1️⃣ What is economics?

Economics is the study of how people, businesses, and governments make choices to use
limited resources (like money, time, land) to satisfy their unlimited wants and needs.

🔸 Example: You have ₹500 and want both a movie ticket and a new t-shirt. Economics helps
you decide which one gives you more value.

2️⃣ What are the main branches of economics?

There are two main branches:

 Microeconomics – studies individual parts of the economy like a person, a shop, or a

company.

Example: Why did tomato prices go up in one city?

 Macroeconomics – looks at the big picture of the whole economy like national
income, inflation, unemployment.

Example: Why is India’s GDP growing slowly this year?

3️⃣ What is the difference between economics and economy?

 Economics is the subject or study — the theory, rules, and concepts.

 Economy is the real-world system — how money, jobs, and trade actually work in a
country.

🔸 Example: Economics is like learning how to drive; the economy is the traffic on the actual
road.

4️⃣ Why is the study of economics important in daily life?

Because we all make choices — how to spend money, save, invest, or plan for the future.
Economics helps us make better decisions and understand how the world works.

🔸 Example: If petrol prices rise, should you take a bus, carpool, or walk? Economics helps
you think it through.

5️⃣ Who is considered the father of economics?

Adam Smith is known as the "Father of Economics."
He wrote a famous book called "The Wealth of Nations" in 1776.

🔸 Example: He explained how markets work through supply and demand, and how people
acting in their self-interest can benefit society.

6️⃣ What are the basic economic problems every society faces?

All societies face three basic problems due to limited resources:

1. What to produce?
– Example: Should India focus more on food or smartphones?
2. How to produce?
– Example: Use machines or manual labor?
3. For whom to produce?
– Example: Should goods be made for rich people, poor people, or both?

1️⃣ What is microeconomics?

Microeconomics is the study of individual parts of the economy — like a person, family,
company, or one market.

🔸 Example:

 Why is the price of onions increasing in a local market?

 How does a shopkeeper decide how many goods to sell?

2️⃣ What is macroeconomics?

Macroeconomics looks at the entire economy as a whole — such as the total income of the
country, unemployment, inflation, or national growth.

🔸 Example:

 What is India’s GDP this year?

 Why is unemployment rising across the country?

3️⃣ How is microeconomics different from macroeconomics?

Feature Microeconomics Macroeconomics
Scope Small/individual units Whole economy
Focus on Consumers, firms, specific markets National income, inflation, employment
Example Price of one product (e.g., sugar) General price level in the country

🔸 Simple difference:
Micro is "one tree", Macro is "the whole forest."

4️⃣ How are microeconomics and macroeconomics interrelated?

They are connected, like small parts making up a big machine.

 The overall economy (macro) is made of millions of individuals and firms (micro).
 A change in national tax policy (macro) can affect household spending (micro).
 If many companies increase prices (micro), it causes inflation (macro).

🔸 Example:
When petrol prices rise (micro), transportation becomes costly, leading to overall inflation
(macro).

5️⃣ Give examples of microeconomic and macroeconomic issues.

✅ Microeconomic Issues:

 A shopkeeper deciding what price to set for milk.

 How a worker chooses between two job offers.
 A factory deciding whether to produce 100 or 200 units.

✅ Macroeconomic Issues:

 India's inflation rate rising to 6%.

 Government planning a ₹10 lakh crore budget.
 RBI increasing interest rates to control inflation.

1️⃣ What is scarcity, and why is it the central problem in economics?

Scarcity means that resources (like money, land, time) are limited, but human wants are
unlimited.
Because of scarcity, we have to make choices — that’s why economics exists.
🔸 Example: You want to buy both a phone and a new bike, but have money for only one.
You must choose — that’s scarcity.

2️⃣ What is opportunity cost? Can you give an example?

Opportunity cost is the value of the next best alternative you give up when you make a
choice.

🔸 Example: You have ₹100 and can either buy a movie ticket or a book. If you choose the
movie, your opportunity cost is the book — the thing you didn’t choose.

3️⃣ What is meant by demand and supply?

 Demand means how much of a product people are willing and able to buy at a
certain price.
 Supply means how much of a product sellers are willing and able to sell at a certain
price.

🔸 Example: If the price of mangoes drops, people demand more (demand ↑). But if the price
rises, farmers may bring more to market (supply ↑).

4️⃣ What is utility in economics?

Utility means the satisfaction or benefit a person gets from using a good or service.

🔸 Example: Eating an ice cream gives you happiness. That satisfaction is called utility.

5️⃣ What is market equilibrium?

Market equilibrium is the point where demand equals supply — the price and quantity at
which both buyers and sellers are satisfied.

🔸 Example: If people want 100 packets of milk at ₹30, and shops are also willing to sell 100
packets at ₹30 — that's equilibrium.

6️⃣ What is national income? How is it measured?

National income is the total income earned by a country’s people and businesses in one year.
🔸 It is measured using methods like:

 Production method (value of goods/services)

 Income method (total income earned)
 Expenditure method (total spending on goods/services)

🔸 Example: All salaries, profits, rents, and interest earned across India in one year add up to
national income.

7️⃣ What is inflation, and how does it affect common people?

Inflation means a general rise in prices of goods and services over time.

🔸 Effect on common people:

 Your money buys less.

 Cost of living rises.
 Savings lose value.

🔸 Example: If milk cost ₹40 last year and now it's ₹50, that's inflation. You need more
money for the same item.

8️⃣ What is GDP, and why is it important?

GDP (Gross Domestic Product) is the total value of goods and services produced in a
country in a year.

