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CBSE Study Material for Class 12th Economics Retest

CBSE Study Material for Class 12th Economics Retest: After a series of different leaked papers of and of different streams, CBSE has finally decided to take re-test of Economics on 25th April 2018 of which we are already aware of. The students who already worked hard for their exams must be thinking that why they are gonna suffer for few days like must be missing and suffering from some of the entrance exams and coaching classes for their future and career counseling, due to the irresponsible approach of CBSE. This might be resulting in the delay for the announcement of CBSE Results. 

Check more: 4 Problems That Class 12th Students will face due to Economics Re-Test.

Economics Study Material for Re-Test

CBSE Results

Now when you guys have to give the re-test again then don't take it in a negative matter. By taking it a positive manner, look it as another opportunity to score good marks in the next paper. If you were about to score marks between 85-90 marks then it's an opportunity for you to score marks around 94-95 marks as you are having approx 25 days to study again. In this period, the students who cheated in the exam and gave it by using unfair means, they can also attempt full syllabus again if you gave a bit of concentration in the classrooms at lectures. But for the next exam, the main concern for the students is that what if the next paper came difficult. In my opinion, that will not happen because of the reason that if they give a hard paper and the students who were about to score 98-99 will be on a protest and will again lead to a sense of discouragement and disaffection towards CBSE. This will simply also hamper the CBSE Results.

Getting back to the point the CBSE Study Material for the re-test is given below make sure you prepare the below-given questions perfectly. I am not saying that these questions will appear in the exams but will help you all guys out to revise the whole syllabus effectively and efficiently without any confusions and problems. So here are the questions and the hints for the same questions are given below but if you try them to write them on your own will help you out in the answer framing.

*Note: Hints are only given to check your answers, make sure you write them your own. This will also help you in improving your CBSE Results.


Question: What will be the effect of Sarva Shiksha Abhiyaan on the Production Possibility Curve (PPC)? (3 marks)

Answer: Production Possibility Curve refers to the curve showing all the possible combination of producing two goods with the given resources and technology.Sarva Shiksha Abhiyaan will provide educational opportunities for the future generation and will ultimately lead to the rightward shift in the Production Possibility Curve (PPC).

Question: What are the reasons for the rightward shift in the Production Possibility Curve (PPC). (3 marks)

Answer: Reasons for the rightward shift in the Production Possibility Curve are:
  1. Increase in the Resources of the Economy
  2. Advancement of Technology
  3. Discovery of Natural Resources
Question: Differentiate between Micro Economics and Macro Economics on the basis of:
  1. Definition
  2. Tools Used
  3. Components
Answer: General Difference between both of them.

Question: Explain the condition of consumer equilibrium in case of one good. (3 marks)

Answer: Give the definition of Consumer Equilibrium and explain the condition of one commodity i.e. MUx = Px.

Question: How a consumer will allocate his given income for buying two goods, using utility analysis. (4 marks)

Answer: Explain the condition of consumer equilibrium of two goods of utility analysis.

Question: Explain what will a rational consumer do when MUx/Px > MUy/Py. (4 marks)

Answer: A rational consumer will increase the consumption of the Good X and which will cause a decrease in the marginal utility of Good X because of Law Diminishing Marginal Utility (Law of DMU).

Question: Explain Law of Demand with schedule and diagram. (4 marks)

Answer: As asked in the question law of demand with schedule and diagram.

Question: Explain Law of Supply schedule and diagram. (4 marks)

Answer: As asked in the question law of demand with schedule and diagram.

Question: Explain the Law of Diminishing Marginal Utility (Law of DMU) with schedule and diagram. (4 marks)

Answer: Same as prescribed in the question explain  Law of Diminishing Marginal Utility (Law of DMU) with schedule and diagram.

Question: Explain the Law of Variable Proportion with schedule and diagram. (4 marks )

Answer: Same as prescribed in the question explain  Law of Variable Proportion (Law of VP) with schedule and diagram.

Question: Explain the relation between: 
  1. Average Product (AP) and Marginal Product (MP)
  2. Average Cost (AC) and Average Variable Cost (AVC)
  3. Average Cost (AC) and Average Fixed Cost (AFC) and Average Variable Cost (AVC)  (3 marks each)
Answer: Same as given in the books.

Question: Give one difference between the law of supply and price elasticity of supply
(1 marks)

Answer: Law of supply reflects the direction of change in supply whereas price elasticity of
supply measures the magnitude of change in supply.

