CBSE Class 11 Economics Question Bank

CBSE Class 11 Economics - Question Bank. There are many more useful educational material which the students can download in pdf format and use them for studies. Study material like concept maps, important and sure shot question banks, quick to learn flash cards, flow charts, mind maps, teacher notes, important formulas, past examinations question bank, important concepts taught by teachers. Students can download these useful educational material free and use them to get better marks in examinations.  Also refer to other worksheets for the same chapter and other subjects too. Use them for better understanding of the subjects.

INTRODUCTION

1. DEFINE ECONOMICS.

Class 11 Economics: Question Bank

Unit 1: Introduction

Define economics.

Answer: Economics is the study of how people use their limited resources to satisfy their unlimited wants. Different economists have defined it in different ways. Adam Smith defined it as the study of wealth. Marshall defined it as the study of mankind in the ordinary business of life, that is, of material welfare. Robbins defined it as a science which studies human behaviour as a relationship between ends (unlimited wants) and scarce means which have alternative uses. Robbins' definition is the most widely accepted today.

Critically examine Marshall's definition of economics.

Answer: According to Marshall, economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and use of the material requisites of well-being.

1. Merit: It shifted the focus from wealth to human welfare, so it is called the welfare definition.
2. Criticism 1: It limits economics to material things only. Services such as those of a teacher or a doctor, which are non-material, are also economic activities.
3. Criticism 2: It studies only 'ordinary men' and ignores the others who are not in the ordinary business of life.
4. Criticism 3: Welfare cannot be measured exactly, because it is a matter of feeling. Also, it does not explain the problem of scarcity, which is the real basis of every economic problem.
5. Criticism 4: Robbins pointed out that economics should not make value judgments about which ends are good or bad. Marshall's definition is classificatory and normative.

Distinguish between economic and non-economic activities. To what extent is such a division appropriate and proper? Explain.

Answer:

Basis	Economic activities	Non-economic activities
Motive	Done to earn money or a livelihood	Done out of love, sympathy, duty, patriotism or social feeling
Measurement	Can be measured in terms of money	Cannot be measured in money
Examples	A farmer producing wheat, a doctor running a clinic, a teacher working in a school	A mother cooking for her family, a person helping a blind man cross the road, social service
Effect on national income	Included in the national income	Not included

Answer (continued): The division is useful, because it helps us to find which activities are to be counted in national income. But it is not completely proper, because the same activity may be economic or non-economic depending on the motive. For example, if a mother cooks for her family, it is non-economic; if she cooks as a cook in a hotel for a salary, it is economic. So the division depends on the motive of the person and is not rigid.

Distinguish between microeconomics and macroeconomics.

Answer:

Basis	Microeconomics	Macroeconomics
Meaning	The study of individual economic units such as a consumer, a firm or an industry	The study of the economy as a whole, such as national income, general price level and employment
Main topics	Demand, supply, price determination, consumer behaviour	National income, inflation, unemployment, money supply
Also called	Price theory	Income and employment theory
Example	Why the price of one commodity (like wheat) rises	Why the general price level in the country rises

Is economics a positive science or a normative science or both? Explain with the help of an example.

Answer: Economics is both.

1. A positive science studies what is. It describes facts and the relation between cause and effect, without any value judgment. Example: 'If the price of a commodity rises, its demand falls.'
2. A normative science studies what ought to be. It gives value judgments and suggestions. Example: 'The government should reduce the price of the essential commodities' or 'Income inequality should be reduced.'

Economics studies the economic problems as they are (positive), and it also suggests the way they should be solved (normative). So it has both the aspects.

Collection of data and introduction to statistics

Give any two important qualities of a good questionnaire.

Answer: (i) The number of questions should be small, and they should be short, simple and clear. (ii) The questions should be arranged in a logical order, and they should not be offensive or personal, so that the informant gives the correct answer.

What is meant by information through correspondence?

Answer: In this method, the investigator appoints local persons or correspondents in different places. They collect the information in their areas on their own and send it to the investigator (by post or otherwise). Newspapers and agencies use this method. It is cheap and covers a wide area, but the data may not be accurate, because the correspondents may be biased.

Define primary data.

