RBSE Solutions Class 11 Economics Chapter 2 Nature and Scope of Economics

RBSE Class 11 Economics Chapter 2 Multiple Choice Questions

Question 1. Normative science is associated with :
(a) What is it
(b) What ought to be done
(c) from where is it
(d) from where was it
Answer: (b) What ought to be done
In simple words: Normative science deals with what "should" or "ought" to be in economics, focusing on ideal situations and value judgments.

🎯 Exam Tip: Remember that normative statements express opinions or values, often using words like 'ought' or 'should', and cannot be tested as true or false.

Question 2. Positive science is associated with
(a) What is it
Answer: (a) What is it
In simple words: Positive science in economics explains things as they are, like facts, focusing on what "is" happening without saying if it's good or bad.

🎯 Exam Tip: Positive statements are factual and can be tested and proven true or false, unlike normative statements.

Question 3. 'What ought to be done' is a subject matter of :
(a) Positive Science
(b) Normative Science
(c) Art
(d) None of the options
Answer: (b) Normative Science
In simple words: When we talk about what "should be done," we are looking at normative science, which involves opinions and value judgments in economics.

🎯 Exam Tip: Differentiate clearly between positive (what is) and normative (what ought to be) economics in your answers.

RBSE Class 11 Economics Chapter 2 Very Short Answer Type Questions

Question 1. Into how many parts is the subject matter of economics divided?
Answer: The subject matter of economics is divided into 5 main parts.
In simple words: Economics is studied by breaking it down into five key areas.

🎯 Exam Tip: While the question only asks for the number, briefly listing the five parts (Consumption, Production, Exchange, Distribution, Public Finance) can demonstrate a deeper understanding if time permits.

Question 2. What is consumption?
Answer: Consumption is an economic activity where people use goods and services. This is done to directly satisfy their personal and group needs.
In simple words: Consumption means using goods and services to meet our needs and wants.

🎯 Exam Tip: When defining economic terms, always include keywords like 'economic activity', 'goods and services', and 'satisfaction of wants'.

Question 3. What is the meaning of production?
Answer: Production is about increasing the usefulness or value of goods and services. It means creating something new or making existing things more valuable.
In simple words: Production is making things or adding value to them.

🎯 Exam Tip: For definitions, use clear, concise language. Mentioning "utility" or "value" is key for production.

Question 4. What is distribution?
Answer: Distribution refers to how income is shared among the different factors used to produce goods and services. These factors include land, labor, capital, and entrepreneurship.
In simple words: Distribution is about how money earned from making things is shared among the people and resources involved.

🎯 Exam Tip: Always link distribution to the factors of production (land, labor, capital, entrepreneurship) for a complete answer.

Question 6. What is positive science?
Answer: Positive science in economics explains the relationships between causes and their results. It does not comment on whether something is good or bad. It simply describes how things are, which is why it's also called real science.
In simple words: Positive science tells us what is happening and why, without judging if it's right or wrong.

🎯 Exam Tip: Emphasize that positive science focuses on 'what is' and deals with factual analysis, not value judgments.

Question 7. What is normative science?
Answer: Normative science in economics looks at policy-related facts. It also explains what actions "should be taken" in certain situations. It focuses on what ought to be done.
In simple words: Normative science talks about what should be done in economics, often giving advice or opinions.

🎯 Exam Tip: Highlight that normative science suggests 'what ought to be' and involves recommendations or policy prescriptions.

Question 8. What is an art?
Answer: An art is a field of knowledge that shows the best way to reach certain goals. It's about using skill to achieve a desired outcome.
In simple words: Art is about knowing the best way to do something to reach a goal.

🎯 Exam Tip: Connect the definition of art to practical application and achieving objectives effectively.

Question 9. In the form of normative science, which types of questions are solved by economics?
Answer: As a normative science, economics answers questions about what "should be done" in a specific situation. It helps in making choices based on what is considered best or ideal.
In simple words: Normative economics helps decide what actions should be taken in different situations.

🎯 Exam Tip: For normative economics questions, always link the answer to 'what ought to be' or 'what should be done'.

RBSE Class 11 Economics Chapter 2 Short Answer Type Questions

Question 1. Describe the components of the subject matter of economics.
Answer: The subject matter of economics consists of 5 main components:
• Consumption: This is an economic activity where people use goods and services to directly satisfy their personal and group needs.
• Production: This is about creating goods and services or increasing their value and usefulness.
• Exchange: This involves the buying and selling of products or services.
• Distribution: This involves how the income earned from production is divided among the various resources like land, labor, capital, and entrepreneurship.
• Public Finance: This branch studies government income, spending, public debt, how deficits are funded, and tariff policies.
In simple words: Economics covers five main areas: how people use things (consumption), making things (production), buying/selling things (exchange), how money is shared (distribution), and government finances (public finance).

🎯 Exam Tip: Clearly define each component with a brief explanation to demonstrate a comprehensive understanding of economics' scope.

Question 2. Describe the limitations of economics.
Answer: Here are the limitations of economics:
1. Economics is a social science, so it only studies human activities. It does not look at the activities of animals, birds, or other living things.
2. It does not study the actions of abnormal or anti-social individuals.
3. Economics only focuses on activities that can be measured in terms of money. It provides help for practical problems but does not always give clear solutions.
In simple words: Economics has limits because it only studies human actions that involve money and does not look at unusual behavior or animal activities. It also does not always give exact solutions to problems.