🔸 It shows how big and active the economy is.

🔸 Example: India’s GDP tells us how much income the country generates — more GDP
usually means more jobs and better standard of living.

9️⃣ What is economic development and how is it different from economic

growth?

 Economic growth means an increase in GDP or output over time.

 Economic development means improvement in quality of life — better education,
health, equality, environment, etc.

🔸 Example:
If a country makes more money (growth) but still has poor healthcare and unemployment, it’s
not fully developed.
True development means growth + welfare.

1️⃣ What type of economy does India have?

India has a mixed economy — it includes both private businesses and government
involvement.

🔸 Example:
Private companies like TATA and Reliance exist along with government services like Indian
Railways and public hospitals. Both work together in the economy.

2️⃣ What are the major sectors of the Indian economy?

India’s economy has three major sectors:

1. Primary Sector – Uses natural resources.

🔹 Example: Farming, fishing, mining.
2. Secondary Sector – Involves manufacturing.
🔹 Example: Factories making clothes, cars, cement.
3. Tertiary Sector – Provides services.
🔹 Example: Banking, teaching, transportation, tourism.

📌 Note: The tertiary (services) sector is the largest contributor to India’s GDP today.

3️⃣ What are some major economic challenges India is facing today?

India faces several key economic problems:

 Unemployment – Many people, especially youth, don’t have stable jobs.

 Poverty and inequality – Some people are very rich while others struggle for basics.
 Inflation – Rising prices make life harder for the poor and middle class.
 Agricultural distress – Farmers often face low income, high debt, and poor market
access.
 Informal sector dominance – A large part of India’s workforce has no job security
or benefits.

4️⃣ What is the role of the government in managing the economy?

The government plays a crucial role in:

  Creating policies for growth (like Make in India, Digital India).
 Providing public goods and services like roads, hospitals, education.
 Reducing inequality through taxes and welfare programs.
 Controlling inflation and stabilizing the economy via the RBI (Reserve Bank of
India).
 Attracting investment and regulating industries.

🔸 Example: During COVID-19, the government announced stimulus packages and free food
schemes to support the poor.

5️⃣ What are some government schemes to improve economic welfare?

Here are some major welfare schemes:

Scheme Name Purpose

MGNREGA Rural employment guarantee (100 days of work)
PM-KISAN Direct income support to farmers
Ujjwala Yojana Free LPG cylinders to poor households
Ayushman Bharat Free health insurance for poor families
PM Awas Yojana Affordable housing for all
Skill India Training for youth to improve job skills
Jan Dhan Yojana Financial inclusion through zero-balance bank accounts

1️⃣ How does economics differ from commerce or business studies?

Subject Focus Area

Study of how resources are used, how choices are made, and how
Economics
economies function.
Commerce Study of trade, exchange, and distribution of goods and services.
Business
Study of how businesses are planned, organized, and managed.
Studies

🔸 Simple Difference:

 Economics is about why choices are made in society.

 Commerce is about how goods and services move in markets.
 Business Studies is about how to run a business.

2️⃣ How does a country decide what to produce, how to produce, and for whom
to produce?
These are called the three basic economic questions, and countries answer them based on
their economic system (capitalist, socialist, mixed).

 What to produce? → Based on needs, demand, or national priorities.

🔸 Example: India focuses on food, jobs, roads, and health.
 How to produce? → Depends on available resources (labor vs. machines).
🔸 Example: Use of tractors or manual labor in farming.
 For whom to produce? → Based on who can afford, or in socialist systems, who
needs it most.
🔸 Example: Public hospitals serve poor people for free.

3️⃣ What happens when prices are fixed too high or too low?

🔺 Too High (Above Market Price):

 People don’t buy much → Surplus (unsold goods).

🔸 Example: If wheat is priced at ₹100/kg, few buy it — shops overflow.

🔻 Too Low (Below Market Price):

 Sellers don’t supply much → Shortage (not enough goods).

🔸 Example: If onions are ₹5/kg, demand increases but farmers won’t sell → market
runs out.

This creates market imbalance and may need government intervention.

4️⃣ How does international trade benefit an economy?

International trade allows countries to:

✅ Sell what they’re good at (exports)

✅ Buy what they lack (imports)
✅ Earn foreign exchange
✅ Access better technology and goods

🔸 Example: India exports IT services and imports oil. Both actions help grow the economy.

Trade promotes specialization, growth, jobs, and consumer choice.

5️⃣ Can a country grow economically without improving people’s standard of

living?
✅ Yes, but only for a short time — this is called "growth without development."

 Economic growth = more output or income (GDP ↑)

 Standard of living = better health, education, housing, and quality of life

🔸 Example: If a country builds many factories (GDP ↑) but workers still live in poverty —
growth has not led to real development.

📌 True progress = growth + improvement in people's lives.

1️⃣ Is economics a science or an art? Why?

Economics is both a science and an art.

 ✅ Science because it uses facts, data, and cause-effect relationships to study how
economies work.
🔸 Example: "If prices rise, demand falls" is a scientific law in economics.
 ✅ Art because it helps us apply knowledge to solve real problems like poverty,
inflation, or unemployment.

🔍 In short:
Science explains the rules; art helps us apply them in life.

2️⃣ What is meant by the term "economic activity"?

Economic activity is any activity that involves production, distribution, or consumption

of goods and services for earning income or satisfaction.

🔸 Example:

 A farmer growing crops

 A shopkeeper selling clothes
 A teacher giving tuition

These are all economic activities because they involve money or value creation.