Answer: Primary data are the data which are collected for the first time by the investigator himself, for a specific purpose. They are original in character. For example, data collected by a survey of the heights of the students of a school.

What is meant by secondary sources of information?

Answer: Secondary data are the data which have already been collected by some other person or agency for some other purpose, and which are used by the investigator. The sources of such data are (i) published sources, such as government publications, reports of committees, newspapers, journals and research papers, and (ii) unpublished sources, such as records kept by offices and research institutes.

Give any two main functions of statistics.

Answer: (i) It presents the facts in a simple and definite form, so that they can be understood easily. (ii) It condenses a large mass of data into a few figures (such as averages), and it helps in comparison, forecasting and policy-making.

Why is statistics important for economic analysis?

Answer: Statistics helps an economist to collect, organise and present the data, such as the national income, price, employment and production, and to analyse them with the help of averages and other measures. It helps in testing the economic theories, in finding the relation between variables (such as price and demand), in forecasting and in making the economic plans and policies. So, without statistics, economic analysis would be incomplete.

What are the limitations of statistics?

1. Statistics studies groups and not individuals.
2. It deals with quantitative data only. Qualitative aspects (like honesty or intelligence) cannot be studied directly.
3. Statistical results are true only on average; they are not exact.
4. It can be misused by an unskilled or a biased person to prove anything.
5. Statistical laws are not exact like the laws of science.

Define statistics in the singular and plural form.

Answer: In the plural form, statistics means numerical facts or data, such as the figures of population, production or income. In the singular form, statistics means the science (the subject) of collection, organisation, presentation, analysis and interpretation of the numerical data.

Unit 4: Development experience (1947–90) and Indian economic reforms since 1991 – Chapter 1: Indian economy on the eve of independence

When were the railways introduced?

Answer: The railways were introduced in India by the British in 1850. The first train ran from Bombay to Thane in 1853.

Define export surplus.

Answer: Export surplus means the excess of the value of exports over the value of imports. During the British rule it was not used for the development of India. It was used to meet the cost of the British administration, the cost of wars fought by Britain and the import of the invisible items (drain of wealth).

Name some notable economists who estimated India's per capita income during the colonial period.

Answer: Dadabhai Naoroji, William Digby, Findlay Shirras, V. K. R. V. Rao and R. C. Desai.

What was the two-fold motive behind the de-industrialisation by the colonial government in pre-independent India?

Answer: (i) To reduce India to a mere exporter of the raw materials (like cotton, jute and indigo) required for the British industries. (ii) To make India a vast market for the finished goods (such as the machine-made cotton and silk clothes) produced in the British factories.

How did the British rulers' policy adversely affect the foreign trade of India?

Answer: The British followed a policy of tariff on the export of the Indian handicrafts and of free trade or very low duty on the import of the British goods. As a result, India became an exporter of raw materials and an importer of finished goods. The Suez Canal opened in 1869 and the British had a monopoly over the shipping, so most of the trade was with Britain. The export surplus was used for the British interests, which led to a drain of India's wealth.

Give a brief account of the qualitative aspect of the demographic profile of India during the British rule.

Answer: The quality of the population was poor. The overall literacy level was only about 16 per cent, and the female literacy was as low as 7 per cent. The public health facilities were not available to the majority of the people, so the death rate was high. The infant mortality rate was very high (about 218 per 1000), and the life expectancy was only about 44 years.

What does colonialism refer to?

Answer: Colonialism is the policy in which a country (the colonial power) establishes political and economic control over another country, called a colony, and exploits its resources for its own benefit. India was a colony of Britain for about 200 years.

When was India's first official census operation undertaken?

Answer: The first official census in India was undertaken in 1881. After 1921 it has been taken regularly every ten years.

When was the Tata Iron and Steel Company (TISCO) incorporated in India?

Answer: TISCO was incorporated in 1907 (at Jamshedpur).

Whose interests were served by the economic policies pursued by the British government in India?

Answer: They served the interests of the British government and British industry, and not those of the Indian people. India was used as a source of cheap raw materials and as a market for the British goods.

Chapter 2: Indian economy 1950–1990

Differentiate between long-term and short-term planning.