🎯 Exam Tip: When discussing limitations, focus on the scope of economic study, such as human behavior, measurability, and the lack of definitive solutions.

Question 3. "Economics is a positive science". Explain this statement.
Answer: As a positive science, economics explains the relationship between causes and effects. It answers questions like "what is it?", "why does it happen?", and "how does it happen?". It does not discuss the good or bad points, correctness, or faults of economic activities. Instead, it relies on facts and logic.
In simple words: Positive economics just describes and explains economic facts and how they are linked, without giving opinions on whether they are good or bad.

🎯 Exam Tip: For a statement like this, explain what positive science means by giving examples of the types of questions it answers and what it *does not* do (i.e., avoids value judgments).

Question 4. "Is economics a science?” Clarify this statement.
Answer: Science is an organized and complete way of studying knowledge that explains how causes and effects are related. Economics does a detailed analysis of events, studying them step-by-step. Based on this, it makes predictions about facts and forms economic principles and rules. It uses a scientific method to understand economic events and their outcomes. An economist can also explain economic situations correctly by creating standard rules. Economics can also make predictions about future economic activities. Modern tools like mathematics, statistics, and computers have made its predictive power even stronger. Economics systematically studies only one subject, focusing on interconnected activities like consumption, production, exchange, and distribution, which are all related to money. The laws of economics are tested like in any other science and apply to people everywhere, based on human nature. Many economic rules, such as the law of diminishing utility and the law of demand, explain cause and effect, proving that economics is indeed a science.
In simple words: Yes, economics is a science because it studies things in an organized way, looks at cause and effect, makes predictions, and forms rules, just like other sciences.

🎯 Exam Tip: To clarify if economics is a science, provide multiple arguments such as its systematic study, cause-effect relationships, predictive power, and the validity of its laws.

RBSE Class 11 Economics Chapter 2 Long Answer Type Questions

Question 1. Is economics a science or an art or both? Explain.
Answer:
**Economics as a Science:**
Science is a systematic and complete study of knowledge that explains the relationship between cause and effect. It analyzes incidents, studies them thoroughly, and based on this, it forecasts and predicts facts. Economics uses a scientific method to understand the causes and consequences of economic events and to build economic principles and rules. It uses scientific methods to interpret economic events, making accurate forecasts. It also systematically studies wealth-related activities, examining capabilities and establishing factor-result relationships. Thus, economics is a science.

**Economics as an Art:**
In general, art means achieving a goal with skill. Art provides practical knowledge, not only analyzing problems but also offering solutions. An economist is uniquely positioned to make final decisions on economic problems. The goal of economics is to maximize societal welfare. The policies and actions adopted by economists or the government to achieve specific goals are considered an art. The practical use of economic rules and principles makes economics an art. Economists today often focus on solving real-world problems like price increases, unemployment, and economic development, which shows its artistic aspect. Therefore, considering economics as an art is appropriate.

**Economics as Both Science and Art:**
Economics is both a positive and a normative science. It studies both the theoretical and practical aspects of its subject. The theoretical side relates to its scientific nature, while practical economics relates to art. So, theoretical economics is a science, and practical economics is an art. An economist can act as both a scientist and a responsible citizen, advising on important national issues.
In simple words: Economics is both a science because it uses systematic study and facts, and an art because it applies these ideas skillfully to solve real-world problems and achieve goals.

🎯 Exam Tip: For a comprehensive answer, break down the explanation into "Economics as a Science" and "Economics as an Art," then conclude by showing how it encompasses both.

Question 2. Explain the nature and domain of economics.
Answer: The nature and scope of economics are often debated due to ongoing changes in economic activities and different definitions of economics. Professor Keynes suggested three main elements that define the scope of economics:

1. **Subject Matter of Economics:** This is divided into five parts:
• Consumption
• Production
• Exchange
• Distribution
• Public Finance

2. **Nature or Characteristics of Economics:** This involves looking at economics as a science, as normative or positive, and as an art.
• **Nature of Economics as a Science:** It is a systematic study of knowledge that explains cause and effect, analyzing incidents and making predictions based on facts. Economics uses a scientific method to understand economic events.
• **Nature of Economics as Normative or Positive:** As a positive science, economics describes factual relationships (what is, why it is so, how it happens) without judging good or bad. As a normative science, it analyzes policy-related facts (what ought to be done, what should be done in a situation) and comments on the merits and demerits of economic actions.
• **Nature of Economics as an Art:** It is the skill of achieving objectives and provides practical knowledge. An economist makes decisions on economic problems, aiming to maximize welfare, and the policies adopted are seen as an art.

3. **Relationship Between Economics and Other Sciences:** This examines how economics connects with fields like mathematics, statistics, and sociology.
In simple words: The nature of economics involves whether it's a science or an art, or both, and whether it describes facts or gives advice. Its domain covers five key areas: consumption, production, exchange, distribution, and public finance, and how it relates to other subjects.

🎯 Exam Tip: Structure your answer clearly using sub-headings for each element of nature and domain. Provide concise explanations for each point, especially the five parts of the subject matter.

Question 3. What is the meaning of science? Is economics a science? Elucidate.
Answer: Science is an orderly and thorough study of knowledge that explains the relationship between cause and effect. It objectively analyzes events, studies them systematically, and based on this analysis, forecasts and predicts facts.