3️⃣ What is the scope of economics in real life?

Economics touches almost every part of daily life, including:

✅ Spending, saving, budgeting
✅ Choosing jobs or careers
✅ Understanding price rise (inflation)
✅ Government policies and taxes
✅ Business decisions
✅ Environmental issues and development

🔸 Example: Deciding between buying a car or saving for education is an economic decision.

📌 Scope: From individual life to global trade — economics applies everywhere.

4️⃣ How do positive and normative economics differ?

Positive Economics Normative Economics

Deals with facts and what is Deals with opinions and what should be
Objective and testable Subjective and value-based
🔸 Example: “India’s inflation rate is 🔸 Example: “The government should reduce
6%.” inflation.”

In short:
Positive = fact-based
Normative = opinion-based

5️⃣ What is meant by the economic way of thinking?

The economic way of thinking means analyzing situations by focusing on:

 Scarcity
 Choices
 Costs and benefits
 Incentives
 Trade-offs
 Rational decisions

🔸 Example: Instead of asking “Should I go to college?”, an economist asks:

 What’s the cost?

 What’s the benefit?
 What’s the next best alternative (opportunity cost)?

📌 It's a smart and structured way to make choices in a world with limited resources.
1️⃣ What are the different types of economic systems?

There are three main types of economic systems:

System Who Controls Resources? Example Countries

Capitalist (Market
Private individuals & businesses USA, Australia
Economy)
Socialist (Planned Government owns & controls North Korea, former
Economy) resources USSR
Mixed Economy Both private sector and government India, France, UK

2️⃣ What type of economic system does India follow and why?

India follows a Mixed Economy — a combination of capitalism and socialism.

🔸 Why?
To balance:

 Private sector freedom (to encourage growth & competition)

 Government control (to protect the poor and ensure basic services)

🔸 Example:
Private companies like TCS, Reliance exist alongside public services like LIC, BSNL, and
free government schools.

3️⃣ What are the main features of a mixed economy?

1. ✅ Co-existence of public and private sectors

2. ✅ Government planning for national development
3. ✅ Private freedom to run businesses and earn profit
4. ✅ Social welfare focus — subsidies, healthcare, education
5. ✅ Regulation of unfair practices (like monopolies or pollution)

🔸 Example: Indian Railways (public) and Indigo Airlines (private) both operate in
transportation.

4️⃣ How does resource allocation work in different economic systems?

 System Who decides what to produce and how?
Capitalist Decisions made by market forces (supply & demand)
Socialist Decisions made by government through central planning
Mixed Both government and private businesses make decisions

🔸 Example:
In capitalism, a factory owner decides how much to produce based on profit.
In socialism, the government decides based on needs of society.
In a mixed economy like India, both play a role.

5️⃣ What are the pros and cons of a market economy (capitalist system)?

✅ Pros ❌ Cons
Encourages innovation and efficiency Creates inequality — rich get richer
Consumer has many choices May ignore poor or rural areas
Fast economic growth No guarantee of basic services for all
Private property and profit motive drive Profit motive may harm environment or labor
progress rights

🔸 Example: In a market economy, iPhones and apps are created quickly due to competition
— but some people may not afford basic healthcare.

1️⃣ What is meant by a consumer in economics?

A consumer is a person or group who buys goods or services to satisfy their needs or wants
— not for resale but for personal use.

🔸 Example:
When you buy a packet of milk for your home, you are a consumer.

2️⃣ Who is a producer and what are their objectives?

A producer is a person, company, or government that makes goods or provides services.

🔹 Main objectives:

 To earn profit
 To satisfy consumer needs
 To expand business and market share
🔸 Example:
A farmer growing wheat or a company making smartphones are both producers.

3️⃣ What motivates consumers to buy goods and services?

Consumers are motivated by:

1. ✅ Need or Want – Basic needs (like food) or personal desires (like clothes).
2. ✅ Utility – The satisfaction they get from the product.
3. ✅ Price – Lower price often attracts buyers.
4. ✅ Quality and Brand – Trust and reputation matter.
5. ✅ Advertising and Trends – Influence of marketing and fashion.

🔸 Example:
People buy smartphones for communication (need), features (utility), or to follow a trend
(influence).

4️⃣ How does the law of demand work in real life?

The Law of Demand says:

"When the price of a product goes up, demand falls. When price goes down, demand
rises." (All else being equal)

🔸 Real-life example:
If mangoes are ₹100/kg, people buy less.
If price drops to ₹50/kg, more people buy them — that’s law of demand in action.

5️⃣ What factors affect consumer demand?

Here are the key factors:

Factor How it affects demand

✅ Price of the product Higher price → less demand; lower price → more demand
✅ Income of consumers More income → buy more goods (normal goods)
✅ Tastes and Changing fashion, trends, or habits influence choices
preferences
Substitutes (like tea vs. coffee) and complements (like pen &
✅ Prices of related goods ink)

✅ Advertising Strong ads can increase interest and sales

✅ Future expectations If people expect price to rise soon, they buy more today
🔸 Example:
If petrol prices go up, people may buy fewer cars or switch to bikes or electric vehicles.

1️⃣ What are the four main factors of production?

In economics, production means making goods or services. To do this, four key resources
are needed, called the factors of production:

Factor Meaning Example

Land Natural resources used in production Soil, water, minerals, forests
Labour Human effort — physical or mental A teacher, a factory worker
Man-made tools and machines used for
Capital Machines, buildings, computers
work
Person who organizes all factors & takes Business owner, startup
Entrepreneur
risk founder

2️⃣ What is the role of capital in production?