Answer:

Basis	Long-term planning	Short-term planning
Period	Generally more than 10 years (e.g. 15–20 years)	Generally one to five years (e.g. a five-year plan)
Objective	Broad, general goals of the economy	Specific, detailed targets
Example	Perspective plan	Five-year plan or annual plan

Give a brief note on the Industrial Policy Resolution 1991.

Answer: The Industrial Policy of 1991 was a part of the New Economic Policy. Its main features were: (i) abolition of industrial licensing for all except a few industries; (ii) the public sector reserved for only 8 industries (later reduced further); (iii) removal of the limits on the size of the firms under the MRTP Act; (iv) the policy of disinvestment of the public sector units; (v) liberal policy for the foreign direct investment (up to 51 per cent in many industries) and for the import of technology.

Who formulated the plans in India?

Answer: The Planning Commission formulated the five-year plans in India. The final approval was given by the National Development Council (NDC).

When was India's Planning Commission constituted and who was its chairman?

Answer: The Planning Commission was set up in March 1950. Its chairman was the Prime Minister, Pandit Jawaharlal Nehru.

What is the current name of the Planning Commission and when was it constituted?

Answer: The Planning Commission has been replaced by the NITI Aayog (National Institution for Transforming India). It was constituted on 1 January 2015.

What were the main objectives of the first three five-year plans?

1. First Plan (1951–56): to develop the agriculture sector, including irrigation and power projects, as the country was facing a food shortage.
2. Second Plan (1956–61): to promote rapid industrialisation, specially the basic and heavy industries (the Mahalanobis model).
3. Third Plan (1961–66): to make the economy self-reliant and self-generating, with stress on both agriculture and industry.

What is the main objective of the current five-year plan and its duration?

Answer: The last five-year plan was the Twelfth Plan (2012–17). Its main objective was 'faster, more inclusive and sustainable growth'. After that, five-year plans have been discontinued and the NITI Aayog now prepares the long-term strategies.

Differentiate among the different types of economic systems.

Answer:

Basis	Capitalist economy	Socialist economy	Mixed economy
Ownership of resources	Private	Government	Both private and government
Main motive	Profit	Social welfare	Both profit and social welfare
Prices decided by	Market forces (demand and supply)	Central planning authority	Market forces, with government control in some areas
Example	USA	Erstwhile USSR, China (earlier)	India

Explain the following: (a) Self-reliance (b) Equity (c) Modernisation (d) Growth (e) Land reforms (f) Land ceiling (g) Green revolution (h) Industrial Policy Resolution 1956 (i) Trade policy / import substitution

1. Self-reliance: Reducing the dependence on imports and foreign aid, specially for food and the basic goods, and producing them within the country.
2. Equity: Fair distribution of the benefits of development, so that the poor also get the basic needs and the inequality of income and wealth is reduced.
3. Modernisation: Adoption of new technology and a change in the social outlook, such as the equal rights of women.
4. Growth: An increase in the country's capacity to produce goods and services, shown by the rise in GDP.
5. Land reforms: The changes in the ownership of land, such as the abolition of the intermediaries (zamindars), tenancy reforms and the fixing of the ceiling on land holdings, to give land to the tillers.
6. Land ceiling: The fixing of the maximum size of land which a person can own. The extra land is taken by the government and given to the landless.
7. Green revolution: The rise in the foodgrain production (specially wheat and rice) in the late 1960s through the use of high-yielding variety (HYV) seeds, fertilisers and irrigation.
8. Industrial Policy Resolution 1956: It divided the industries into three categories: Schedule A (exclusively for the state), Schedule B (state and private together) and Schedule C (private sector). It gave the public sector the 'commanding heights' of the economy and made industrial licensing compulsory.
9. Trade policy / import substitution: The policy of replacing the imports with domestic production, protecting the home industries by high tariffs and quotas on the imports.

Define the new economic policy and its features.

Answer: The new economic policy of 1991 was the set of reforms adopted by India to get out of the economic crisis (the balance of payments crisis). It is also known as LPG, that is, liberalisation, privatisation and globalisation.

1. Liberalisation: removal of the licensing and the other controls on the industries and trade.
2. Privatisation: reduction of the role of the public sector and the sale of its shares.
3. Globalisation: integration of the Indian economy with the world economy, by free trade and foreign investment.
4. Other features: reduction in the import tariffs, devaluation of the rupee, and reform of the financial and tax systems.

