# PSEB 10th Class SST Solutions Economics Source Based Questions and Answers

Punjab State Board PSEB 10th Class Social Science Book Solutions Economics Source Based Questions and Answers.

## PSEB 10th Class Social Science Solutions Economics Source Based Questions and Answers

Question 1.
At the time of calculation of National Income, goods and services are multiplied by their prices. If the quantity of national product is multiplied by the current prices we call it national income at the current price or monetary income. Conversely, if the quantity of national product is multiplied with the price of some fixed period i.e. base year, the result obtained is called National Income at constant prices or Real National Income. Prices keep on changing. As a result of it, National Income is subject to increase or decrease without any change in the number of goods and services. In order to estimate the real economic progress of a country, the national income of different years should be measured at the prices of some particular period of a year an account of constant prices, real income will only change with the change in the number of goods and services.
(a) What do you mean by National Income?
National income is the net factor income earned by normal residents of a country in the form of wages, rent, interest, and profit in one year. This is the sum of domestic factor income and net factor income.

(b) State the difference between Gross national income and net national income.

• When depreciation is included in the national income of a country it is known as gross national income. Conversely when depreciation is deducted. It is known as net national income. In fact,
• National income + depreciation = Gross national income
• National income – depreciation = Net national income
• Gross is a broader concept as compared to ‘Net’.

Question 2.
The word consumption is used in two senses. In the first sense as a process and in the second as an expenditure. In the sense of a noun, it is the activity that satisfies human wants directly like the use of water for quenching thirst and the use of food for the satisfaction of hunger etc. Thus consumption is that process by which a person uses the utility of a good in order to satisfy his wants.
In the expenditure, sense consumption means that total expenditure which is incurred on the consumption goods.
Under national income whatever many people spend on the purchase of goods and services for the direct satisfaction of their wants is called consumption or total consumption expenditure.
(а) What is consumption? What are the factors that affect it?

• Consumption means expenditure made on consumption during one year in an economy.
• Consumption depends on many factors like income, price of the commodity, fashion, etc.
• Thus it can be said that consumption is a function of many factors, which means it depends on many factors.
• Income has the most effect on consumption. Generally with the rise in income consumption also increase but the increase in consumption is less than that of income.

(b) What is the propensity to consume? State its types.
A schedule showing the various amounts of consumption that correspond to different levels of income is known as the propensity to consume.

• Average Propensity to Consume. The ratio of total consumption to total income is called average propensity to consume. This implies that people will spend how much part of their income on consumption and how much part they save. This is obtained by dividing the consumption by the income, or
APC = $$\frac{\mathrm{C}}{\mathrm{Y}}$$
• Marginal Propensity to Consume. The ratio of change in consumption to change in income is called marginal propensity to consume, i.e.,
MPC = $$\frac{\Delta \mathrm{C}}{\Delta \mathrm{Y}}$$

Question 3.
Public Finance is the combination of two words, i.e., Public + Finance. Public means group of people who are represented by the government and finance means monetary factor. Thus public finance means the financial sources of the government i.e. revenue and expenditures. That portion of economics in which the problems of revenue and expenditure are discussed is called public finance. Thus Public finance is the study of the problems of government institutions concerning central, state, and local governments. Public finance includes revenue of government i.e. tax, interest, profit etc. Public expenditure includes defense, administration, education, health industries, agriculture etc. Public debts are also studied under public finance.

The economic activities of the government of the country have also increasd with the passage of time. The area of public finance has also been widened. It studies not only the revenue and expenditure of the government but it also studies all economic activities of the government concerning special economic objectives like full employment, economic development, income and equal distribution of wealth, price stability, etc.
(а) What are the main sources of Government Income?
The main sources of income of the government are taxes which are of two types.

1. Direct taxes
2. Indirect taxes

1. Direct taxes. Direct tax is that which is paid by the same person on whom tax has been imposed legally. For example income tax, gift tax, corporate tax, wealth tax etc.

2. Indirect taxes. Indirect tax is defined as that form of taxes which are imposed on goods and services. These taxes are imposed indirectly on Public. Examples of indirect taxes are sale tax, excise duty, entertainment tax, export, import duty, GST etc.

(b) State the main objectives of Public Finance.
Following are the main objectives of Public Finance.

1. Price Stabilization. Public Finance maintains stability in the prices of goods and services thereby, preventing constant fluctuations and inflation and deflation that tend to destabilize the economy of a country.
2. Equitable Distribution of Wealth. Public Finance is also concerned with equitable distribution of income and wealth among individuals and various sections of the country. „
3. Satisfaction of Needs. The satisfaction of collective needs is another main objective of Public Finance.
4. Allocation of Resources. Public Finance performs the function of allocating resources among public and private sectors.
5. Provision of full employment. Provision of full employment opportunities to citizens of a country is another aim to public finance.