Capital refers to tools, equipment, and infrastructure used to produce goods and services.

🔹 Role in production:

 Increases efficiency and speed of work

 Helps in mass production
 Supports technological advancement

🔸 Example:
A farmer using a tractor (capital) can plough land faster than doing it manually.

3️⃣ How is labour different from human capital?

 Labour = Any physical or mental work done by a person.

 Human Capital = The skills, knowledge, and experience a worker brings to the job.

🔸 Difference in simple terms:

Labour is the effort, while human capital is the quality of the worker.

🔸 Example:
A person working in a factory is labour. If that person is trained and skilled, they become
human capital and are more productive.
4️⃣ What is meant by land in economics—does it only mean soil?

No — in economics, "land" means all natural resources, not just soil.

🔹 It includes:

 Forests
 Rivers and lakes
 Minerals under the ground
 Air, sunlight, etc.

🔸 Example:
Coal mines, water used in hydroelectric plants, and even the location of a shop — all are part
of land in economic terms.

5️⃣ What role does the entrepreneur play in the economy?

An entrepreneur is the person who:

 Brings all other factors together (land, labour, capital)

 Starts and runs businesses
 Takes risks to earn profit
 Introduces innovation and creates jobs

🔸 Example:
Someone like Dhirubhai Ambani or a local bakery owner — both are entrepreneurs.

🔹 Without entrepreneurs, production doesn’t start, and growth slows down.

1️⃣ What is a market in economic terms?

In economics, a market is any place (physical or virtual) where buyers and sellers come
together to exchange goods and services.

🔸 It doesn't have to be a physical location!

A market can be a local vegetable shop, a shopping mall, or even an online site like Amazon.

2️⃣ What is meant by price mechanism or invisible hand?

The price mechanism (or invisible hand, a term by Adam Smith) refers to how prices
automatically adjust based on demand and supply — without any central planning.

🔹 When demand increases → price rises

🔹 When supply increases → price falls

🔸 Example:
If onions are in short supply, prices rise — this encourages farmers to grow more, and buyers
to buy less.

👉 It's called "invisible hand" because this process works naturally and silently in the
background — like an invisible guide for the economy.

3️⃣ How do supply and demand determine the price of a good?

Prices in a market are set at a point where demand equals supply — called the equilibrium
price.

 If demand is more than supply → Price goes up

 If supply is more than demand → Price goes down

🔸 Example:
If people suddenly want more mobile phones (demand ↑), but production stays the same
(supply constant), prices rise.

4️⃣ What happens in case of excess demand or excess supply?

Situation What Happens

✅ Excess Demand Too many buyers, not enough goods → Shortage → Prices rise
✅ Excess Supply Too many goods, not enough buyers → Surplus → Prices fall

🔸 Example:
If a new phone is very cheap and everyone wants it (excess demand), stores may run out of
stock, and sellers may increase the price.

5️⃣ What is the role of competition in a free market?

In a free market, competition keeps the system healthy:

 Forces sellers to improve quality and lower prices

 Encourages innovation and better customer service
  Gives buyers more choices

🔸 Example:
If two nearby grocery shops sell the same rice, both will try to offer the best price or service
to attract customers.

1️⃣ What is the difference between domestic trade and international trade?

Domestic Trade International Trade

Trade within a country Trade between two or more countries
Same currency used Different currencies involved
Involves customs, exchange rates, trade
Less legal and transport issues
policies
Example: Buying wheat from Punjab to sell in
Example: India exporting tea to the UK
Delhi

2️⃣ Why do countries import and export goods?

Countries export to sell what they have in surplus, and import what they lack or cannot
produce efficiently.

🔹 Reasons to Import:

 Unavailable goods (e.g., crude oil, gold)

 Better quality or cheaper products

🔹 Reasons to Export:

 Earn foreign exchange

 Create jobs
 Sell excess production

🔸 Example:
India imports crude oil because it doesn't produce enough. It exports software services and
textiles because it’s good at making them.

3️⃣ What is globalization in economics?

Globalization means the increased flow of goods, services, capital, people, and ideas
across countries.
🔹 It leads to:

 More trade and foreign investment

 Cultural and technological exchange
 Global supply chains (products made across multiple countries)

🔸 Example:
An iPhone may be designed in the USA, assembled in China, and sold in India — that’s
globalization.

4️⃣ What are the main indicators of a healthy economy?

Some key signs that show an economy is doing well:

1. Rising GDP – economy is producing more goods/services

2. Low inflation – prices are stable
3. Low unemployment – more people have jobs
4. High exports – global demand for a country's products
5. Strong infrastructure and investment

🔸 Example:
If India has growing GDP, rising income, and low joblessness — it signals a healthy
economy.

5️⃣ Why do exchange rates matter in the global economy?

Exchange rates show how much one country’s currency is worth compared to another (e.g.,
1 USD = ₹83).

🔹 They matter because:

 They affect import/export prices

 They impact foreign investments and tourism
 A weak currency makes imports costlier but exports cheaper

🔸 Example:
If the Indian Rupee weakens against the Dollar, importing oil becomes more expensive,
which may raise fuel prices domestically.

1️⃣ What is the role of the government in the economy?

The government plays a guiding and supporting role in the economy. It:

 Makes laws to ensure fair trade

 Provides public goods like roads, schools, hospitals
 Collects taxes and spends on development
 Controls inflation, unemployment, and poverty
 Regulates markets to prevent exploitation

🔸 Example: If onion prices rise too much, the government may ban exports or release stock
from storage to bring prices down.