**Economics as a Science:**
1. **Systematic Procedure:** Economics uses a scientific method to understand causes and effects of economic activities, forming principles and regulations. It observes behavior, forms hypotheses, and evaluates them to create economic rules.
2. **Power to Explain:** Economists can interpret economic events correctly and appropriately by forming standard regulations.
3. **Power of Prediction:** Since economics can interpret, it can also predict economic activities. The use of mathematical, statistical procedures, and modern computers has further enhanced its predictive power.
4. **Systematic Study:** Economics systematically studies a single subject: interrelated activities of consumption, production, exchange, and distribution, all linked to wealth.
5. **Validity of Laws:** Economic laws, like those in other sciences, are examined for validity. They are based on human nature and apply universally.
6. **Relationship between Cause and Consequence:** Many economic rules (e.g., law of diminishing utility, law of demand) clarify cause and consequence, confirming economics as a science.
In simple words: Science is an organized study of cause and effect. Economics is a science because it uses a systematic approach, can explain and predict events, and has valid laws based on cause-effect relationships.

🎯 Exam Tip: Begin with a clear definition of science. Then, provide several distinct arguments, each with a brief explanation, to support why economics can be considered a science.

Question 4. Is economics a positive science or a normative science or both? Explain.
Answer: Economics can be considered both a positive science and a normative science.

**Economics as a Positive Science:**
Economists like J.B. Say, Senior, and Robbins have viewed economics as a positive science. According to Robbins, positive science studies facts that can be examined, while normative science deals with evaluations and findings. Here are arguments in favor of economics as a positive science:
1. It provides systematic, logical, and correct economic conclusions because the link between causes and consequences is logical.
2. Strong economic principles are formed based on factual viewpoints and scientific analysis.
3. Focusing only on factual economic activities would reduce disagreements among economists, leading to better understanding and faster development in economics.
4. Professor Robbins stated that people should work according to their best skills, realizing the scarcity of resources. An individual should specialize; otherwise, they waste time and money. Economists should focus on cause and effect, not on what "should" or "should not" be done.

**Economics as a Normative Science:**
Many economists, including Fraser, Henderson, and Quandt, consider economics to be a normative science. Here are arguments in its favor:
1. **Mankind is both emotional and logical:** Since individuals are emotional as well as logical, studying both human behavior aspects is crucial. Thus, economics must be both positive and normative.
2. **More Useful:** Economics aims for social welfare. Therefore, its role as a normative science, offering solutions and improvements, is more important. Economists should think about making economic activities more useful.
3. **More Realistic:** The nature of economics is always changing and developing into welfare economics. Topics like economic planning and social security are major subjects today. So, the normative aspect cannot be ignored.
4. **Helpful in societal betterment:** As a social science working for societal improvement, its normative aspect, which guides what policies should be adopted, cannot be overlooked.

From this discussion, it's clear that economics is both a positive and a normative science. While it can be seen as a pure, real science, it must also consider normative objectives for practical application.
In simple words: Economics is both a positive science (describing what is, based on facts) and a normative science (suggesting what should be done, based on values and policies). It uses facts and logic, but also helps make choices for a better society.

🎯 Exam Tip: To answer this thoroughly, explain both positive and normative aspects with supporting arguments for each, then provide a balanced conclusion that acknowledges both roles of economics.

Question 1. The classical economist is
(a) Adam Smith
(b) J.B.Say
(c) Senior
(d) All of the options
Answer: (d) All of the options
In simple words: Adam Smith, J.B. Say, and Senior are all considered important classical economists who laid the foundations of economic thought.

🎯 Exam Tip: Familiarize yourself with key figures in different schools of economic thought to correctly identify them in MCQs.

Question 2. The Welfare economist is
(a) Marshall
(b) Pigou
(c) J.S. Mill
(d) (a) and (b) both
Answer: (d) (a) and (b) both
In simple words: Both Marshall and Pigou are recognized as leading welfare economists who focused on how economics could improve societal well-being.

🎯 Exam Tip: Note that some economists can belong to multiple categories or schools of thought depending on their focus areas.

Question 3. The subject matter of economics is divided into how many parts?
(a) One
(b) Two
(c) Four
(d) Five
Answer: (d) Five
In simple words: The study of economics is typically broken down into five major sections to cover all its aspects.

🎯 Exam Tip: Remember the core divisions of economics to answer direct recall questions quickly and accurately.

Question 4. That economic action, which is related to the utility of goods and services for direct satisfaction of individual and collective necessity, is
(a) Consumption
(b) Utility
(c) Distribution
(d) Exchange
Answer: (a) Consumption
In simple words: The act of using goods and services to directly meet personal or group needs is called consumption.

🎯 Exam Tip: Understand the primary function of each economic activity to identify the correct term for its description.

Question 5. The action which is related to the purchase and sale of a commodity or resource-
(a) Utility
(b) Production
(c) Exchange
(d) Distribution
Answer: (c) Exchange
In simple words: Buying and selling goods or resources is known as exchange in economics.

🎯 Exam Tip: Distinguish clearly between concepts like utility (satisfaction), production (creation), exchange (trade), and distribution (sharing income).

Question 6. Sequential and thorough study of knowledge is called-
(a) Art
(b) Science
(c) Social Science
(d) None of the options
Answer: (b) Science
In simple words: A careful and step-by-step study of knowledge is what we define as science.

🎯 Exam Tip: Recall that a systematic and comprehensive approach is a hallmark of scientific study.

Question 7. States the cause-effect relationship
(a) Science
(b) Art
(c) Social Science
(d) None of the options
Answer: (a) Science
In simple words: Science helps us understand why things happen (causes) and what happens as a result (effects).

