examples.                      (3) Ans. Technology and globalization:

(i)      Improvement in transport technology has made faster delivery of goods across long distances at lower costs.

(ii)    Information and communication technology like computer, internet, and telecommunication has developed.

(iii)  Telephones (mobiles, fax) are used to contact one another.

(iv)  Information is being accessed easily even to the remote areas.

(v)    Satellite communication devices are of great use.

Q3. Examine the reasons that forced Indian Government for putting barriers on foreign trade and investment just after independence.                                                                                                      (3)

Ans. (i)To protect the producers within the country from foreign competition.

(ii) Industries were just coming up in the 1950s and 1960s, and competition from imports at that stage would not have allowed these industries to come up. 

(iii)Thus, India allowed imports of only essential items such as machinery, fertilisers, petroleum etc. 

(iv)Note that all developed countries, during the early stages of development, have given protection to domestic producers through a variety of means.

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