Define WTO.

Answer: WTO means the World Trade Organisation. It was established on 1 January 1995 as the successor of the GATT (General Agreement on Tariffs and Trade). It is an international organisation which makes the rules of the international trade, settles the trade disputes among the member countries and helps in reducing the trade barriers. Its headquarters is at Geneva, Switzerland. India is a founder member.

Chapters 3 and 4: Methods of data collection, organisation of data

Distinguish between the census and the sampling method of data collection.

Answer:

Basis	Census method	Sampling method
Meaning	Data are collected from every item of the population	Data are collected from a selected part (sample) of the population
Cost, time and effort	High	Low
Accuracy	More accurate and reliable in a small population	Less exact, but sufficient if the sample is well selected
Suitability	For a small population	For a large population or where the items are destroyed in testing
Example	Population census of India	Testing the quality of the electric bulbs

Explain any two advantages of the sampling method.

Answer: (i) It saves time, money and effort, because only a part of the population is studied. (ii) It is the only possible method where the population is very large or the testing destroys the item (such as testing the life of electric bulbs). It also gives good results if the sample is properly selected.

Differentiate between primary and secondary data.

Answer:

Basis	Primary data	Secondary data
Meaning	Collected for the first time by the investigator	Already collected by some other agency
Nature	Original	Not original
Cost and time	More	Less
Reliability	More reliable, as the investigator knows the purpose	Less reliable, as the purpose of the collection may be different
Example	Data from a survey made by oneself	Data from the census reports or journals

What are the methods of primary data collection?

1. Direct personal investigation
2. Indirect oral investigation
3. Information from local sources or correspondents
4. Questionnaires and schedules (by mail, or filled in by the enumerators)
5. Telephone interview

Define classification of data and its objectives and types.

Answer: Classification is the process of arranging the data into groups or classes according to their common characteristics.

1. Objectives: to condense the data, to make them simple and clear, to bring out the similarities and differences, to make comparison easy, and to prepare the data for further analysis.
2. Types: (a) Chronological (by time), (b) Geographical (by place), (c) Qualitative (by attribute, such as sex or religion), and (d) Quantitative (by numerical value, such as height or marks).

Differentiate between continuous and discrete series.

Answer:

Basis	Discrete series	Continuous series
Variable	Takes only exact (whole) values	Takes any value in a range
Presentation	Individual values are shown, such as 1, 2, 3	Class intervals are shown, such as 0–10, 10–20
Example	Number of children in a family	Height or marks of students

Make a frequency distribution table from any data.

Take the marks of 20 students (out of 50): 12, 25, 31, 8, 44, 19, 27, 36, 15, 22, 41, 29, 33, 5, 18, 24, 38, 46, 21, 9. Take the class intervals of width 10.

Marks (class interval)	Frequency
0–10	3
10–20	4
20–30	6
30–40	4
40–50	3
Total	20

(5, 8, 9 fall in 0–10; 12, 15, 18, 19 in 10–20; 21, 22, 24, 25, 27, 29 in 20–30; 31, 33, 36, 38 in 30–40; and 41, 44, 46 in 40–50. Values equal to the upper limit would go to the next class, as the upper limit is excluded.)

Estimate the mean of the following series.

Answer:

Class interval	0–5	5–10	10–15	15–20	20–25	25–30	30–35	35–40
Frequency	11	3	24	17	7	16	5	1

Use the direct method. Mean = Σfm ÷ N, where m is the mid-value of each class.

Class interval	Frequency (f)	Mid-value (m)	f × m
0–5	11	2.5	27.5
5–10	3	7.5	22.5
10–15	24	12.5	300
15–20	17	17.5	297.5
20–25	7	22.5	157.5
25–30	16	27.5	440
30–35	5	32.5	162.5
35–40	1	37.5	37.5
Total	N = 84		Σfm = 1445

Answer: Mean = Σfm ÷ N = 1445 ÷ 84 = 17.20 (approximately).

From the following data, calculate the weighted mean.

Answer:

Marks	62	77	65	62	57
Weights	2	1	2	3	4

Marks (x)	Weight (w)	w × x
62	2	124
77	1	77
65	2	130
62	3	186
57	4	228
Total	Σw = 12	Σwx = 745

Answer: Weighted mean = Σwx ÷ Σw = 745 ÷ 12 = 62.08 (approximately).

