Kerala Plus Two Economics Question Paper March 2021 with Answers

Teachers recommend solving Kerala Syllabus Plus Two Economics Previous Year Question Papers and Answers Pdf March 2021 to improve time management during exams.

Kerala Plus Two Economics Previous Year Question Paper March 2021

Answer question from 1 to 41 up to the maximum of 80 scores. (12 × 1 = 12)

Question 1.
a. In a centrally planned economy, all the important economic activities are planned by:
i) The market
ii) The government
iii) Both market and government
iv) Corporate sector
Answer:
ii) The government

b. An example of micro variable is:
i) National income
ii) Gross Domestic Product
iii) Net Domestic Product
iv) Individual income
Answer:
iv) Individual income

c. The founding father of Modern Economics is:
i) J.M. Keynes
ii) Adam Smith
iii) Alfred Marshall
iv) Amartya Sen
Answer:
ii) Adam Smith

d. The book ‘General Theory of Employment, Interest and Money was published in the year:
i) 1929
ii) 1936
iii) 1775
v) 1946
Answer:
ii) 1936

e. Other things remain the same, when price of a commodity decreases, ite demand
i) Falls
ii) Rises
iii) Never changes Constant
Answer:
ii) Rises

f. The firm’s revenue under perfect competiion is:
i) MR > AR
ii) AR > MR
iii) MR = AR
iv) MR > Price
Answer:
iii) MR = AR

g. National income in India is:
i) GDP_MP
ii) GNP_FC
iii) NDP_FC
iv) NNP_FC
Answer:
iv) NNP_FC

h. In India, the custodian of foreign exchange reserve is :
i) State Bank of India
ii) Reserve Bank of India
iii) Canara Bank
iv) Indian Bank
Answer:
ii)  Reserve Bank of India

i. The situation where, market demand equals market supply:
i) Excess supply
ii) Excess demand
iii) Equilibrium
iv) Deficient demand
Answer:
iii) Equilibrium

j. Shape of the demand curve under monopoly market:
i) Upward sloping
ii) Downward sloping
iii) Horizontal straight line
iv) Vertical straight line
Answer:
ii) Downward sloping

k. Budget in which Government Expenditure is greater than Government Revenue:
i) Surplus budget
ii) Deficit budget
iii) Balanced budget
iv) Current account deficit
Answer:
ii) Deficit budget

l. In a two sector model AD = \(\overline{\mathrm{C}}+\overline{\mathrm{I}}\)
Here autonomous consumption is indicated by:
i) c
ii) \(\overline{\mathrm{C}}\)
iii) \(\text { T }\)
iv) Y
Answer:
ii) \(\overline{\mathrm{C}}\)

Question from 2 to 13 carry each.

Question 2.
Write any two features of centrally planned economy.
Answer:
Welfare motive or welfare of the people, No private property, govt, planning, govt takes all important decisions etc.

Question 3.
What do you mean by Balance of trade?
Answer:
Difference between value of visible exports and visible imports of goods of a country in a given period of time.

Question 4.
What is meant by Average product and Marginal product?
Answer:
AP = Total Product per variable input or AP = TP/ variable input MP = Change in output/change in input or MP = “TP/”variable input.

Question 5.
What is Cardinal utility analysis?
Answer:
The level of utility can be expressed in numbers or utility can be measured cardinally . Eg:- 50 utils etc.

Question 6.
List out four sectors of the economy according to the marco economic point of view.
Answer:
Household, Firms or Business, Government, External or Foreign Sector.

Question 7.
What is the difference between micro and macro economics?
Answer:
Microeconomics deals with individual behaviour, Macroeconomics with aggregates.

Question 8.
Why the AR and MR curves are the same under per-fect competition?
Answer:
Under Perfect competition, there is uniform price, soAR = MR.

Question 9.
What do you mean by Excess demand?
When total demand is greater than total supply in a market or Total demand>Total supply.

Question 10.
What is meant by Paradox of thrift?
Answer:
If the MPS of the economy increases, the total value of saving in the economy will not increase or If the individual saving increases, the total saving in the economy will not increase.

Question 11.
Briefly explain the market demand.
Answer:
Sum total of individual demand for a good in a particular market at different prices.

Question 12.
Define the Gross national Product.
Answer:
The economic output produced by a nation’s normal residents. They are either in India or in abroad. Or GDP + Net Factor income from abroad = GNP or GNP = NNPmp + Depreciation.

