Economics
Simplified
Study Material
Std
X
1. Development R. Ayyappan
1.People
have different notions of developmental goals (or) People have
conflicting
goals
Ø People
are different from each other. Different persons can have different
developmental goals.
Ø What
may be development for one may be development for the other. It may even be
destructive for the other.
Ø Eg:
industrialist will support dams for the cheap and efficient electricity whereas
the people those who are living that area may oppose the project because they
will lose the livelihood due to the project.
2.What
are the common goals of the people?
Ø Material goals:
Regular job, decent wages or price for their product.
Ø Non material goals:
Equal treatment, freedom, security, and respect.
3.How
World Bank classifies or compares the countries or states?
Ø World
Bank classifies the countries on the basis of the average income or per capita
income.
Ø The
countries with per capita income of US$ 12736 per annum and above in 2013 are
called rich countries.
Ø The
countries with per capita income of US$ 1045 or less are called low income
countries.
Ø Per
capita income of India is US$ 1570 per annum. So India is ranked as Middle
income country.
4. Define average income or per capita
income and explain the defects.
Per capita income = Total income
Total population
Ø Defects: Average income does not show the real
picture, it shows only average picture of the country.
Ø Average
income not shows the fair distribution or equitable distribution of the income
in the country.Eg:
|
Country
|
I
|
II
|
III
|
IV
|
V
|
Average
|
|
Country A
|
9500
|
10500
|
9800
|
10000
|
10200
|
10,000
|
|
Country B
|
500
|
500
|
500
|
500
|
48000
|
10,000
|
5.How
other criteria’s other than per capita income influence the development or
Kerala, with lower per capita income has a better human development ranking
than Punjab. Hence, per capita income is
not a useful criterion at all and should not be used to compare states. Do you
agree? Discuss.
Ø There
are factors like literacy and health are also important criteria like per
capita income.
Ø Yes
I agree per capita income alone is not a useful criterion to compare the
states.
Table
1
|
State
|
Per
capita income for 20012-13 (in Rs)
|
|
Maharashtra
|
1,04,000
|
|
Kerala
|
88,500
|
|
Bihar
|
27,200
|
Ø According
to table one Maharashtra in first place because of the high per capita income
but human resource development not only refers the income but also other
criterions like education and health. From table 2 we can understand how per
capita income alone cannot determine the development.
Table
2
|
State
|
Infant
Mortality rate
Per 1,000
(2012)
|
Literacy
rate (%)
2001
|
Net
attendance ratio for class 1-V
|
|
Maharashtra
|
25
|
82
|
64
|
|
Kerala
|
12
|
94
|
78
|
|
Bihar
|
43
|
62
|
35
|
Ø According
table 2, Kerala has positive ratios in education and in health even though less
in per capita income.
Ø Infant
mortality rate of Kerala is only 12 where it is 25 in Maharashtra, it shows Maharashtra
lacks behind the Kerala in health.
Ø Literacy
rate and Net attendance ratio also Kerala is better than the ratios of
Maharashtra.
Ø So
to measure the Human resource development, along with per capita income other
criteria’s like education, health are also important.
6.Human
Development Report
Ø Human
Development Report published by UNDP compares countries based on the
educational levels of the people, their health status and per capita income.
Ø India
stands in 135th place in this report.
|
Country
|
Percapita
Income $
|
Life
expectancy
At Birth
2013
|
Literacy
Rate
For 15+
2005-06
|
HDI
2013
|
|
Srilanka
|
9250
|
74.3
|
91.2
|
73
|
|
India
|
5150
|
66.4
|
62.8
|
135
|
|
Pakistan
|
4652
|
66.6
|
54.9
|
146
|
7.Life
expectancy : Average
expected length of life of a person at the time of birth.
8.HDI =Human Development Index
9.Why
is the issue of sustainability important for development?
Ø The
development very much based on resources.
Due to the exploitation and large scale use of resources are depleting
in a rapid rate.
Ø For
example : The oil reserves of middle east will exhaust in 78.1 years, in USA
within 12.1 years. In entire world the oil reserves will be exhaust in 53.3
years.
