NCERT Solutions for Class 12 Economics Introductory Macroeconomics Chapter 1

Introduction Class 12

Chapter 1 Introduction Exercise Solutions

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Exercise : Solutions of Questions on Page Number : 7

Q1 :  

What is the difference between microeconomics and macroeconomics?


Answer :

Points of Difference

Microeconomics

Macroeconomics

1.

Definition

It is a branch of economics that studies the economic variables at an individual level like the households, the firms, the consumers etc.

It is a branch of economics that studies the economic variables of an economy as a whole.

3.

Deals with

It deals with how consumers or the producers make decisions depending on their given budget and other variables.

It deals with how different economic sectors like households, industries and other government and foreign sectors make their decisions.

4

Method

The method of partial equilibrium (i.e. equilibrium in one market) is used.

The method of general equilibrium (i.e. equilibrium in all the markets, simultaneously) is used.

4.

Variables

The major variables involved are price, consumer's demand, wages, rent, profit, firm's revenue, cost, etc.

The major variables involved are aggregate demand, aggregate supply, inflation, unemployment, poverty, etc.

5

Theories

Various theories studied are:

1.Theory of Consumer's Behaviour and Demand

2. Theory of Producer's Behaviour and Supply

3. Theory of price Determination under different market conditions

Various theories studied are

1. Theory of National Income

2. Theory of Money

3. Theory of General Price level

4. Theory of Employment

5. Theory of International trade

6

Popularised by

Alfred Marshal

Keynes

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Q2 :  

What are the important features of a capitalist economy?


Answer :

Capitalist economy is an economic system where the means of production are privately owned. These means of production are driven by the motive of profit making. This economic structure is also known as free market economy or laissez faire.

Following are the features of a capitalist economy:

1. Role of the government

The government provides the basic framework for the smooth functioning of an economy. It provides the basic framework and is responsible for maintenance of law and order, justice, growth and stability, defence, etc.

2. Profit motive

The economic agents are driven by the prime motive of profit maximization.

3. Central problems

The central problems of an economy are solved by the market forces of demand and supply, i.e., the law of demand and supply operates here. The producers will supply only those goods and services that are demanded by the economy.

4. Role of private sector

The role of private individuals is more dominant. The main role of undertaking production and organising factors of production are played by the private individuals and capitalists.

5.Laissez-faire

This economy is also called `laissez faire'. It has minimum interference or restriction from the government.

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Q3 :  

Describe the four major sectors in an economy according to the macroeconomic point of view.


Answer :

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Q4 :  

Describe the Great Depression of 1929.


Answer :

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Next Chapter 2 : National Income Accounting >>

Introductory Macroeconomics - Economics : CBSE NCERT Exercise Solutions for Class 12th for Introduction will be available online in PDF book form soon. The solutions are absolutely Free. Soon you will be able to download the solutions.

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