🎯 Exam Tip: The ability to identify cause-and-effect relationships is a fundamental characteristic of science.

Question 8. Under which subject are public income, public expenditure, public debt, deficit, financing, tariff policy, etc. studied?
(a) Distribution
(b) Exchange
(c) Public finance
(d) None of the options
Answer: (c) Public finance
In simple words: All matters related to government income, spending, debt, and financial policies are studied under public finance.

🎯 Exam Tip: Public finance specifically deals with the financial activities of the government and their impact on the economy.

Question 10. To achieve a certain goal, the policies adopted by the economist or government have been called-
(a) Science
(b) Art
(c) Both
(d) None of the options
Answer: (b) Art
In simple words: The way economists and governments apply policies skillfully to reach specific goals is considered an art.

🎯 Exam Tip: The practical application and strategic implementation of economic principles to achieve objectives highlight the 'art' aspect of economics.

RBSE Class 11 Economics Chapter 2 Very Short Answer Type Questions

Question 1. What is called the beginning and end of economics?
Answer: Consumption is known as both the beginning and the end of economics.
In simple words: Economics starts and finishes with how people use goods and services.

🎯 Exam Tip: This concept highlights the central role of consumer satisfaction and utility in economic theory.

Question 2. What are the main sources of production?
Answer: The main factors of production are land, labor, capital, organization, and entrepreneurship. These elements are essential for producing goods and services.
In simple words: The key things needed to make products are land, workers, money/tools, management, and people who take risks to start businesses.

🎯 Exam Tip: Always remember and list the five classical factors of production when asked about sources of production.

Question 3. How has the subject matter of economics become broader?
Answer: The subject matter of economics has broadened to include five main parts:
1. Consumption
2. Production
3. Exchange
4. Distribution
5. Public Finance
In simple words: Economics now covers more areas, including how people use goods, how things are made, how goods are traded, how wealth is shared, and how the government manages money.

🎯 Exam Tip: Recognizing the expansion of economics beyond simple transactions to broader societal functions is crucial.

Question 5. Why is exchange required?
Answer: Exchange is needed to ensure that manufactured goods reach consumers for consumption. It also helps meet people's various needs and wants.
In simple words: We need exchange (buying and selling) so that people can get the products they want and businesses can sell what they make.

🎯 Exam Tip: Explain exchange as a facilitator of both consumption and the fulfillment of demand and supply.

Question 6. Which activities related to material welfare are considered to be the subject matter of economics by Marshall?
Answer: Marshall considered economic activities focused on material welfare as the subject matter of economics. This means he focused on activities that increase human well-being through tangible goods and services.
In simple words: Marshall believed economics should study how people create and use things that improve their physical comfort and well-being.

🎯 Exam Tip: When discussing Marshall's view, emphasize his focus on 'material welfare' as central to economics.

Question 7. To what Is economics related in Adam Smith's wealth centred definition?
Answer: In Adam Smith's definition, economics is mainly related to earning and accumulating wealth. He saw economics as the study of how nations create and manage their wealth.
In simple words: Adam Smith thought economics was mostly about how to get and keep wealth.

🎯 Exam Tip: Link Adam Smith directly to the "wealth-centered" definition of economics in your explanation.

Question 8. Production, exchange, distribution etc., activities are done for what?
Answer: Economic activities like production, exchange, and distribution are all carried out ultimately for consumption. The goal is to provide goods and services that people can use.
In simple words: Everything from making to trading and sharing wealth is done so that people can finally use and enjoy goods and services.

🎯 Exam Tip: Highlight consumption as the ultimate objective that drives all other economic activities.

Question 9. Which activity is related to the sale-purchase of any commodity or resource?
Answer: The activity related to the sale and purchase of any commodity or resource is price determination. This involves setting the value at which goods and services are exchanged.
In simple words: Buying and selling goods involves deciding on their price.

🎯 Exam Tip: Understand that price determination is the core process that links buyers and sellers in an exchange.

Question 11. What is the result of collective efforts of various resources?
Answer: The result of the combined efforts of various resources (like land, labor, capital) is production. These resources work together to create goods and services.
In simple words: When different resources work together, the outcome is the creation of products or services.

🎯 Exam Tip: Connect the collective efforts of resources directly to the concept of production, emphasizing synergy.

Question 12. What is the paramount interest of the state at present?
Answer: Currently, the main interest of the state is to ensure the economic welfare of its people. This includes policies aimed at improving living standards and economic well-being.
In simple words: Today, the government's top goal is to make sure its people have a good economic life.

🎯 Exam Tip: In modern economics, state interest often shifts from mere wealth accumulation to broader economic welfare and social well-being.

Question 13. What is studied under public finance?
Answer: Under public finance, the study includes public income, public expenditure, public debt, how deficit financing is arranged, and tariff policies, among other things.
In simple words: Public finance studies government's money matters: how it gets money, how it spends, its debts, and its tax rules.

🎯 Exam Tip: List the key components of public finance to show a clear understanding of its scope.

Question 14. Define science.
Answer: Science is an organized and thorough study of knowledge that explains the relationship between causes and effects. It relies on systematic observation and experimentation.
In simple words: Science is an organized way to study facts and understand how one thing causes another.

🎯 Exam Tip: A good definition of science emphasizes its systematic nature and focus on cause-and-effect relationships.