Question 13.
What is meant by the personal income?
Answer:
PI = Nl -Undistributed profit -Net interest payment made by household – corporate tax + Transfer payment to household.

Question 14.
Write a brief note on the central problems of an economy due to scarcity of resources.
Answer:
What is produced and in what quantities? How are these goods produced? For whom are these goods produced?

Question 15.
Write a short note to the Great Depression of 1929.
Answer:
Started in USA, output and employment level in Europe and North America fell by huge amount, many factories were closed or shut down, production fell, huge unemployment, shut down of industries.

Question 16.
Briefly explain the circular flow of income in a simple economy.
Answer:

Question 17.
Identify the important features of monoploy market.
Answer:
Single seller, No close substitute, No entry , price maker, downward sloping demand curve.

Question 18.
Briefly explain any three functions of money.
Answer:
Medium of exchange, Unit of account, Measure

Question 19.
Briefly explain the determination of income in a two sector model.
Answer:

Question 20.
Define the Total Revenue, Average Revenue and Marginal Revenue.
Answer:
TR = total amount of receipts from the sale of the product or TR = Price X output AR = Revenue per unit of commodity sold or AR = TR/QMR = net addition to TR when an additional unit sold or MR =TR_n – TR_n-1; , or MR = ∆TR/∆Q (Since in the Malayalam version to the question, it is asked to define TP, AP and MP, give score 1 + 1 + 1, if the student defines or write the equations to TP, AP and MP.) TP – quantity produced by using a given level of output AP – Output per unit of variable input or TP/variable input MP – change in output/change in input.

Question 21.
When price is ₹10/-, the consumer buys 10 units of commodity. When price rises to ₹20/-, the demand falls to 5 units. Calculate the price elasticity of de-mand.
Answer:
For equation or formula(relevant formula)For correct process For answer (-0.5 or 0.5)∆q/∆p x p/q – 10/10 × 5/10 = – 0.5.

Question 22.
Discuss the important determinants of firm’s supply curve.
Answer:
1. Technological progress
2. input price
3. unit tax

Question 23.
Explain the difference between Revenue deficit and Primary deficit.
Answer:
Revenue Deficit = Revenue Expenditure – Revenue Receipts Primary Deficit = Fiscal Deficit-Net interest payment.

Question 24.
Explain any two features of indifference curve.
Answer:
1. For writing any two features( downward sloping or convex to origin, Higher IC shows higher level of satisfaction and lower IC shows lower level of satisfaction, two ICs never intersect each other)
2. For explanation or figure/diagram

Question 25.
Analyse the features of Perfect competition.
Answer:
Large number of buyers and sellers, Homogeneous product, free entry and exit, price taker, uniform price, perfect knowledge, demand curve parallel to X axis, No transport cost etc.

Question 26.
Define the concepts of stocks and flows with examples.
Answer:
Stocks:- A quantity or variable measured at a particular point of time or static concept. Eg;- Capital, wealth etc. FlowsA quantity or variable measured at particular period of time or dynamic concept. Eg;- Capital formation, income etc.

Question 27.
Distinguish between MPC (Marginal Propensity to Consume) and MPS (Marginal Propensity to Save).
Answer:
MPC = Change in consumption/Change in income or AC/AY or any relevant equation or definition. MPS = Change in saving /Change in income or AS/AY.

Question 28.
What do you mean by the government budget. Explain its objectives.
Answer:
Annual financial statement of the govt. Statement of estimated receipts and expenditure of the govt, for a financial year. Objectives:- Allocation function Redistribution function Stabilisation function Relevant.

Question 29.
What is an open economy? identify the three linkages of an open economy.
Answer:
Relevent definition to open economy (Is one which interacts with other countries through various channels or country having economic relations with other countries) Three linkages:- Output or product market linkage Financial market linkage Labour or Factor market linkage

Question 30.
Suppose the market demand curve of Apple is ; QD = 500 – P. The market supply curve of Apple is; qs = 100 + P. Calculate the equilibrium price and quantity.
Answer:
At equilibrium, Qd = Qs or Qs = Qd 100 + p =500 – p 2p = 400 P = 200 Equi.
Price = 200 100 + p = 100 + 200 = 300
500 -p = 500 “200 = 300 Equi. Quantity ” = 300

Question 31.
List out the important features of monopolistic competition; write two examples of this market.
Answer:

1. Any three features of Monopolistic competition (many firms or fairly large number of firms, differentiated products or non-homogeneous products, free entry and exit, selling cost etc)
2. Any two relevant examples (soap producing firms, Toothpaste producing firms etc).