Question: Under which situation will MR fall when an additional quantity of a good is sold.
(1 marks)

Answer: When per unit price falls by selling an additional unit of a good.

Question: MR = AR in perfect competition but MR < AR in monopoly and monopolistic competition why? (3 marks)

Answer: Since a firm under perfect competition is a price taker and sell all it wants at the given market price, the firms MR from selling an extra unit of output is equal to the part which that unit is sold.

Question: Explain the following features of perfect competition.(6 marks)
  1. A large number of firms or Sellers and Buyers
  2. Homogeneous Product
Answer: Same as given in the books.

Question: What is the main function of money in an economy?(1 marks)

Answer. The main function of money in an economic system is to facilitate the exchange of
Goods and services.

Question: The central bank acts as lender of last resort. How?(3 marks)

Answer: The central bank also acts as lender of last resort for the other banks of the country.It means that if a commercial bank fails to get financial accommodation from anywhere, it approaches the central bank as a last resort. Central bank advances the loan to such a bank against approved securities. As a lender of the last resort, central bank exercises control over the entire banking system of the country.

Question: Central bank performs the function of a clearinghouse. How?(4 marks)

Answer: Every bank keeps cash reserves with the central bank. The claims of banks against one another can be easily and conveniently settled by simple transfers from and to their account. Supposing, Bank A receives a cheque of Rs 10,000 drawn from Bank B and Bank B receives a cheque of Rs. 15000 drawn on Bank A. The most convenient method of settling or clearing their mutual claims is that Bank A should issue a cheque amounting to Rs 5000 in favor of Bank B, drawn on central Bank. As a result of this transference, a sum
of Rs. 5000 will be debited to the account of Bank A and credited to the account of B. There is no need for cash transactions between the banks concerned. It facilitates cash transaction across the entire banking system, it also reduces the requirement of cash reserves of the commercial banks.

Question: Why can the value of MPC/MPS be not greater than 1?(1marks)
Answer: It is because the change in consumption can never be greater than the change in income.

Question: In poor countries like India, people spend a high percentage of their income so that APC and MPC are high. Yet, the value of the multiplier is low. Why?
(3/4 marks)

Answer: Working of the multiplier process is based on one fundamental assumption: that
there exists, excess capacity in the economy, so that whenever consumption expenditure
rises (implying an increase in demand ) there is a corresponding increase in production
(implying the increase in income). But poor countries like India, lack of production capacity.
Accordingly, whenever demand increases (in terms of increase in consumption
expenditure), there is increasing the pressure of demand on the existing output (implying
inflation or rise in prices) rather than the increase in output or income.

Question: In a Govt. Budget, revenue deficit is Rs. 8,00,000 Cr. and borrowings are Rs. 50,000 Cr. How much is the fiscal deficit?(1 marks)

Answer: Rs. 50,000 Crore.

Question: What is disinvestment?(1 marks)

Answer: Disinvestment refers to withdrawal of existing investment.

Question: What does zero primary deficit mean?(1 marks)

Answer: Zero primary deficit means that interest commitment on earlier loans have

compelled the Govt. to borrow.

Question: How government reallocates the resources and redistributes the income through Budget?(4 marks)

Answer: 1. Reallocation of resources
               2. Redistribution of income

These point are to be explained with the definition of Government Budget.

Question: State which type of exchange rate has no official intervention in the foreign
exchange market? How it is determined?(3-4 Marks)

Answer: Flexible exchange rate has no official intervention. It is determined by the
interaction of supply and demand in the foreign exchange market.

Question: When exchange rate of the foreign currency falls it supplies also falls. Why?
(3-4 Marks)

Answer: When exchange rate falls, experts become less profitable hence the supply of foreign currency through exports falls.

Question: When exchange rate of the foreign currency falls, its demand rises. Why?
(3-4 Marks)

Answer: When exchange rate falls, imports become cheaper, demand for imports rises and
so rises the demand for foreign exchange to purchase more imports.

Question: Balance of payments always balances. Discuss it. (3-4 Marks)

Answer: Balance of payments is always balanced. A negative balance on the current account is equated with the positive balance in the capital account. The monetary authorities may finance a deficit by depleting their reserves of foreign currencies or by borrowing from the IMF etc. Hence BOP is always in balance.

Final Words

This was it from my side for this article but I will be giving you all more stuff to study for the upcoming unwanted exam. Moreover, I would like to tell you that you can check your CBSE Results on our site for free in case CBSE Official Result side is crashed which will be for sure. Stay Tuned for more.

   Check you JEE Results 2018 and CTET Results 2018 here.


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