Question 15. Which economists have accepted economics as a real (positive) science?
Answer: Among the notable classical economists, J.B. Say and Nassav Williams Senior, along with modern economist Robbins, regarded economics as a real (positive) science. They believed it focuses on what "is" rather than what "ought to be."
In simple words: Economists like J.B. Say, Senior, and Robbins saw economics as a positive science, meaning it deals with facts and what actually is.

🎯 Exam Tip: Naming specific economists associated with a particular viewpoint demonstrates broader knowledge of the subject.

Question 17. What does the word art means?
Answer: Art is a skill that shows the best way to achieve specific goals. It helps us apply knowledge in a practical way.
In simple words: Art means having a skill to do something well and achieve a goal.

🎯 Exam Tip: When defining "art" in economics, focus on its practical application and goal-oriented nature.

Question 18. Who can take the final decision on the problems which are purely economic in nature?
Answer: An economist is best suited to make final decisions on problems that are entirely economic in nature. They have the expertise to understand complex economic issues.
In simple words: An economist is the best person to decide on economic problems.

🎯 Exam Tip: Emphasize the role of an economist as a specialist in solving economic challenges.

Question 19. Who takes the decisions about problems like exchange rate, bank rate, etc.?
Answer: An economist makes decisions regarding issues such as exchange rates, bank rates, and similar financial matters. These decisions require specialized economic knowledge.
In simple words: An economist decides on things like exchange rates and bank rates.

🎯 Exam Tip: List key economic issues like exchange rates and bank rates to demonstrate knowledge of an economist's role.

Question 20. What is the main purpose of economics?
Answer: The main goal of economics is to make sure individuals and society achieve the highest possible level of well-being. It aims to maximize the welfare of people.
In simple words: Economics mainly aims to make people and society as happy and prosperous as possible.

🎯 Exam Tip: The core purpose of economics is always linked to welfare maximization; remember to include this keyword.

Question 21. How are most of the countries in the world resolving the economic problems?
Answer: Most countries around the world are solving their economic problems by focusing on economic development. This involves improving living standards and increasing wealth.
In simple words: Most countries solve economic problems by working towards economic development.

🎯 Exam Tip: "Economic development" is the key phrase when discussing how countries resolve economic issues on a global scale.

Question 22. What is the theory of economics related to?
Answer: The theoretical part of economics is connected to its scientific nature. It deals with understanding how economic principles work systematically.
In simple words: Economic theory is about the scientific side of economics.

🎯 Exam Tip: Link the theoretical aspect of economics directly to its scientific qualities for a clear answer.

Question 24. What activities are studied in economics?
Answer: Economics specifically studies only economic activities. These are actions related to producing, consuming, and exchanging goods and services.
In simple words: Economics looks at activities that involve money and resources.

🎯 Exam Tip: Clearly state that economics focuses exclusively on *economic* activities, not all human actions.

Question 25. Robbins has considered economics to be which science?
Answer: Lionel Robbins considered economics to be a human science. He focused on how humans make choices when resources are scarce.
In simple words: Robbins thought economics was a human science.

🎯 Exam Tip: Remember Robbins's perspective that economics is fundamentally about human behavior and choice in the face of limited resources.

Question 26. What is determined under distribution?
Answer: In distribution, we determine the national income and how it should be shared among different development and welfare programs. It's about how the total wealth is divided.
In simple words: Distribution in economics figures out how national income is divided for development and welfare.

🎯 Exam Tip: The two key components of distribution are determining national income and its allocation for developmental and welfare programs.

Question 27. What is ensured by distribution?
Answer: Distribution makes sure that the national income is shared fairly among all the factors that contribute to production. It aims for equitable sharing of wealth.
In simple words: Distribution makes sure national income is shared fairly among all contributors.

🎯 Exam Tip: "Fair distribution" and "all contributive factors" are essential points when explaining the role of distribution.

Question 28. Is economics a science?
Answer: Yes, economics is considered a science. It involves a complete and thorough study of knowledge, showing the cause-and-effect relationships of economic events.
In simple words: Yes, economics is a science because it systematically studies cause and effect in the economy.

🎯 Exam Tip: To prove economics is a science, highlight its systematic study and focus on cause-and-effect relationships.

Question 29. Economics has the power to predict, how?
Answer: Economics can interpret and explain economic events. Because of this ability, it also has the power to predict future economic outcomes and trends.
In simple words: Economics can explain things and also predict what might happen in the future.

🎯 Exam Tip: Connect economics' ability to interpret and explain with its power to predict for a comprehensive answer.

Question 31. Which science investigates the policy-related facts?
Answer: Normative science is the branch of economics that investigates facts related to policy decisions. It focuses on what "ought to be" in economic policy.
In simple words: Normative science looks into facts that help make economic policies.

🎯 Exam Tip: Remember that normative economics deals with value judgments and policy recommendations.

Question 32. Realizing the scarcity of resources, mankind should perform work according to the best of his skills. Who said that?
Answer: This statement was made by Lionel Robbins. He emphasized that given limited resources, people should use their abilities efficiently.
In simple words: Robbins said that because resources are few, people should use their best skills for work.

🎯 Exam Tip: Associate Lionel Robbins with the concept of scarcity and efficient resource allocation in economics.

Question 33. What is the role of economics as a normative science?
Answer: As a normative science, economics highlights the good and bad points of economic events and activities. It helps in achieving economic welfare for both society and individuals by suggesting what actions "should" be taken.
In simple words: Normative economics points out the good and bad in economic events, guiding us toward better welfare for everyone.

🎯 Exam Tip: When explaining normative economics, always include the idea of "merits and demerits" or "what should be" and its link to welfare.