The mean height of 25 male workers in a factory is 61 inches and the mean height of 35 female workers in the same factory is 58 inches. Find the combined mean of the 60 workers.

Combined mean = (N₁x̄₁ + N₂x̄₂) ÷ (N₁ + N₂)

= (25 × 61 + 35 × 58) ÷ 60 = (1525 + 2030) ÷ 60 = 3555 ÷ 60 = 59.25 inches.

Answer: The combined mean height is 59.25 inches.

Chapters 3 and 4: LPG (new economic reforms) and poverty

Define the new economic reforms and their objectives.

Answer: The new economic reforms are the policies of liberalisation, privatisation and globalisation started in 1991. The objectives were to remove the balance of payments crisis, to bring down inflation, to increase the efficiency and competition in the industries, to attract foreign investment and technology, and to increase the rate of economic growth.

Define LPG in detail.

1. Liberalisation: Removing the government controls and restrictions on the industries and trade, such as industrial licensing, price controls and the quantitative restrictions on the imports.
2. Privatisation: The transfer of the ownership and management of the public sector enterprises to the private sector, by disinvestment or by letting the private firms enter the areas earlier reserved for the government.
3. Globalisation: The integration of the domestic economy with the world economy through the free flow of goods, services, capital and technology across the countries.

Define Navratnas.

Answer: The Navratnas are nine selected public sector enterprises which were given more financial and managerial freedom by the government (from 1997) to make them more efficient and competitive. They can take investment decisions up to a limit (about Rs 1000 crore) without the prior approval of the government. Examples are Hindustan Aeronautics, Bharat Electronics, Oil India and NMDC.

Define poverty. Distinguish between absolute and relative poverty.

Answer: Poverty is the condition in which a person is not able to meet the basic needs of life, such as food, clothing and shelter.

Basis	Absolute poverty	Relative poverty
Meaning	Living below the minimum income or consumption level needed for the basic needs (the poverty line)	Comparison of the income levels of the different sections of the people
Measure	Number or percentage of the people below the poverty line	Inequality between the rich and the poor
Example	A person who cannot get the minimum calories of food	Poor people in a rich country, compared with the others

Explain any three main causes of poverty in India.

1. High population growth, which reduces the per capita income and the availability of the resources.
2. Unemployment and underemployment, specially in the rural areas, as the people have no regular income.
3. Unequal distribution of land and income, and low productivity in agriculture. Illiteracy, lack of skills, and the colonial exploitation in the past are other causes.

How does inflation affect the poorer sections of society? Explain.

Answer: Inflation means a continuous rise in the prices. The poor spend most of their income on food and the necessities, whose prices rise quickly. Their incomes do not rise at the same rate, so their real income (purchasing power) falls. They have to reduce their consumption of the essential goods and may remain underfed. They also get no help from the savings, because they have none. So inflation makes the poor poorer and widens the gap between the rich and the poor.

How does poverty affect economic growth? Comment.

Answer: Poverty and economic growth affect each other. The poor have low savings, low investment and low productivity, because of poor health, education and skills. Their purchasing power is low, so the demand for goods and services is small, and this slows down the growth of the industries. The government has to spend more on the welfare programmes and has less to spend on development. So poverty reduces the economic growth, and low growth in turn keeps the poverty high.

Explain any four poverty eradication programmes adopted in India after independence.

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA, 2005): gives 100 days of guaranteed wage employment in a year to every rural household whose adult members volunteer for unskilled manual work.
2. Swarnajayanti Gram Swarozgar Yojana (SGSY) / National Rural Livelihood Mission: promotes self-employment of the rural poor, through self-help groups and bank credit.
3. Pradhan Mantri Rozgar Yojana (PMRY): helps the educated unemployed youth to start micro-enterprises.
4. Antyodaya Anna Yojana / Public Distribution System: supplies foodgrains at subsidised prices to the poorest families. Another programme is the Swarna Jayanti Shahari Rozgar Yojana, for the urban poor.

Suggest some effective measures to control poverty in India.