Ø In
our country the water level declined by 4 meters during past 20 years.
Ø Nearly
1/3 of the country overusing their ground water resources.
10.“We
have not inherited the world from our forefathers – we have borrowed it from
our children.” - Comment
We have rights to use
the resources for our living or survival but if exploit the resources in greed
it is not a justice to the future generation.
We don’t have those rights too.
11.“The
earth has enough resources to meet the needs of all but not enough to satisfy
the greed of even one person.”
The above mentioned
statement was made by our father of nation Mahatma Gandhi. According to him human fair utilization of
resources will not deplete the resources.
Greed is a thing which does not have any limit. The resources which satisfy our needs are
limited, exhaustible in nature, if we utilize for our need resources will
sustain for a long period otherwise they will vanish rapidly and our life in
the earth will be at stake.
12.In what respect the criterion used by
the UNDP for measuring development different from the one used by the World
Bank?
World Bank use only per capita income or average
income where as UNDP uses other
variables like literacy rate, Net attendance ratio, Life expectancy, Gross
enrolment ratio along with per capita income.
13.Money in your pocket cannot buy all
the goods and services that you may need to live well. Justify the statement
Ø Income
itself is not a indicator of goods and services that people could use.
Ø Ex:
Money in your pocket cannot buy pollution free environment or to ensure
unadulterated medicines.
Ø Money
may also not be able to protect you from infectious diseases, unless the whole
of your community takes prevention steps.
==============================================================
2. Sectors of the economy
1.Describe
the different sectors of the economy?
Primary
sector: Primary sector
activities directly engage with the nature.
It produces food grains and raw materials for the secondary sector. Agriculture, Dairy, Fishing, and Mining comes
under this sector.
Secondary
sector: It covers
industrial or manufacturing activities.
Ex: sugar industry,
Iron and steel industry etc.,
Tertiary
sector: these are activities that help the development of the
primary and secondary sectors. These
activities, by themselves do not produce a good but they are an aid or support
for the production. Ex: Transportation, Communication, Education, Banking etc.,
2. How
all the sectors are interlinked?
Ø Primary
sector provide raw material for the secondary sector. If primary sector unable to supply raw
material means secondary sector will not produce products.
Ø Secondary
sector makes primary sector prosperous.
If secondary sector not getting raw materials from the primary sector means the farmers
will not get market for their products.
Ø Raw
materials should reach the industry and final goods should reach the market, it
is not possible without transportation.
Apart from the transportation, labour, management, infrastructure are
also needed for the development of primary and secondary sector. It is provided by the tertiary sector. It links other sector with people. Without the support of tertiary sector nearly
primary and secondary sector effect less.
3. Trace the historical change in sector: Total
GDP
|
Year
|
Rupees in
crores
|
|
1971-72
|
500,000
|
|
2011-12
|
5,500,000
|
Share of sectors /
Sectoral contribution towards the GDP.
|
Year
|
Primary
(%)
|
Sector
(%)
|
Tertiary
(%)
|
|
1971-72
|
44
|
22
|
36
|
|
2011-12
|
18
|
24
|
56
|
Share of sectors in Employment (%)
The
primary sector continues to be the largest employer even now
Industrial
sector outputs went up by more than 9 times but employment generation has went
up only 3 times
In
service sector outputs went up by 14 times but employment generation has went
up by only 5 times.
4.Not
all of the service sector is growing equally well- comment the statement
Large number of workers engaged in
service sector are small shopkeepers, repair persons, transport persons. Their
earning are less.
There are limited number of services
that employ highly skilled and educated workers.
5.Under
or disguised unemployment
When
a person have less work or working less than his potential or not having
regular work, it is called under or disguised unemployment.
Ex:
More family members depends on small piece of land.