Question 34. Give an argument in favour of not considering economics to be an art.
Answer: One argument against considering economics as an art is that its nature is like a pure science. To maintain this scientific relationship, it's argued that treating it as an art isn't appropriate. The scientific side focuses on objective analysis rather than practical application.
In simple words: Some people say economics is not an art because it is more like a pure science that focuses on facts.

🎯 Exam Tip: Focus on the "pure science" aspect and its emphasis on objective study as an argument against categorizing economics as an art.

Question 35. Give arguments in favour of considering economics to be an art.
Answer: If economics is studied as an art, it helps in checking economic principles and determining if they are correct or false. Art provides practical knowledge, allowing economists to apply theories to real-world problems. It helps in achieving specific economic goals.
In simple words: Economics is an art because it helps test economic ideas and apply them to real-world problems to reach goals.

🎯 Exam Tip: Arguments for economics as an art should highlight its practical application, problem-solving capabilities, and its role in evaluating principles.

Question 36. What are two forms of an economist like a scientist?
Answer: An economist can be seen in two forms: as a scientist and as a good citizen. As a scientist, they objectively analyze economic phenomena, and as a good citizen, they use their knowledge to contribute to national well-being.
In simple words: An economist works as a scientist to study economic facts and as a good citizen to help the country.

🎯 Exam Tip: Differentiate between the objective role (scientist) and the societal role (citizen) of an economist.

RBSE Class 11 Economics Chapter 2 Short Answer Type Questions

Question 1. Why is there a difference of opinion about the nature and the scope of economics?
Answer: Currently, there are many disagreements among economists about the nature and scope of economics. This is due to constant changes in human economic activities and different definitions of economics that have emerged over time. These variations lead to diverse viewpoints.
In simple words: Economists disagree on what economics is and what it covers because human economic activities keep changing and different definitions exist.

🎯 Exam Tip: Mention "constant change in economic activity" and "conflicting definitions" as the primary reasons for differing opinions on economics' nature and scope.

Question 2. Explain the opinion of the classical economists.
Answer: Well-known classical economists like Adam Smith, J.B. Say, and J.S. Mill defined economics based on wealth. According to Adam Smith's definition, economics focuses on how to earn and accumulate wealth. This perspective covers everything related to generating, using, and distributing wealth.
In simple words: Classical economists like Adam Smith believed economics was about making and keeping wealth.

🎯 Exam Tip: Identify key classical economists and emphasize their "wealth-centered" definition of economics.

Question 3. Explain consumption.
Answer: Consumption is an economic activity where goods and services are used to directly satisfy personal and group needs. It is considered both the beginning and end of economics because all economic activities like production, exchange, and distribution are ultimately done for consumption.
In simple words: Consumption is using goods and services to meet our needs. It's the main reason for all economic activities.

🎯 Exam Tip: Define consumption as a satisfaction-driven activity and highlight its central role as the "beginning and end" of economic processes.

Question 4. Clarify the exchange process.
Answer: Exchange involves selling or buying a product or service. It's necessary to ensure that produced goods are consumed and wants are fulfilled. The invention of money made exchange much easier by overcoming the problems of the barter system.
In simple words: Exchange is buying and selling things to meet needs. Money made it much simpler than trading without money.

🎯 Exam Tip: Explain exchange as trade (sale/purchase) and note how money's invention streamlined it by replacing the barter system.

Question 6. What is the 'cause effect' relationship of economics?
Answer: Many economic rules, like the law of diminishing utility, the law of equi-marginal utility, and the law of demand, explain how one event causes another. Based on these relationships, economics is considered a science.
In simple words: Economics shows how one thing leads to another, like cause and effect, which makes it a science.

🎯 Exam Tip: Provide specific examples of economic laws (e.g., diminishing utility, demand) to illustrate cause-effect relationships in economics.

Question 7. Why can't economics be objective like natural sciences?
Answer: Economics cannot be as objective as natural sciences because its main subject is human beings. Economics studies human economic activities, not non-living things. Economists themselves are human, so their opinions and beliefs can influence their analysis and discoveries, making complete objectivity difficult.
In simple words: Economics cannot be fully objective like natural sciences because it studies human behavior, and even economists have their own views.

🎯 Exam Tip: The core reason for limited objectivity in economics is its focus on human behavior and the human element of the researchers themselves.

Question 8. Definite predictions are not possible in economics, Why?
Answer: In economics, human behavior is studied, and this behavior changes unpredictably in ways not seen in other fields. Because of this uncertain human behavior, it's not possible to make exact predictions. Economists don't have full control over the factors influencing human economic decisions.
In simple words: Exact predictions are hard in economics because human behavior, which it studies, is always changing and unpredictable.

🎯 Exam Tip: The unpredictability of human behavior is the main reason why definite predictions are difficult in economics, unlike in natural sciences.

Question 10. Explain economics as a normative science.
Answer: Normative science in economics analyzes facts related to policy matters, asking "what should be done?" in specific situations. It highlights the good and bad aspects of economic events and activities, offering guidance on ideal actions.
In simple words: Normative economics looks at economic facts and suggests what actions should be taken to improve things.

🎯 Exam Tip: When explaining normative economics, remember it deals with "what ought to be" and offers policy guidance, including merits and demerits.