Question from 32 to 37 carry 5 scores each. (6 × 5 = 30)

Question 32.
Explain price ceiling. Write its two effects.
Answer:
1. Pnceceing :-Thegovernmentimposed upperlimit on the price of a good or services. Fixed below the market determined price. When the government fixes a price ceiling there is an excess demand. Effects :- Rationing, Long queue, creation of black marketing etc.

Question 33.
Classify the following Govt. Expenditures into Revenue Expenditure and Capital Expenditure.
Answer:
Revenue Expenditure: lnterest Payments, Subsidies, Salaries and Pensions Capital Expenditure:- lnvestment in shares, Loans to state Govt. by central govt.

Question 34.
The items in Column A show the concepts related with cost and production. Match them suitably with Coulmn B.

A	B
Short run	Total cost
Marginal product	Some factors are fixed
Total Fixed Cost	ATC
Curve(TFC)	AQ
Total Fixed Cost + Total Variable Cost (TFC + TVC)	Change in output Change in input
Marginal Cost (MC)	Horizontal Straight line parallel to X axis

Answer:
Short run – Some factors are fixed Marginal Product Change in output/change in input Total Fixed Cost Curve(TFC) – Horizontal stright lineparallel to X axis. Total Fixed Cost + Total Variable Cost(TFC + WC) – Total Cost Marginal Cost(MC) – ∆TC/∆Q.

Question 35.
What is Balance of payments (BOP)? Explain the three components of current account of BOP.
Answer:
BoP:-Record the transactions in goods, services and assets between a country with the rest of the world for a specified period, typically a year. Components of current a/c:- Trade in goods, Trade in services, Transfer payments & with brief explanation.

Question 36.
Explain the tax revenue and non-tax revenue of the Central Government.
Answer:

1. Tax Revenue :-Direct Tax and Indirect Tax
2. Direct Tax :- Personal income tax, Corporate tax, wealth tax etc (any two examples)
3. Indirect Tax:- Customs duty, excise duty, GST, etc (any two)
4. Non Tax Revenue :- interest receipts, dividends, profits, fee, grants in aid etc.

Question 37.
Brsefly explain ‘the Returns to scale’.
Answer:
Long run production function/Studies the effects of increase in factors in same ratio on the output (or any relevant point which clarifies the concept) 3 stages of Returns to scIe :- IRS, CRS and DRS

Questions from 38 to 41 carry 8 scores each.

Question 38.
A consumer wants to consume two goods. The prices of two goods are 10/- each. Income of the consumer is 50f-. based on the data:
A) Draw a budget line.
B) Explain the optimal choice of the consumer with the help of indifference curve.
Answer:
A. M/p1 = 50/10 = 5M/p2 = 50/10 = 5
Budget line Diagram with given data and the Budget Equation

B. Diagram and explanation

Question 39.
Complete the given table and define The concepts of TFC, WC and TC.

Output	TFC	TVC	TC	AFC	AVC	SAC	SMC
0	100	0
1	100	100
2	100	200
3	100	300
4	100	400

Answer:

Output	TFC	TVC	TC	AFC	AVC	SAC	SMC
0	100	0	100	–	–	–	–
1	100	100	200	100	100	200	100
2	100	200	300	50	100	150	100
3	100	300	400	33.3	100	133.3	100
4	100	400	500	25	100	125	100

TFC – The total cost to employ fixed inputs or TC – TVCTVC- Total cost to employ variable inputs or TC – TFCTC – Total cost of the firm or TFC + TVC = TC

Question 40.
GDP of a country can be calculated by using three methods. Explain the income and expenditure method.
Answer:

1. For explaining income method(W + P + ln + R)
2. For explain Expenditure method(C + l + G + X M)

Question 41.
The Reserve Bank of India (RBI) controls the money supply in the economy in various ways. Explain. (Hints : Quantitative and Qualitative tools)
Answer:

1. For Quantitative Measures – Bank Rate, CRR, Open Market Operation etc. (any relevant three measures with explanation)
2. For listing any two qualitative measures persuasion, moral suasion, margin requirement etc.