Class 12 Macroeconomics Chapter 1 MCQ and Important Question answers. Get here the solutions of 12th Economics lesson 1 Introduction with multiple choice questions and other important question answers for the preparation of board exams 2022-2023.

Class 12 Macroeconomics Chapter 1 MCQ

Q1

Economy may be classified as

[A]. Capitalist
[B]. Socialist
[C]. Mixed
[D]. All of the above
Q2

Mr. Tiwari wants to study national income. Which branch of economics will he have to study?

[A]. Microeconomics
[B]. Factor price determination
[C]. Development economics
[D]. Macroeconomics
Q3

Who used the word ‘micro’ for the first time?

[A]. Ragnar Frisch
[B]. Boulding
[C]. Keynes
[D]. Marshall
Q4

Which of the following is not a flow variable?

[A]. Saving
[B]. Wealth
[C]. Income
[D]. Investment

What is an economy?

In any society, people need many goods and services in their everyday life including food, shelter, transport facilities like roads, buses, trains, etc. Production and distribution of these goods and services via various resources forms an economy.

The centrally planned economy

In this economy, the government or the central authority plans all the important activities in the economy. All important decision related to production, exchange and consumption of products and services is decided by the government. The central authority will try to achieve a particular allocation of resources and a flawless distribution of the final combination of goods or services which is thought to be desirable for society as a whole. Like, the Jan-Dhan bank account scheme. The government thought that each and every individual should have their own bank account, and they launched this scheme.

Now many poor families can enjoy the financial benefits of different schemes which are given to people by the government, and they can have that money directly in their bank account. Similarly, take the example of the Ration Card. You can get a specific amount of ration from the government every month, and at a minimal cost. This is also a scheme of the government which is helping masses. The goods and services which are very important for the prosperity and wellbeing of the economy as a whole and are not produced in an adequate amount, like education and health services, then the government might try to induce the individuals or may itself decide to produce the goods and services to make it adequate.

Class 12 Macroeconomics Chapter 1 Important Question answers

What is the difference between microeconomics and macroeconomics?

Microeconomics facilitates the decision of an individual households, firms or some other organisations whereas Macroeconomics refers to a larger scale as a whole, like a state or a country and even the world.

What do you understand by Positive and normative economics?

How the different mechanisms function while solving a problem of the economy, is done by the positive economic analysis. And to understand whether these mechanisms are the desired one or not, we study that in normative economics.

What is a centrally planned economy?

When the government or the central authority plans all the important activities in the economy, is called centrally planned economy. In this, all the decisions regarding production, exchange and consumption of goods and services are made by the government.

What is scarce resources in an economy?

When we produce any goods or services in an economy, it is understandable that not every resource is available and is in adequate quantity. The lack or insufficiency of those resources is called scarcity of resources.

Class 12 Economics – The market Economy

In market economy, all economic activities are organised through the market. A market is a set of arrangements where economic agents can freely exchange their endowments and products with each other. For the smooth functioning of any system, the coordination in the activities of different constituent parts of the system, is necessary. If the buyer demands more of a certain food, the price of that will rise. This indicates that the society as a whole wants more of that particular good, and the producers of that good will have to increase the production of that.

Class 12 Macroeconomics Chapter 1 MCQ Multiple Choice Questions

Q5

A laptop purchased by a consumer is an example of

[A]. An intermediate good
[B]. Intermediate consumption
[C]. A consumer good
[D]. None of the above
Q6

Which of the following is the salient feature of the resources?

[A]. These are limited as compared to wants
[B]. These have alternative usage
[C]. Both a and b
[D]. None of the above
Q7

What is known as the study of individual units?

[A]. Microeconomics
[B]. Macroeconomics
[C]. Development economics
[D]. Income and employment theory
Q8

The basic factors of production are land, labour, capital and ________.

[A]. Resources
[B]. Machinery
[C]. Enterprise
[D]. Investment

Positive and normative economics

As you know that there is more than one way to solve the central problems of an economy. These different ways require different types of resources allocation as well as different distribution of the final mix of goods and services produced in the economy. Therefore, it is important to understand that which of these alternative mechanisms are most desirable for the economy as a whole. In positive economic analysis, we study how the different mechanisms function, and in normative economics, we try to understand whether these mechanisms are desirable or not.

Class 12 Macroeconomics Chapter 1 Extra Question Answers

What basic solution we can use when scarcity of resources arises?

The scarce resources must be allocated properly in the production of goods and services in keeping with likes and dislikes of the people in the society. By doing that, we can optimise the limited resources available.

What is a Market economy?

In a market economy, all economic activities are organised through the market. All goods and services come with a price at which the exchange take place. If buyers demand more of a certain good, the price of that good will rise.

How the central economic problems are solved in a market system?

In a market system, the central problems regarding in how much quantity and what goods and services to produce are solved through the coordination of economic activities brought about by the price signals.

How can an economy function smoothly?

For the smooth function of any economic system, it is imperative that there is coordination in the activities of different constituent parts of the system. Otherwise, it can lead that economy into chaos.

Microeconomics and Macroeconomics

In microeconomics, we study the behaviour of individual economic agent in the market for different goods and services and try to figure out how the prices and quantities of goods and services are determined through the interaction of individuals in these markets. On the other hand, in macroeconomics, we try to get an understanding of the economy as a whole by focusing our attention on aggregate measures such as total output, employment and aggregate price level.

What are the central problems of an economy?

Production, exchange and consumption of goods and services are the basics of an economy. What is going to be produced and what should be the quantity of it and who will be the consumer of that product, these are the central problems of an economy.