Question 11. Give arguments in favour of not considering economics as an art.
Answer: 1. Art provides practical information about a subject. While science helps create principles, art provides the practical role. If economics is seen as a science, then it should not be considered an art. 2. The nature of economics is similar to a pure science. To maintain this scientific character, it is argued that economists should focus only on analysis and not on artistic application.
In simple words: Economics should not be called an art because it is like a pure science that focuses on facts and analysis, not just practical skills.

🎯 Exam Tip: Differentiate clearly between the theoretical, principle-forming role of science and the practical application aspect of art when arguing this point.

Question 12. Give arguments in favour of economics to be considered as an art.
Answer: 1. Only an economist can make the final decisions on problems that are purely economic, such as exchange rates or bank rates. They provide solutions based on their specialized knowledge. 2. The main goal of economics is to maximize welfare for individuals and society. The policies adopted by economists or governments to achieve specific goals are considered an art, as they require skill in application.
In simple words: Economics is an art because economists use their skills to solve economic problems and create policies to improve society's well-being.

🎯 Exam Tip: Emphasize the practical problem-solving and policy-making aspects of economics to support its classification as an art.

Question 13. Economics is both an art and a science. How?
Answer: Economics is both an art and a science because it involves a systematic study of knowledge that explains cause and effect (science), and it also applies this knowledge skillfully to achieve goals and solve problems (art). It uses scientific methods to understand the world and artistic approaches to implement solutions.
In simple words: Economics is both a science because it studies facts and cause-effect, and an art because it uses those facts to solve real-world problems skillfully.

🎯 Exam Tip: When explaining this dual nature, clearly define how economics fulfills both roles – systematic study for science and skillful application for art.

Question 14. State two limitations of economics.
Answer: 1. Economics does not study the activities of abnormal or unsocial human beings. Professor Robbins considered economics as a human science, focusing on rational choice, not all human behavior. 2. Economics only studies economic activities. It does not look at activities of animals, birds, or other living organisms. It only focuses on actions that can be measured in terms of money, even though it helps solve practical issues without giving definite solutions.
In simple words: Two limitations are that economics does not study abnormal human actions and only focuses on activities that involve money, not all living things.

🎯 Exam Tip: Remember to highlight the exclusion of non-economic or irrational human behavior and the focus on measurable economic activities as key limitations.

Question 15. Explain the arguments in relation to economics being a normative science.
Answer: Economists like Fraser, Henderson, and Quandt viewed economics as a normative science based on these arguments: * **Mankind is both emotional and logical:** Individuals are emotional as well as logical. Therefore, economics must study both aspects of human behavior, making it a normative science alongside a positive one. * **More useful:** Economics serves as a tool for social welfare. Its role as a normative science becomes crucial for making it more useful and effective, as it guides what should be done to improve society. * **Wrong argument of division of labor:** It's incorrect to say economists should only interpret cause-and-effect, leaving solutions to policymakers. This approach would make economic analysis dull and inefficient. Economists should also have the power to make decisions. * **More realistic:** The field of economics is always changing. Today, welfare economics and subjects like economic planning and social security are important. Ignoring the normative side would make economics less realistic and incomplete.
In simple words: Economics is normative because humans are emotional and logical, it's more helpful for social welfare, economists should also solve problems, and it's more realistic for today's changing economic world.

🎯 Exam Tip: For arguments supporting normative economics, focus on human behavior's emotional aspect, social welfare, the economist's role in solutions, and the dynamic nature of economic issues.

Question 17. Explain the concept in relation to the subject matter of economics.
Answer: Lionel Robbins defined economics based on the scarcity of resources and unlimited wants. This definition greatly expanded the field. Robbins saw economics as a human science where the main focus is on making economic choices between endless needs and limited resources.
In simple words: Robbins defined economics as making choices due to scarce resources and endless wants, which expanded what economics studies.

🎯 Exam Tip: Connect Robbins's definition to the concepts of "scarcity," "unlimited wants," and "economic choice" for a complete answer.

Question 18. Explain public finance as a subject of economics.
Answer: Public finance is a branch of economics that studies public income, public expenditure, public debt, deficit financing systems, and tariff policies, among other things. Over time, the scope of what is included in public finance continues to evolve.
In simple words: Public finance studies government money-like income, spending, debt, and taxes. Its focus changes over time.

🎯 Exam Tip: List key elements of public finance (income, expenditure, debt, taxes) and mention its dynamic nature.

Question 19. State two arguments in favour of economics as a science.
Answer: 1. **Use of scientific procedure:** Economics employs a scientific method to understand economic activities and form principles. It involves observing behavior, forming hypotheses, and evaluating them, much like other sciences. 2. **Power to explain:** Economists can interpret economic events accurately and appropriately by setting standard rules and theories. This ability to explain cause and effect is a hallmark of a science.
In simple words: Economics is a science because it uses scientific steps to study things and can explain why economic events happen.

🎯 Exam Tip: Focus on the methodological aspects (scientific procedure, hypothesis testing) and explanatory power as core arguments for economics as a science.

Question 20. Give two arguments in opposition of considering economics as a science.
Answer: 1. **Absence of Uniformity:** In economics, there is a lack of consistent understanding about specific events, meaning different economists may study the same event in various ways. This lack of a single, uniform method makes it less scientific. 2. **Disagreements:** There are often many disagreements among economists on a single issue. When experts cannot agree, it suggests that economics may not be as clear-cut and scientific as natural sciences.
In simple words: Economics is not fully a science because there is no single way to study events, and economists often disagree on the same topics.

🎯 Exam Tip: When arguing against economics as a science, emphasize the lack of uniformity in study methods and the prevalence of disagreements among economists.