Unorganized
sector workers like agricultural labours, constructional workers, painters,
pettey shop workers etc.,
6.National
Rural Employment Guarantee Act 2005 (NREGA 2005)
Ø Work
for 100 days for a family in a year
Ø Rs.100
per day
Ø Cleaning
the ponds, constructing the embankments, strengthening the walls of canals or
rivers and dredging works will be given to the NREGA workers.
|
7.Organised
sector
|
Un
organized sector
|
|
Ø These
organizations are guided by the laws provided by the central and state
governments.
|
Ø These
organizations will not or partly follow the laws of the government.
|
|
Ø Workers
welfare will be given more preference.
|
Ø Workers
welfare will not be given much importance.
|
|
Ø There
will be job security
|
Ø There
will not be job security
|
|
Ø Workers
will be benefitted economically much.
|
Ø Workers
may be exploited
|
|
Ø There
will be a safe environment.
|
Ø They
will not give much importance to the safety of the environment.
|
|
Ø Ex:
Workers of Indian Railways
|
Ø Ex:
Daily wage farm labour.
|
8. How to protect the unorganized sector
workers.
Ø Laws: Factories Act,
Minimum Wages Act, Work man compensation Act, Labour law etc.,
Ø Regular
supervision on the institutions.
Ø Creating
awareness among the unorganized sector labour.
Ø Monitoring
agencies to monitor the functioning of the unorganized sector and labour
rights.
9.
How to create more employment?
Ø Agriculture : Application of modern methods of farming –
availing loans from the banks, cold storage facilities, Dam and canals – value
added services transportation to the rural regions.
Ø Industries : Promoting local industries. Providing technical
and financial assistance to the industrial sector.
Ø Tertiary sector :
increasing the infrastructural facilities like transport, communication,
education, education, water, electricity etc.,
10.Differentiate
the sectors on the basis of ownership
|
Public
sector
|
Private
sector
|
|
Ø Capital
is generated from the government and the people.
|
Ø Capital
is provided by the individuals or group of people.
|
|
Ø The
main aim of the institution is service.
|
Ø The
main aim of the institution is profit.
|
|
Ø These
institutions follow all the laws provided by the government.
|
Ø These
institutions partly sometime will not follow any guidelines of government.
|
|
Ø These
are organized institutions.
|
Ø Mostly
unorganized institutions.
|
|
Ø There
will be a job security for the workers.
|
Ø There
will not be a job security for the workers.
|
|
Ø Ex:
NLC (Neyveli Lignite Corporation)
|
Ø Ex:
Tata Iron and Steel Company Limited.
|
==============================================================
Chapter 3.Money and credit
1. Barter system or What is double co
incidence of wants? Or Barter system
Ø Goods
àGoods
Ø Exchange
of goods without using money.
Ø Ex: The shoe
manufacturer had to directly exchange shoes for wheat without the use of money.
Ø Drawback: The exchange is only possible when shoe producer
finds the wheat producer and at the same time wheat producer in the need of
shoe.
2. How money avoids the double co
incidence of wants?
Ø GoodsàMoneyàGoods
Ø Goods
will be sold for money and through the money earned from the commodity will
used to purchase the goods what a person wants.
Ø Ex: The shoe manufacture
sells the shoe for the money and he use the money to purchase the wheat.
3. Which organization is responsible for
issuing of currency in India ?
Ø Reserve
Bank of India is responsible for issuing of currency in India.
4. How banks favours the depositors?
Ø Banks
giving interest for the depositors for their deposit.
Ø Banks
gives protection to the money of the depositors.
5. What is demand deposit?
Ø The
deposits in the bank can be withdrawn on demand, these deposit are called
demand deposits.
6. What is cheque?
Ø A
cheque is a paper instructing the bank to pay a specific amount to the person
in whose name the cheque has been issued.
7. Mechanism of bank or How banks earns
profit?
Ø People
deposit there surplus money in the banks. And banks give interest to that
deposit.
Ø Banks
gives the deposits to the barrower in the form of loan and charges higher rate
of interest than what they offer to the deposit.
Ø The
difference between what is charged from borrowers and what is paid to
depositors is the main source of income to the bank.
8. How much money banks can hold as cash
in India?
Ø Banks
in India can hold 15% of the deposit as cash.