Question 4.
In every underdeveloped country there is a need and availability of infrastructure in a sufficient quantity. Lack of Infrastructure facilities will create hurdles in the development of industries and agriculture sector as a result of it their rate of growth will come down. For example, we daily feel that the industrial and agriculture sector suffer a lot on account of shortage of power. Similarly, if there is a lack of transport facilities then industries will not be able to get raw-material and their finished goods will also not reach the market in time. Thus, insufficient of economic infrastructure will bring down the rate of growth of production sectors like industries and agriculture etc. On the contrary, the sufficient availability of economic infrastructure will be helpful in acceleration of their development.
(a) What is meant by infrastructure?
The part of the capital stock of the economy which is necessary from the viewpoint of providing various kinds of services is called infrastructure in short, infrastructure means those activities, facilities and services which are helpful in the operation and development of other sectors.

(b) State the meaning of economic infrastructure? What are its kinds?
Economic infrastructure refers to that capital stock which offers various types of productive services directly to the producers. For example, a country’s transportation system like Railways, Road Airways provides services to the one part of the production and distribution system only. Similarly Banking system, money and capital market provide services to the other part of industries and agriculture.

Following are the main components of economic infrastructure.

• Transport and Communication
• Electric Power
• Irrigation
• Banking and other financial institutions.

Question 5.
The modern era is an era of consumerism. A variety of hew goods are supplied in the market daily for the utility and comfortability of the consumer^. New food products, new fashion garments, decorative items, household gadgets, new means of transport, modern means of entertainment like-coloured television, video etc. ate being invent and produced continuously. Advertisement and publicity are being used at large scale to introduce or to make available these1 goods to the coneuthers. Now a days a consumer chooses his consumption material on the basis of attractive advertisements and publicity of different producers. In this way, they are exploited in many ways. To protect the consumers from such type of exploitation,” consumer protection measures have been started.
(a) What is Consumer Protection?
Consumer protection means the protection of the buyers of consumers goods from the exploitation of the unfair trade practices of the producers.

(b) What is Consumer Education?
To protect the intersects of the consumers, it is very much essential to educate
them. It is with this view that the consumer’s week is celebrated throughout the country between March 15 and March 21 every year. During these days more stress is given on awareness among the consumers regarding their rights. The occassion is mai’ked by various exhibitions, seminars and street plays. Consumers are apprised of the possible unfair trade malpractice^ of short weights and measures, adulteration and the dike.

Question 6.
India is considered to be an agrarian economy because 68% of its population is still dependent on agriculture for livelihood. After independence Indian inherited a backward agricultural economy from the Britishers. Mahatma Gandhi considered agriculture as “Soul of India”. Iri this context Nehru had also said, “Agriculture needs utmost priorities.” Emphasising thb importance of agriculture Dr. V.K.R.V. Rao said, “If the vast mountain of development is to be crossed under five year plans, then the targets fixed for agriculture will have to be achieved. In the words of eminent Indian scholar Dantewala, “For the economic development of Indian economy. Success in the field of agriculture leads the country to the path of economic progress.”
(a) What is agriculture?
The term “Agriculture” in the English language is derived from two words, “Agri means field and ‘culture’ means cultivatioin in other words, “Agriculture is the art or science of production of crops and livestock on a farm.”

(b) State the importance of agriculture in Indian economy.
Following are the main importances of Agriculture in Indian economy.

1. Contribution in National Income. About 40% of national income of India comes from primary sector like agriculture and forestry etc. During the period of planning share of agriculture in the national income has been ranging between 51% and 29%.
2. Agriculture and Employment. In Indian economy, maximum employment opportunities are available in the agriculture sector.
3. Transport. Agriculture in India offers a crucial support to the transport industry. Both railways and roadways are the bulk carriers of farm products in India.
4. Wealth of Nation. A significant component of the country’s wealth belongs to the agricultural sector. In terms of fixed assets, land occupies the highest rank in India.
5. Contribution to Domestic trade. Agriculture also plays a significant role in the country’s domestic trade. This is borne art by the fact that huge expenditure in India is incurred on the purchase of farm products needed by more than a billion people in the country.

Question 7.
The term “Green Revolution is a combination of two words—“Green” and “Revolution”. Green stand for greenery. Revolution means so sudden and fast changes that the spectators were wonder-struck. This term has been used for the progress of agricultural production. Because of the severe agricultural reforms initiated during the period of first three plans in India, in 1967-68, the production of foodgrains increased by about 25% as compared to the last year i.e., 1966-67. Such a tremendous increase in the production of foodgrains in any one year was nothing short of revolution. That is why, the economists gave this spectacular increase in foodgrains products the name of Open Revolution.
(a) State the effects of Green-revolution.