RBSE Class 11 Economics Chapter 2 Long Answer Type Questions

Question 1. Is economics a science? Give arguments in its favour and opposition.
Answer: Science is a systematic and detailed study of knowledge that explains cause and effect. Science logically analyzes events, studies them systematically, and uses this analysis to forecast and predict facts. **Arguments in favor of economics as a science:** * **Use of scientific procedure:** Economics uses a scientific process to understand cause-and-effect relationships in economic activities and to create economic principles. This involves observing human behavior, forming and testing hypotheses, leading to the formation of economic rules. * **Power to explain:** An economist can correctly and appropriately interpret economic events by developing standard regulations and theories. * **Systematic study:** Economics involves the systematic study of a single subject – interrelated activities like consumption, production, exchange, and distribution – which are linked to wealth. * **Validity of laws:** Like other sciences, economics examines the validity of its laws. Economic laws are based on human nature and apply universally to people across the world. * **Relationship between cause and consequences:** Many economic principles, such as the law of diminishing utility and the law of demand, clarify cause and effect, which confirms that economics is a science. **Arguments against economics as a science:** * **Absence of Uniformity:** In economics, there's no single, uniform way to evaluate an event. Different economists may study the same event using various methods, leading to diverse conclusions. * **Disagreements:** Economists often disagree significantly on a single issue. Such widespread disagreement prevents economics from being considered a unified branch of science. * **Not objective:** Unlike natural sciences, economics cannot be fully objective because its subject matter is human beings. Economists, being human, have their own viewpoints and beliefs, which can influence their analysis and findings. * **Economic laws are not exact:** Natural science laws, like gravity, are fixed and absolute. Economic rules, however, are not always fixed and can be influenced by various factors.
In simple words: Economics is a science because it uses scientific methods, explains cause and effect, and has laws that apply broadly. But it is not a perfect science because economists often disagree, it's hard to be fully objective with human behavior, and its laws are not always exact like in physics.

🎯 Exam Tip: For this comprehensive question, ensure you provide balanced arguments for and against economics as a science, citing specific characteristics for each side.

Question 2. Into how many parts can the subject matter of economics be divided? Describe them in detail.
Answer: The subject matter of economics is traditionally divided into five main parts: * **Production:** This involves increasing the usefulness and value of goods and services. Making bread is an example. The main resources used in production are land, labor, capital, organization, and entrepreneurship. * **Exchange:** This process involves buying and selling products or services. Exchange is vital for consuming manufactured goods and fulfilling wants. The invention of money made exchange much easier by replacing the barter system, and the theory of price determination relies on currency. * **Distribution:** This refers to the division of income among the different factors of production (like rent for land, wages for labor, interest for capital, and profit for entrepreneurship). It determines national income and how it's allocated for development and welfare programs. It also ensures fair distribution of national income. * **Consumption:** This is the use of goods and services to directly satisfy individual and collective needs. It is considered both the beginning and end of all economic activities. * **Public Finance:** This branch studies public income (taxes), public expenditure (government spending), public debt, deficit financing, and tariff systems. Over time, the scope of public finance continues to change.
In simple words: Economics is divided into five parts: Production (making goods), Exchange (buying/selling), Distribution (sharing income), Consumption (using goods), and Public Finance (government's money matters).

🎯 Exam Tip: List all five components clearly and provide a brief, distinct explanation for each, focusing on their core function within economics.

Question 3. Explain the arguments regarding economics being a normative science and positive science.
Answer: **Arguments in favor of economics as a normative science:** Many economists, like Fraser, Henderson, and Quandt, believe economics is a normative science because: * **Humans are both emotional and logical:** Since individuals are both logical and emotional, economics needs to study both aspects of human behavior. This makes it essential for economics to also be a normative science. * **More realistic:** Economics is constantly evolving, with welfare economics, economic planning, and social security becoming major topics. Ignoring the normative aspect makes economics less realistic. * **Wrong argument of division of labour:** It's argued that economists should not just interpret cause-and-effect but also be involved in finding solutions. Limiting their role to mere interpretation would make the subject monotonous and less impactful. * **Helpful in betterment of the society:** As a social science working for societal improvement, economics cannot ignore its normative role, which guides actions towards better outcomes. **Arguments in favor of economics as a positive science:** Economists like J.B. Say, Senior, and Robbins regard economics as a positive science. Robbins stated that "Economics studies the facts which can be examined, while normative science studies the evaluations and findings." * **Realistic viewpoint for conclusions:** In economics, a realistic approach provides systematic, logical, and correct conclusions because the cause-and-effect relationship is inherently logical. * **Forms strong economic principles:** Actual viewpoints and scientific analysis help form strong economic principles based on real beliefs and facts. * **Reduces disagreements:** If economics focuses only on the authenticity of economic activities, it reduces disagreements among economists, increases understanding, and accelerates the field's development. * **Robbins's scarcity principle:** Professor Robbins argued that people should work according to their best skills, given scarce resources. They should specialize. Economists should focus on cause and effect, not on what "should" or "should not" be done.
In simple words: Economics is considered normative because it helps improve society by looking at what 'should be done', considering human emotions and evolving economic issues. It's also seen as positive because it uses logical facts to explain cause and effect, builds strong principles, and focuses on objective analysis of economic activities, as supported by thinkers like Robbins.

🎯 Exam Tip: Provide clear, distinct arguments for both normative and positive aspects, linking each to key concepts like "what ought to be" (normative) and "cause-effect" (positive).