2️⃣ What is fiscal policy and how does it affect the economy?

Fiscal policy means how the government uses its income (taxes) and spending
(expenditure) to manage the economy.

✔️ Expansionary fiscal policy → more spending or lower taxes to boost the economy (used
in slowdowns)
✔️ Contractionary fiscal policy → less spending or higher taxes to control inflation (used
when prices rise fast)

🔸 Example: During COVID-19, India increased public spending (like free rations and health
care) to support the economy.

3️⃣ What is the difference between direct and indirect tax?

Direct Tax Indirect Tax

Paid directly by a person/entity Collected through purchase of goods/services
Burden cannot be shifted Burden can be shifted to others
Based on income or profits Based on consumption
Example: Income Tax Example: GST on goods, petrol tax

4️⃣ What is meant by public expenditure and why is it important?

Public expenditure means money spent by the government for public welfare and
development.

✔️ It funds:

 Schools, hospitals, police

 Infrastructure (roads, bridges, electricity)
 Subsidies and welfare schemes
🔸 Importance: It creates jobs, reduces inequality, and improves quality of life.

🔸 Example: The PM Awas Yojana uses public expenditure to provide housing for the poor.

5️⃣ What is a budget deficit?

A budget deficit happens when the government spends more than it earns through taxes
and other revenues.

📉 Deficit = Government Spending – Government Income

🔹 It's common in developing countries, but if too high, it can cause debt and inflation.

🔸 Example: If the government earns ₹10 lakh crore but spends ₹12 lakh crore in a year, the
deficit is ₹2 lakh crore.

1️⃣ Why do individuals, firms, and governments need to make choices?

Because resources are limited (like money, time, land), but wants and needs are
unlimited.

 Individuals must choose how to spend income (e.g., food vs. clothes).
 Firms must choose what to produce and how much (e.g., bikes or cars).
 Governments must choose where to spend (e.g., on defense or education).

👉 Choice is necessary because we can’t have everything at once.

2️⃣ What is meant by the problem of choice in economics?

The problem of choice arises because of scarcity — limited resources vs. unlimited wants.

Economics studies how people decide what to produce, how to produce, and for whom,
using their limited resources in the most efficient way.

🔸 Example: A farmer has 1 acre of land — should they grow wheat or sugarcane? Choosing
one means giving up the other.

3️⃣ How does opportunity cost affect economic decision-making?

Opportunity cost is the value of the next best alternative that you give up when making a
choice.

It helps individuals, firms, and governments compare benefits of different choices.

🔸 Example:
If a student chooses to study economics for 2 hours instead of watching a movie, the
opportunity cost is the fun they missed from the movie.

👉 Decision-makers choose the option that offers the highest benefit at the lowest cost
(including opportunity cost).

4️⃣ Can opportunity cost be zero? Give an example.

Yes, in rare cases, opportunity cost can be zero — when there's no alternative use for a
resource.

🔸 Example:
If a person is unemployed and sitting idle, and they decide to volunteer, the opportunity
cost is zero because their time wasn’t being used for something else.

But in real life, most choices involve some trade-off.

5️⃣ What is the Production Possibility Curve (PPC) and what does it show?

The Production Possibility Curve (PPC) is a graph that shows the maximum possible
output combinations of two goods or services that can be produced with available resources
and technology.

✅ It shows:

 Scarcity (we can’t produce everything)

 Choice (we must choose between options)
 Opportunity cost (moving from one point to another involves trade-offs)
 Efficiency and inefficiency

🔸 Example:
A country can produce either guns or butter. The PPC shows all the combinations it can
produce using all its resources efficiently.

📉 A point inside the curve = underuse of resources

📈 A point on the curve = full, efficient use
🚫 A point outside the curve = not possible (unless economy grows)
1️⃣ What are human wants and how are they classified?

Human wants are the desires or needs people feel for goods and services to improve their
lives.

🔹 Wants are classified as:

Type Meaning Examples

Necessities Basic things needed for survival Food, clothing, shelter
Comforts Things that make life easier and pleasant Fan, bed, refrigerator
Luxuries Expensive things that give status or extra joy Car, jewelry, branded clothes

👉 Wants keep changing with time, place, income, and lifestyle.

2️⃣ Why are wants unlimited and resources limited?

 Wants are unlimited because human desires keep growing — as one want is
satisfied, new ones appear.
🔸 Example: After getting a mobile phone, you want a better one.
 Resources are limited because we have limited money, time, land, labour, tools,
etc.
🔸 Example: A farmer has only so much land and money — they must choose how to
use it best.

🧠 This is the central problem of economics — scarcity vs. unlimited wants.

3️⃣ What is meant by utility? How is it measured?

Utility is the satisfaction or benefit a person gets from consuming a good or service.

🔹 Measured in utils (a hypothetical unit of satisfaction).

It’s not an exact number but helps compare preferences.

🔸 Example:
Eating the first slice of pizza gives you 10 utils of utility. The second slice may give you only
6 utils.

4️⃣ What is the Law of Diminishing Marginal Utility?

This law says:
👉 As a person consumes more units of the same good, the extra satisfaction from each
additional unit decreases.

🔸 Example:

 1st roti – very satisfying (high utility)

 2nd roti – still good (less utility)
 3rd roti – not very exciting (even less)
 4th roti – maybe no utility at all!

🧠 This helps explain why people buy less of a good as they consume more — it links to the
law of demand.

5️⃣ What is the difference between total utility and marginal utility?

