By reviewing Kerala Syllabus Class 8 Social Science Notes Kerala Syllabus Chapter 4 Basic Economic Problems and the Economy Important Questions, students can improve their conceptual understanding.
Basic Economic Problems and the Economy Extra Questions and Answers Class 8 Social Science Chapter 4 Kerala Syllabus
Basic Economic Problems and the Economy Class 8 Important Questions
Question 1.
Who is known as the father of economics?
a) Karl Marx
b) Alfred Marshall
c) J.M. Keynes
d) Adam Smith
Answer:
d) Adam Smith
Question 2.
Who is the economist who argued that government intervention is inevitable in economic activities?
a) Adam Smith
b) David Ricardo
c) Karl Marx
d) J.M. Keynes
Answer:
d) J.M. Keynes
Question 3.
What is the economic policy adopted by India after independence?
a) The capitalist economy
b) Socialist Economy
c) Mixed economy
d) The market economy
Answer:
c) Mixed economy
Question 4.
What is considered to be the fundamental factor of growth and innovation in the knowledge economy?
a) Material resources
b) The labour force
c) Capital Investment
d) Knowledge and Skills
Answer:
d) Knowledge and Skills
Question 5.
What are the main activities in an economy?
Answer:
Production, Consumption, Distribution
Question 6.
What is the main objective of the capitalist economy?
Answer:
Maximum Profit
Question 7.
Which is the concept formulated by J.A. Schumpeter?
Answer:
Creative Destruction
Question 8.
What is the main resource in the knowledge economy?
Answer:
Knowledge
Question 9.
Define Economy.
Answer:
An economy is the way a country organises the production, distribution and consumption of various goods and services.
Question 10.
Who defined economics as the study of the relationship between human wants and limited resources?
Answer:
Lionel Robbins
Question 11.
Differentiate between basic needs and gratifying needs.
Answer:
| Basic needs | Gratifying needs |
| The essential needs for the survival of life such as food, clothing and shelter can be called basic needs. | There are certain needs that make our life more comfortable and happy. These are called gratifying needs. |
Question 12.
Explain the basic economic problem of ‘What to produce?
Answer:
Each country has to prioritise what to produce using the available resources. Once it is decided what to produce, the question as how much to produce becomes relevant. A country has to produce many goods and services. If the country decides to produce more of any one commodity or service, it will have to limit the resources that can be used to produce other goods.
Question 13.
Write any two features of the labor intensive technique.
Answer:
- Production involving more labourers
- Low level of capital utilisation
Question 14.
What is the role of government in a capitalist economy?
Answer:
It is an economy in which ownership of the factors of production is concentrated in individuals. There is limited government intervention. Active participation of government in economic development can be seen today in many countries that follow capitalist economy.
Question 15.
Define mixed economy and write an example.
Answer:
A mixed economy is one that combines some features of a capitalist economy and a socialist economy. Eg: India
Question 16.
What is the ‘Theory of Surplus Value’ formulated by Karl Marx?
Answer:
German economist and philosopher Karl Marx developed the ‘Theory of Surplus Value’. According to Marx, the basis of production is the labour of the workers. But only a small portion of this is given to the labourer and the majority is kept by the capitalist.
Question 17.
What is the financial contribution of David Ricardo?
Answer:
British economist David Ricardo came up with the theory that trade between two countries can increase the welfare of both countries. His ‘Theory of Rent’ regarding the lease of land is very famous.
Question 18.
What are the differences between Labour Intensive Technique and Capital Intensive Technique?
Answer:
- The method of production using more labour and less capital is called ‘Labour Intensive Technique’.
- The method of production using more capital and less labour is called ‘Capital Intensive Technique’.
Question 19.
Explain the major thoughts of Amartya Kumar Sen on Welfare Economics.
Answer:
- Emphasis should be placed on education, health care and social justice to achieve economic progress.
- Gender equality and women empowerment are essential for the progress of the country.
- Economic development should be evaluated on the basis of its influence on human rights and freedoms.
Question 20.
What are the basic economic problems of a country?
Answer:
- What to produce?
- How to produce?
- For whom to produce?
Question 21.
What does the knowledge economy mean?
Answer:
A knowledge economy refers to an economic system in which knowledge and skills are the conductors of growth and innovation. In this economy, knowledge is considered as a key resource. Its creation, dissemination and application are crucial to economic development.
Question 22.
Write any three characteristics of Capital Intensive Technique.
Answer:
- Less demand for labourers
- Utilises more capital investment
- Ensures productivity
Question 23.