9. What is credit?
Ø Credit
refers to an agreement in which the lender supplies the borrower with money,
goods or service in return for the promise of future payment.
10. How credits play a positive role? Or
How credits promote the earning of a people?
Ø Ex:
Salim has received an order for making 3000 pairs of shoes.
Ø Now
he needs money for the purchase of labour and raw material.
Ø He
took leather in credit from leather supplier.
Ø He
obtains advance payment from the trader who placed the order.
Ø He
manufactured the 3000 pairs of shoes and repaid the credit to the leather
supplier and trader.
Ø He
also earned good profit.
11. How credits affect the people? Or
How credits pushes a person into debt trap?
Ø Ex:
Swapna a farmer having 3 acres of land.
Ø She
takes loan from the money lender to purchase the pesticide who charges high
interest.
Ø But
her crop fails due to poor season.
Ø Now
she unable to repay the loan. So the debt increased very shortly.
Ø She
sold the part of the land and repaid the loan
Ø Credits
pushes a person into a debit trap when risk is more like agriculture and also
in taking loan for a high interest from a money lender.
12.What is terms of credit?
Ø Interest
rate, collateral,mode of repayment and time period.
13.What is collateral?
Ø Collateral
is an asset that the borrower owns (such as land, building, vehicle, livestock
and deposits with bank) and uses this as a guarantee to a lender until the loan
is repaid.
14.Differentiate formal source of credit
and informal source of credit.
|
|
Formal
source of credit
|
Informal
source of credit
|
|
1.
|
Availing
loan from banks and co operatives.
|
Money
lenders, traders, relatives, friends and others.
|
|
2.
|
Service
is the aim.
|
Profit is
the aim.
|
|
3.
|
Charges
less interest
|
Charges
very high rate of interest
|
|
4.
|
Reserve
Bank of India monitors these organizations.
|
No
monitoring agency involved in this process.
|
15.How informal lender affect the
people?
Ø Charges
high rate of interest.
Ø Larger
part of the earning will go in the repayment of the credit.
Ø Some
time the amount of repayment may go higher than the income of the borrower.
16. How source of credit differ from the
economic status of the people?
|
|
Class
|
Formal
source
|
Informal
source
|
|
1.
|
Poor
|
15%
|
85%
|
|
2.
|
House
hold with few asset
|
47%
|
53%
|
|
3.
|
Well off
household
|
72%
|
28%
|
|
4.
|
Rich
household
|
90%
|
10%
|
Ø Poor
people hesitate to go to banks for the credit because of the formalities, need
of collateral. They are able to get the loan from a private moneylender easily.
Ø Ignorance
is also one of the reasons for more credit from informal source.
Ø Sources of credit as per Rural household
in India 2012
Commercial banks= 25%, cooperative
Banks =25%, money lender =
33%, friends and
relatives=8%
17. How Self Help Group (SHG) works?
Ø 15-20
neighbourhood can join together form SHG.
Ø The
groups meet regularly and save the money, which varies from Rs.25 to Rs.100.
Ø Member
can take small loans from the group.
Ø After
two years is the group is regular in saving they are eligible for availing loan
from the bank.
Ø Members
can utilize that loan for a productive purpose.
18. Advantages of SHG
Ø Poor
people will get the loan easily
Ø Money
lender can be avoided.
Ø Problem
of lack of collateral can be avoided.
Ø Rural
women to become financially self – reliant.
Ø Through
the meeting social awareness will increase.
19. Grameen banks
Ø Grameen
banks are founded by the Dr.MuhammadYunus of Bangladesh.
Ø It
was started in 1970.
Ø Now 2014
it has 8.63 million borrowers and spread around 81,390 villages of Bangladesh.
Ø Almost
all the borrowers are women and belong to poorest sections of the society.
Ø They
believe that if loans are available for lot of small people with appropriate
conditions, biggest development of wonder is possible.
20. In what ways does the Reserve Bank
of India supervise the functioning of banks? Why is this necessary?
Ø RBI
monitors the cash balance of the banks.