Term Meaning Example (Pizza slices)

The total satisfaction from all units TU from 3 slices = 10 + 6 + 4 =
Total Utility (TU)
consumed 20 utils
Marginal Utility The extra satisfaction from one more
MU of 3rd slice = 4 utils
(MU) unit

🔹 MU = Change in TU / Change in quantity consumed

1️⃣ What factors cause a shift in the demand curve?

A shift in the demand curve means that people are buying more or less at the same price.
This happens when factors other than price change.

🔹 Factors that cause a shift in demand:

 Income: More income → more demand (normal goods)

 Tastes and preferences: Health trends increase demand for healthy food
 Prices of related goods:
o Substitutes (e.g., Pepsi vs. Coke)
o Complements (e.g., car and petrol)
 Expectations: If people expect prices to rise, they may buy more now
 Population: More people → more demand

📉 Demand curve shifts left = demand decreases

📈 Demand curve shifts right = demand increases
2️⃣ What factors lead to a shift in the supply curve?

A shift in the supply curve means producers supply more or less at the same price, due
to changes in non-price factors.

🔹 Factors that cause a shift in supply:

 Cost of production: Higher costs → less supply

 Technology: Better tech → more efficient production → more supply
 Taxes and subsidies:
o Higher taxes = lower supply
o Subsidies = higher supply
 Expectations: If prices are expected to rise, producers may reduce current supply
 Natural factors: Weather, disasters, etc.

📉 Supply curve shifts left = supply decreases

📈 Supply curve shifts right = supply increases

3️⃣ What is elasticity of demand? Why is it important?

Elasticity of demand measures how much the quantity demanded changes when the price
changes.

 Elastic demand = Big change in quantity when price changes (e.g., luxury goods)
 Inelastic demand = Small change in quantity (e.g., salt, petrol)

🔸 Example: If the price of movie tickets rises by 10% and ticket sales fall by 30%, demand is
elastic.

✅ Why it's important:

 Helps businesses set prices

 Helps government understand tax effects
 Helps in forecasting revenue

4️⃣ What is the difference between movement along and shift of a curve?

Movement Along Curve Shift of the Curve

Happens when price changes only Happens when other factors change
Along same curve New curve formed
E.g., lower price → more quantity demanded E.g., income rises → demand increases
📊 Movement = price-based
📈 Shift = due to income, tastes, etc.

5️⃣ How does taxation affect supply and prices?

When the government imposes a tax on a good (like GST or excise duty):

 Cost of production rises

 Supply decreases (shift left)
 Prices rise
 Quantity sold falls

🔸 Example: A tax on tobacco increases the price → less supply → higher retail prices →
fewer people buy

🧠 Subsidies, on the other hand, reduce cost → increase supply → lower prices

1️⃣ What is the difference between goods and services?

Goods Services
Physical items you can touch/store Activities or tasks people do
Can be seen and owned Cannot be owned, only experienced
E.g., food, clothes, phone E.g., teaching, haircut, banking

✅ Goods are tangible, services are intangible.

2️⃣ What are free goods and economic goods?

 Free Goods:
o Available in unlimited supply
o No cost involved
o No opportunity cost
o Example: Air, sunlight (in nature)
 Economic Goods:
o Limited in supply (scarce)
o Have a price
o Involve opportunity cost
o Example: Food, water (purified), electricity
3️⃣ What are public goods and private goods?

Public Goods Private Goods

Provided by government for all Provided by businesses or individuals
Non-excludable (can’t stop others) Excludable (only for buyers)
Non-rivalrous (one’s use doesn't reduce others') Rivalrous (limited usage)
Example: Street lights, national defense Example: Shoes, car, pizza

4️⃣ What are merit goods and demerit goods?

 Merit Goods:
o Socially beneficial, but under-consumed
o People may not realize their full value
o Government often subsidizes or provides free
o Example: Education, vaccination, public libraries
 Demerit Goods:
o Harmful to individuals/society
o Often over-consumed
o Government may tax or restrict
o Example: Alcohol, tobacco, junk food

5️⃣ Why do governments provide certain goods for free?

Because some goods are essential for social welfare, but people may:

 Not afford them (e.g., poor can’t pay for education)

 Not value them enough (e.g., vaccinations)
 Benefit society as a whole (e.g., clean air, public health)

📌 Government provides such goods to:

 Reduce inequality
 Improve public health and productivity
 Ensure access for all, not just the rich

1️⃣ What are the different types of markets in economics?

Markets in economics are classified based on the number of sellers and type of product.
The main types are:
 Market Type Key Features Examples
Fruits, vegetables in
Perfect Competition Many sellers, identical products
wholesale markets
Indian Railways (passenger
Monopoly One seller, no close substitute
trains)
Monopolistic Many sellers, similar but slightly
Toothpaste, soaps, clothing
Competition different products
Mobile networks, airlines,
Oligopoly Few large sellers dominate
automobiles

2️⃣ What is perfect competition and how is it different from monopoly?

Perfect Competition Monopoly

Many small sellers and buyers One seller controls the whole market
Identical (homogeneous) product Unique product, no substitute
No control over price (price taker) Full control over price (price maker)
Easy entry and exit for firms Very difficult for others to enter
Example: Wheat farmers Example: Local water supply board

➡️ So, perfect competition is like many tea sellers in a market, while monopoly is like a
single company supplying electricity in a city.

3️⃣ What is monopolistic competition? Give examples.

 A market where many sellers offer similar but slightly different products.
 Firms try to make their product look unique through branding, packaging, etc.
 Each seller has some control over price.