Complete the missed parts.
• Land – Rent
• ………..a)……….. – Wages
• Capital – ……..b)………..
• ……….c)……… – Profit
Answer:
a) Labour
b) Interest
c) Organisation
Question 24.
Explain the important economic thoughts of Mahatma Gandhi.
Answer:
- Gandhiji envisioned an economy based on self-sufficiency and decentralisation.
- Rural industries need to be nurtured to increase employment opportunities locally.
- Expand local markets for marketing locally produced goods.
- Economic inequality should be alleviated to ensure social justice.
Question 25.
Explain the concept of “creative destruction” with an example.
Answer:
J. A. Schumpeter, a native of the Czech Republic, developed the concept of ‘Creative Destruction.
Industries and technologies create new opportunities and growth through innovation. But he also opined that existing industries and technologies are disrupted or destroyed by innovation.
Eg: The rise of the smart phone industries led to the decline of the tape recorder, video player and film camera industries.
Question 26.
Match the following.
| Dadabhai Naoroji | Efficient tax system |
| Chanakya | The Drain Theory |
| Abhijit Vinayak Banerjee | Self-Sufficiency |
| Mahatma Gandhi | Poverty Eradication |
Answer:
| Dadabhai Naoroji | The Drain Theory |
| Chanakya | Efficient tax system |
| Abhijit Vinayak Banerjee | Poverty Eradication |
| Mahatma Gandhi | Self-Sufficiency |
Question 27.
Write any four characteristics of Needs.
Answer:
- Human needs are diverse and innumerable
- Some needs can be met alone and others through collective efforts
- A need once fulfilled may be repeated
- Needs vary with time, place and individuals
Question 28.
What are the main characteristics of an economy?
Answer:
- Economy is man-made
- Economy is subject to change
- Economic activities in the economy keep changing
- Production, distribution and consumption are the main activities in the economy
Question 29.
Explain the basic economic problem of ‘For whom to produce?
Answer:
Production should be done to meet the needs of the people. The question for whom to produce means how goods and services produced are distributed among the people. Production activities should be planned in such a way that available resources are utilised to benefit everyone in the society. Goods and services are produced through the combined action of factors of production such as land, labour, capital and organisation. The value of the goods produced has to be distributed on the basis of the factors of production according to their share. Product value must be distributed as rent to land, wages to labour, interest to capital, and profit to organisation. That means, how the income from production distributed is also important.
Question 30.
Compare the ownership and features of the capitalist economy and the socialist economy.
Answer:
Capitalist Economy
It is an economy in which ownership of the factors of production is concentrated in individuals.
Socialist Economy
A socialist economy is one in which the government owns and controls all the factors of production. A centralised planning committee will take decisions on economic activities.
| Features | |
| Capitalist Economy | Socialist Economy |
| • All persons have the right to own property. • Maximum profit. • Limited government intervention. • Individuals can store resource and use it to produce goods and services as they want. • The consumer has complete freedom in the market (consumer sovereignty). • Competition among industries. • Active participation of government in economic development can be seen today in many countries that follow capitalist economy. |
• Ownership of the factors of production is vested in the government. • Social welfare is the main objective. • Government’s control over the market. • The central planning committee utilises resources keeping in view the availability of resources and national objectives. • Reducing inequality in income and wealth. • Intervention of private enterprises is also seen in today’s socialist economy. |
Question 31.
Highlight the economic contributions of Indian economists like Chanakya, Dadabhai Naoroji,Mahatma Gandhi and Abhijit Vinayak Banerjee.
Answer:
Indian Economists have given great contribution to the development of economics.
- Chanakya in ancient India, who devised an efficient tax system for the country’s economic development.
- Dadabhai Naoroji, the originator of The Drain Theory, are prominent among them.
- Mahatma Gandhi, Father of our Nation, describes the economic visions in his books Hind Swaraj and India of My Dreams.
Gandhiji’s Economic Thoughts
- Gandhiji envisioned an economy based on self-sufficiency and decentralisation.
- Rural industries need to be nurtured to increase employment opportunities locally.
- Expand local markets for marketing locally produced goods.
- Economic inequality should be alleviated to ensure social justice.
Abhijit Vinayak Banerjee
- Indian-American economist Abhijit Vinayak Banerjee was awarded the 2019 Nobel Prize in Economics for devising an experimental approach to global poverty eradication.
- He shared the Nobel Prize with Esther Duflo and Michael Kremer.