1. Effects on Prices. During the third five-year plan, prices, especially prices of agricultural commodities had a sharp rise. However, due to Green Revolution, the pace of price rise showed down.
2. Prosperity of the Farmers. The Green revolution has very much improved the economic condition of the farmers. Their standard of living has gone up very much than before.
3. Plaughing Back of Profits. The one good effect of the Green Revolution is that now the farmers are also included to invest large part of their income on the development of agriculture.
4. Change in Thinking. Green revolution has completely revolutionized the thinking of the Indian rural people. Now they are convinced that with the help of science they can change that misfortune into fortunes.
5. Effect on Consumers. Poor Indians spend about 80% at their income on agricultural commodities. The green revolution has helped them to balance their budget and raise their standard of living.

(b) What is Green-revolution? State its features.
Green Revolution refers to an extraordinary increase in agricultural production especially in wheat and Rice, which was made possible due to the adoption of new techniques of High Yielding varieties of seeds.

Features:

• The year 1968 was the initial year of Green Revolution.
• Pant Agricultural University, Pant Nagar (U.P.) made an appreciable contribution to it by envolving a new variety of seeds.
• Indian Agricultural Research Institute (I.A.R.I.) New Delhi has also made lot of contributon in regard in bringing the Green Revolution.
• Credit of bringing Green Revolution in India goes to Dr. Norman E. Borlaugh and Dr. M.N. Swami Nathan.

Question 8.
For economic progress of Underdeveloped countries like India, industrialization occupied important place. Only through Industrial development by increasing the rate of production and employment the rate of growth of Indian economy can be increased. Prior to independence, industrial development was very low in India, but after independence, government laid great emphasis on the industrial development of the country. As a result of it, many new industries were established in the country and production capacity and the efficiency of the existing industries were also enchanced. Under the five year plans, the industries development has also been given much importance.
(a) State the importance of Industrial development

1. Employment. Through industrialisation, new industries are established. As a result of it, the millions of unemployed persons get work in these industries and it solve the unemployment problem of the country.
2. Self Dependence. Industrial development makes provision for the production of essential goods in the country. As a result there will be less dependence on other countries and our country will become self-sufficient in the production of large number of goods.
3. Increase in National Income. In India, industrialization will bring better and proper utilisation of natural resources. It will increase total production, employment national income and per capita income of the country.
4. Essential for National Defence. Through industrialization many industries like Iron, steel, aeroplane, defense, production etc. can be established which are very important for the security of the country, because these industries manufacture large quantity of war material.
5. Production of Socially Useful Goods. Through industrialization, the production of essential goods like cloth, cycles, goods, paper, oil etc. has become possible.

(b) How Industries helps in the Balanced growth of an economy?
Indian Economy is an unbalanced economy because the bulk of working population and. capital of the country is engaged in agriculture. There is uncertainty in agriculture. Industrialisation will make the economy a balanced one and it will reduce the dependence on agriculture.

Question 9.
“Cottage industries are those industries which are completely or partially run by the members of a family either as a whole-time business or as a part time business.” Mostly these type of industries are run by the artisans in their homes. Machines are rarely used. Usually these industries fulfil the local requirements. These industries are run by the members of the family. Workers on labour basis are rarely used. They need very less capital. Since these industries are mainly situated in villages, so these are known as “village or rural industries.”
(a) State the difference between cottage and small industries.

1. Cottage industries are normally set up in villages and they are spread throughout the country, whereas small scale industries are mostly set up in cities.
2. In cottage industries, only family members work whereas in small scale industries, work is done through hired workers.
3. Cottage industries normally fulfil the local needs where as small-scale industries produce goods for cities and semi-urban areas. So their production market is very large.
4. In cottage industries, production is done with the help of simple tools and very less capital is required. Whereas small-scale industries are run with power and more working capital is also required.
5. In cottage industries, traditional goods like khadi mats and shoes etc. are produced whereas in small scale industries modem goods like Radio, Television, Electrical and Electronics goods etc. are produced.

(b) What are the problems of cottage industries?

1. Problem of Raw Material and Power. These industries do not get raw material in sufficient quantity and whatever material they get it is of poor quality and for it they have to play high prices.
2. Problem of Finance. In India credit is not available to these industries in sufficient quantity. They have to depend on moneylenders for finance who charge very high rate of interest.
3. Old Method of Production. In there industries mostly old methods of production are used. Old tools like oil press for oil expelling or handlooms for weaving clothes are used. As a result of it the number of production decreases and poor qualities of products are manufactured. Their demand in the market goes down.
4. Problem of Marketing. The entrepreneurs of the industries face many problems in selling their products at fair price and quantity because the outward look of the product produced by these industries is not good.

Question 10.
The role of large scale industries is very important for the economic development of India. The major share of fixed capital investment in industries has been invested in big Industries. A large portion of the total industrial production is received from these industries.
(а) Classified the large scale industries.