🔹 Examples:

 Toothpaste (Colgate, Pepsodent, Dabur)

 Restaurants (serving different food, ambience)
 Clothing brands (each one with its style)

4️⃣ How do businesses compete in imperfect markets?

In imperfect markets (monopoly, monopolistic, oligopoly), competition is not just on price

but also on other factors like:

 Product quality
 Branding and image
  Customer service
 Location and accessibility
 Advertising
 Offering discounts, EMI options, after-sales services

➡️ For example, mobile phone brands compete by offering better cameras, battery life, or
design.

5️⃣ What role does advertising play in economic markets?

Advertising helps businesses:

 Differentiate their product (even if it's similar to others)

 Attract customers and increase demand
 Build brand loyalty
 Inform consumers about features and price

✅ In perfect competition, advertising is rare (products are identical).

✅ In monopolistic and oligopolistic markets, advertising is very important.

🔸 Example: Ads for cold drinks (Coke vs Pepsi) or telecom (Jio vs Airtel) are all about
standing out in similar markets.

1️⃣ What is Per Capita Income? Why is it used?

 Per Capita Income = National Income ÷ Total Population

 It shows the average income of a person in a country in a year.

🔹 Why it is used?

 To compare living standards between countries.

 To measure development level.

✅ Example:
If India's national income is ₹300 lakh crore and population is 140 crore,
Per Capita Income = ₹300 lakh crore / 140 crore = ₹2.14 lakh per person.

2️⃣ What is the difference between Personal Income and National Income?

Personal Income (PI) National Income (NI)

Total income earned by the country (from
Income actually received by individuals
production)
 Personal Income (PI) National Income (NI)
Includes salaries, interest, rent, pension Includes wages, profits, rent, interest, etc.
Excludes income retained by companies or
Excludes transfer payments (like pension)
taxes
Example: Your monthly salary is part of
All salaries in India form part of NI
PI

3️⃣ What is unemployment and what are its different types?

 Unemployment means willing and able people cannot find work.

Types of Unemployment:

Type Meaning Example

Frictional Temporary, when switching jobs A teacher between two jobs
Mismatch of skills with available
Structural A typist replaced by computers
jobs
Cyclical Due to economic slowdown Job loss during recession or pandemic
Farmers after harvest, ice-cream sellers in
Seasonal Work only in certain seasons
winter
Too many people doing the same 5 people working in a small field, only 3
Disguised
work needed

4️⃣ What are the effects of unemployment on the economy?

 Loss of income for families → lower living standards.

 Wastage of human resources.
 Increase in poverty and inequality.
 More crime and social unrest.
 Lower demand → businesses suffer → slower economic growth.

🔹 Example: If many youth are jobless, they may feel frustrated and the economy loses
productive manpower.

5️⃣ What are the causes and consequences of poverty?

🔹 Causes of Poverty:

 Unemployment
 Low education and skills
 Unequal distribution of wealth
 Rapid population growth
 Inflation and rising cost of living
  Lack of access to healthcare and education

🔹 Consequences of Poverty:

 Poor health and malnutrition

 Low productivity and low income
 High dropout rates from schools
 Child labor and social issues
 Economic underdevelopment

✅ Example: A poor family may not afford good food, leading to poor health and fewer job
opportunities.

1️⃣ What is money and what are its main functions?

Money is anything that people accept as a medium of exchange to buy and sell goods and
services.

✅ Main Functions of Money:

1. Medium of Exchange – Used to buy goods and services.

Example: You use ₹50 to buy vegetables.
2. Measure of Value – Tells how much something is worth.
Example: A pen costs ₹20, a book costs ₹100.
3. Store of Value – Can be saved and used later.
Example: You save ₹500 in your wallet for next week.
4. Standard of Deferred Payment – Used to make future payments.
Example: Paying EMIs for a mobile phone.

2️⃣ Why do we need banks?

Banks are safe places to keep money and provide financial services to people and
businesses.

✅ Why banks are important:

 Keep your money safe

 Give loans for home, business, etc.
 Pay interest on your savings
 Help in online transactions
 Support economic growth by giving credit

🔹 Example: You deposit ₹10,000 in a bank; later you take a ₹2 lakh loan for a bike.
3️⃣ What is the role of the Reserve Bank of India (RBI)?

The RBI is India’s central bank. It manages the money supply, interest rates, and
banking system of the country.

✅ Key Roles of RBI:

 Issues currency (₹ notes)

 Controls inflation and money flow
 Regulates banks
 Maintains foreign exchange reserves
 Acts as the government's banker

🔹 Example: If inflation rises, RBI may increase interest rates to control spending.

4️⃣ What is credit and how does it help the economy?

Credit means borrowing money now and paying it later (with interest).

✅ How it helps the economy:

 Allows people to buy things immediately

 Helps businesses grow
 Encourages investment and spending

🔹 Example: A farmer takes a loan to buy seeds. After harvest, he repays it and earns profit.
This supports agriculture and food supply.

5️⃣ What is the difference between commercial and central banks?

Commercial Banks Central Bank (RBI)

Serve the general public and businesses Manages the entire banking system
Accept deposits and give loans Issues currency and controls money supply
Example: SBI, HDFC, ICICI, Bank of Baroda Only one central bank in India – RBI
Earn profit through interest and services Works not for profit, but for economy

1️⃣ What is the difference between developed and developing countries?

