Introduction — Economics STD 12 Humanities & Commerce — Question

Given below are four statements. Indicate for each whether it reflects an increase or decrease in demand; quantity demanded; supply; quantity supplied.

1. Air Deccan reduces its average plane fare by 30% in order to attract more passengers.
2. The government grants export subsidy to producers of oranges in Nagpur to increase the sale of oranges abroad.
3. Wheat farmers decide to withhold wheat as the market price is low.
4. OPEC decides to increase the international oil price.

Find out National Income.

S.No.	Contents	₹ (in crore)
(i)	Factor Income from Abroad	15
(ii)	Private Final Consumption Expenditure	600
(iii)	Consumption of Fixed Capital	50
(iv)	Government Final Consumption Expenditure	200
(v)	Net Current Transfer to Abroad	(-) 5
(vi)	Net Domestic Fixed Capital Formation	110
(vii)	Net Factor Income to Abroad	10
(viii)	Change in Stock	(-) 10
(ix)	Net Imports	(-) 20
(x)	Net Indirect Taxes	70

A consumer consumes only two goods X and Y. At a consumption level of these two goods, he finds that the marginal rate of substitution is higher than the ratio of the prices. Explain the reaction of the consumer.

Giving reason, classify the into intermediate or final goods.
Coal used by consumer households.

What does the negative sign in the formula of slope of demand curve indicate? Explain.

Explain the chain effects, if the prevailing market price is below the equilibrium price.

What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm.

Define current transfers.

What are the functions of a foreign exchange market?