Ø RBI
fixes the interest ratio to all banks.
Ø RBI
fixes the Cash Reserve Ratio.
Ø All
the banks have to submit the reports regularly.
Ø Due
the monitoring of the RBI the real purpose of banks can be achieved.
Ø The
banks cannot in exploitative process. The banks cannot charge very high rate of
interest and in humanistic conditions for credit.
=============================================================
Economics
– Chapter 4.Globalisation and Indian Economy
1. Multi National Corporations
Ø MNC
is a company that controls production in more than one nation.
Ø MNC’s
set up office and factories for production in regions where land, labour, raw
material are available cheaply.
Ø Due
to large scale production MNC can reduce the production cost and sell at cheap
price.
2. How a multinational company earns
more profit?
Ø MNC’s
not only selling the goods globally but also produce the goods globally.
Ø Production
process is divided into small parts and spread out across the globe.
Ø Ex:
China provides cheap manufacturing location
Ø Mexico
and Easter Europe are useful for their closeness to the market of U.S.A and
Europe.
Ø India
has skilled engineers and also large English speaking population provides the
customer care services.
Ø So
MNC’s can cut the cost up to 50 – 60 percent.
3. What is investment?
Ø The
money spends to buy the factors of production like land, building, machines and
equipment and labour are called investment.
4. How local company will be promoted by
a MNC or How MNC’s enter into the country?
Ø MNC’s
provide money for additional investment to local small scale company.
Ø MNC’s
might bring the latest technology for production.
Ø Sometime
MNC’s buys the local companies and then expand the production.
Ø Ex
1:Cargil foods bought small companies like Parakh foods which had large
marketing network and also four oil refineries, now the control shifted to
Cargill.
Ø Cargill
is the largest producer of edible oil in India.
Ø Ex:2
Ford Motors came to India in1995 and tie up Mahindra and Mahindra a jeep and
truck manufacturing company in India. Invested 1700 crore, setup a large plant
at Chennai.
Ø By
2014 Ford produced 77,000 car in India, another 77,000 cars are exported to
South Africa, Mexico and Brazil.
5. What is the basic function of foreign
trade?
Ø New
market for the products
Ø More
choice for the consumer.
Ø Producer
can sell the goods not only in local market but also he is now exposed to
international market.
Ø Producers
in the two countries now closely compete against each other even though they
are separated by thousands of miles.
Ø It
is increasing the job opportunities.
6. Merits of Globalization or advantages
of Globalization.
Ø Increase
of foreign investment and foreign exchange.
Ø Flow
of technology globally.
Ø Movement
of labour, capital, raw material and technology.
Ø Integration
of markets
Ø Countries
are connected through the trade
Ø Advancement
of one part of the world will be shared to other part.
7.Using of Information Technology in
globalization
Ø Ex:
A news magazine published in London readers is designed in Delhi office.
Ø Delhi
office get the information from the internet and designing work is done on a
computer.
Ø After
printing, the magazines are sent by air or London.
Ø The
payments are made through e banking.
8.What is liberalization?
Ø Removing
barriers or restriction set by the government is called liberalization.
Ø With
liberalization of trade, businesses are allowed to make decisions freely about the import and export.
Ø The
government imposes much less restriction over the tax and term and conditions
of trade.
9.Trade barrier
Ø Tax
on imports is an example of trade barrier.
Ø Governments
can use trade barriers to increase or decrease the flow of a goods.
Ø Government
decide what kind of goods and how much of each should come into the country.
Ø Before
1991 there was more restriction over the imports in India. Only the essential
items like fertilizers and petroleum was imported a lot other goods were
restricted much to control the outflow of foreign exchange.
Ø During
1991 India accepted the Globalisation, Liberalisation and Privatization so the
trade barriers are lifted. And Indian market was very much opened to the
international trade.
10. Impact of globalization in India
Positive impacts
Ø Greater
competition for Indian producers.
Ø Quality
of goods improved and now they available at low cost.
Ø Local
companies are selling raw material to the foreign companies and earn lot of
profit.