1. Control the growth of population.
2. Create more employment, specially in the rural areas, and develop the small-scale and cottage industries.
3. Improve agricultural productivity, and make the land reforms effective.
4. Spread education, health care and skill training.
5. Ensure that the poverty alleviation programmes reach the poor, with proper implementation and the reduction of corruption.

Define poverty and its types.

Answer: Poverty is the inability of a person to meet the minimum basic needs of life. Its types are: (i) absolute poverty, where people live below the poverty line, (ii) relative poverty, which shows the income gap between the different sections, (iii) rural poverty and urban poverty, based on the area, and (iv) chronic (long-term) poverty and transient (temporary) poverty.

Briefly explain the three-dimensional attack on poverty adopted by the government.

1. Promotion of economic growth: a higher growth rate increases the opportunities and the incomes of the people.
2. Anti-poverty programmes: direct programmes for the employment, food and the income of the poor, such as MGNREGA and the PDS.
3. Human development: investment in the education, health and the basic services, to improve the capability of the poor.

What programmes has the government adopted to help the elderly and poor destitute women?

Answer: The National Social Assistance Programme (NSAP) was started in 1995. It provides social security to the old, destitute women and the other helpless people, with the Old Age Pension (the National Old Age Pension Scheme), the widow pension and the family benefit scheme. Another is the Annapurna Scheme, which gives 10 kg of foodgrains free to the elderly poor who are not getting the pension.

What is the 'Head Count Ratio'?

Answer: The head count ratio is the proportion of the population living below the poverty line. It is the most commonly used measure of poverty. Head count ratio = (number of poor ÷ total population) × 100.

Who estimates the data related to poverty?

Answer: The poverty estimates were made by the Planning Commission (now NITI Aayog), on the basis of the consumer expenditure surveys of the National Sample Survey Organisation (NSSO).

Chapters 5 and 6: Tabular presentation, diagrammatic presentation

Define a table and its parts.

Answer: A table is a systematic arrangement of the data in rows and columns. The main parts of a table are: (i) table number, (ii) title, (iii) head note, (iv) caption (column headings), (v) stub (row headings), (vi) body (the data), (vii) footnote, and (viii) source note.

From the following data of imports and exports of a firm, prepare a multiple bar diagram.

Answer:

Year	2003	2004	2005	2006	2007
Imports (in Rs)	30	59	72	90	62
Exports (in Rs)	10	34	23	40	29

Answer: The multiple bar diagram is given below. The two bars for each year are drawn side by side, with the same width and a common scale on the Y-axis.

Chapters 5 and 6: Rural development and human capital formation

What are the sources of rural credit?

Answer: The sources are: (i) institutional sources, such as the cooperative societies, commercial banks, regional rural banks (RRBs) and NABARD, the self-help groups; and (ii) non-institutional sources, such as the moneylenders, traders, landlords, relatives and friends.

Bring out the difference between human capital and human development.

Answer:

Basis	Human capital	Human development
Meaning	The stock of skill, education and health of the people, which is used for production	The overall development of the people, with the freedom to lead a long, healthy and creative life
View	Treats man as a means of production	Treats man as the end, not only a means
Aim	To increase the productivity and the income	To increase the well-being and the choices of the people
Scope	Narrow	Wide (includes human capital)

Mention two government organisations each that regulate the health and education sectors.

1. Health sector: the Indian Council of Medical Research (ICMR) and the National Medical Commission (earlier the Medical Council of India).
2. Education sector: the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE). (NCERT and the NCTE are also correct.)

What are the main problems of human capital formation?

1. Rising population, which reduces the per capita facilities of education and health.
2. Brain drain, the migration of the skilled people to the other countries.
3. Low investment in education and health, and the poor quality of the facilities.
4. Poor manpower planning: a mismatch between the education and the jobs, leading to the educated unemployment.
5. Poverty, as the poor cannot afford the education and the health care.

What are the different sources of human capital formation?

1. Expenditure on education
2. Expenditure on health
3. On-the-job training
4. Migration
5. Expenditure on the information (the knowledge about the labour market and the education)

21. Define WTO

Methods of data collection, Organization of data

2. Define LPG in details.

3. Define Navratnas

13. What is “Head Count Ratio”?

14. Who is estimating the data related to poverty?