Ø Top
Indian companies have been able to get benefit from the increased completion.
Ø Along
with foreign investment lot of newer technology also reached our country.
Ø Globalization
has increased job opportunities.
Ø Companies
like Tata motors, Infosys, Ranbaxy, Asian paints and Sundaram fasteners has
emerged as multinational companies.
Negative impacts
Ø Many
local small scale manufacturers lost their opportunities.
Ø Many
Indian products could not meet the challenge of foreign goods.
Ø Due
to the closing of small scale industries many went for the lower income jobs.
Ø More
exploitation of labour in the name labour flexibility.
11.Why foreign investors attracted
towards India?
Ø Special
Economic Zones has been setup with world class facilities like electricity,
Water, Roads, Transport, Storage, recreational and educational facilities.
Ø Production
units in SPZ do not have to pay taxes for an intial period of five years.
Ø Government
has also allowed flexibility in the labour laws to attract the foreign
investors.
Ø Now
there is labour problems like intense pressure of work and low salary etc.,
12. Struggle for a fair globalization
Ø People
with education, skill and wealth have made the best use of the new
opportunities. On the other hand there are many people who have not shared the
benefits.
Ø Fair
globalization would create opportunities for all, and also ensure that the
benefits of globalization are shared better.
Ø Policies
of the government must protect not only of the rich and the powerful, but all
the people in the country.
Ø Labour
laws should be implemented.
Ø If
necessary, the government can use trade and investment barriers. It can negotiate at the WTO for fairer rules.
13.Why
do developed countries want developing countries to liberalise their trade and
investment?
Ø
Human resource of the developing country can
be utilized.
Ø
Developed countries can get raw material from
the developing countries.
Ø
Developed countries can utilize the cheap
labour power of the developing countries.
Ø
Developed countries can get big market for
their products.
Ø
Commodities can be produced at a cheaper cost
due to the availability of the big market and cheap conditions.
=======================================================
1.How
consumers are exploited in the market place?
Ø Shopkeepers can give the commodity
weigh less.
Ø
Possibility
of giving adulterated goods.
Ø
Giving
sub standard goods.
Ø
Giving
defective goods.
Ø
Charge
more than the MRP
Ø False claims or information about the
product
2.How
do producers give false claims?
Ø By giving exaggerated information in media about their products.
Ø
Ex
: A milk powder selling company claimed that their powder is better than the
mother’s milk, after a long struggle the company accepted.
Ø Cigarette manufacturing companies in
earlier not accepted that their product could cause cancer.
3.Consumer
movements
Ø In India consumer movements started
with Rampanth food shortages, hoarding, black marketing, adulteration of food
and edible oil.
Ø
Consumer
organization formed in the 1960’s.
Ø
Till
the 1970’s consumer movement were largely engaged in writing articles and
holding exhibition.
Ø
1985
united nations adopted the UN guidelines for consumer protection.
Ø
Today
consumer international has become an umbrella body of 240 organisations from
100 countries.
Ø In 1986 Indian government has passed a
act called Consumer Protection Act 1986 called COPRA.
4.Right
to be informed
Ø Producer has the responsibility to
give the information about the product like
batch no, Manufacturing date, Expiry date, compositions, quantity, MRP
etc.,
5.Right
to choose
Ø The shopkeeper should not compel us to
purchase particular product.
Ø Ex:
Many times shopkeeper can tell that gas cylinder will be given when Gas
stove is purchased.
6.Right
to seek redreesal
Ø Consumer has the right to seek
redreesal against the unfair trade practices and exploitation.
Ø Consumer can go to the Consumer
councils, District Consumer court, state Consumer court, National Consumer
court.
7.Right
to represent:
Ø This act has enabled us as consumers
to have the right to represent the consumer court.
8.ISI
and Agmark
Ø These organizations are standard
organizations ensure the quality of the product.
Ø
These
organizations develop quality standards for many products.
Ø
It
is not compulsory for the producers to follow standards.
Ø
Risky
products like LPG cylinders, food colours packaged drinking water and cement
etc., it is mandatory.
==========================================================
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