 Developed countries are rich, advanced, and have high living standards.
 Developing countries are still growing and improving their economy and living
conditions.
 Feature Developed Countries Developing Countries
Income level High per capita income Low to middle income
Healthcare, education Well-developed Improving but not enough
Jobs & technology High-skilled, advanced tech Mostly agriculture/industry
Example USA, Germany, Japan India, Brazil, Nigeria

2️⃣ What are the main features of a developing economy like India?

 Large population
 High unemployment and poverty
 Low per capita income
 Agriculture-dependent economy
 Growing industries and services
 Focus on infrastructure, education, and health
 Mixed economy (public + private sectors)

3️⃣ What are the indicators of economic development?

These are signs that show how developed a country is:

1. Per Capita Income – Average income per person.

2. Literacy Rate – More educated people.
3. Life Expectancy – People live longer and healthier lives.
4. Employment Levels
5. Access to clean water, electricity, healthcare
6. Human Development Index (HDI) – Combines income, health, education.

🔸 Example: If a country has better schools, hospitals, and jobs, it shows development.

4️⃣ What is sustainable development?

Sustainable development means growing the economy without harming the environment
or future generations.

🔹 Simple meaning: Use today’s resources wisely so that our children also get to use them.

🔸 Example: Using solar energy instead of coal, planting trees, avoiding plastic.

5️⃣ What is the role of Five-Year Plans in India’s economic history?

India used Five-Year Plans (1951–2017) to plan and guide economic development.

✅ Their role:

 Set goals for agriculture, industry, education, and health.

 Focused on poverty reduction, employment, and self-reliance.
 Helped build infrastructure like roads, dams, and power plants.

🔹 Example: The Green Revolution (under 3rd Plan) increased food grain production.

1️⃣ What is inflation and why do prices keep rising?

Inflation means a general rise in prices of goods and services over time.
Prices rise when:

 Demand is more than supply

 Production costs increase (e.g. fuel, wages)
 The government prints more money

🔸 Example: If milk cost ₹40 last year and ₹50 today, that’s inflation.

2️⃣ Why does the value of money change over time?

Because as prices rise (inflation), the same ₹1️00 buys fewer items than before.

🔸 Example: ₹500 may buy a full grocery bag today, but only half in 5 years if prices rise.

3️⃣ Why do we pay taxes and where does the money go?

We pay taxes so the government can:

 Build roads, schools, hospitals

 Pay for defense, police, and welfare schemes
 Run the country smoothly

🔸 Example: GST, income tax, property tax help fund public services.

4️⃣ How does the government decide how much tax to collect?

The government looks at:

  Its spending needs (like roads, education)
 Income levels of people
 The health of the economy

It balances between collecting enough and not overburdening citizens.

5️⃣ Why are fuel prices always changing?

Fuel prices change due to:

 International crude oil prices

 Rupee-dollar exchange rate
 Government taxes and duties

🔸 Example: If global oil price rises or rupee weakens, petrol becomes costlier.

6️⃣ How is a country’s wealth measured?

Mainly by:

 GDP (Gross Domestic Product): Total value of goods & services in a year
 Per capita income
 Assets like industries, infrastructure

7️⃣ What causes poverty, and why is it hard to eliminate?

Causes:

 Lack of jobs and education

 Low wages
 Unequal distribution of resources
 Rapid population growth

It’s hard to remove because it needs long-term efforts in education, health, and job creation.

8️⃣ Why do salaries differ for different jobs?

 Skills and qualifications required

 Experience level
 Demand and supply of workers
 Nature of work (easy vs risky or rare)
🔸 Example: A software engineer earns more than a delivery person because of skill level and
demand.

9️⃣ How does saving money in a bank help the economy?

 Banks use your savings to give loans to businesses and people.

 This helps in investment, production, and job creation.

🔸 Your saved money → Bank → Loan to company → Builds factory → More jobs

🔟 Why do we face unemployment even when there is so much work to do?

Because:

 People may not have the right skills for available jobs
 Not enough industries or investments
 Seasonal jobs (like farming)
 Overpopulation

🔸 Example: A person with only farming skills can’t work in an IT company.

✅ 1. What is GDP and why is it important?

GDP (Gross Domestic Product) is the total value of goods and services produced in a
country in a year.

It shows how big and healthy the economy is.

🔸 Example: If India produces more cars, food, and services this year than last year, the GDP
increases.

Why important?

 It shows if the country is growing

 Helps plan government policies
 Used to compare with other countries

✅ 2. How does the budget affect common people?

The Union Budget decides:

 How the government earns (via taxes)

 How it spends (on roads, education, health, etc.)

It affects:

 Prices (via tax changes)

 Subsidies (like LPG or food)
 Jobs and salaries (through schemes or cuts)

🔸 Example: If the budget increases tax on mobile phones, they become costlier.

✅ 3. Why does the government give subsidies to farmers or industries?

Subsidies are financial help to reduce costs and encourage production.

To farmers:

 For cheap fertilizers, seeds, electricity

To industries:

 For exports, startups, MSMEs

🔸 Reason: To support income, reduce costs, and promote growth.

✅ 4. What is a recession, and how does it affect us?

A recession is when the economy slows down for months—less production, jobs, and
spending.

How it affects you:

 Job losses
 Lower salaries
 Fewer business opportunities
 People spend less

🔸 Example: During COVID, many lost jobs—this was a recession.

✅ 5. Why does the government borrow money?

To:

 Build infrastructure (roads, railways)

 Run welfare schemes
 Fill the gap when spending > income (deficit)

🔸 Like a family taking a loan for house renovation when savings are not enough.

✅ 6. How do interest rates affect loans and EMIs?

 If interest rates rise → Loans/EMIs cost more

 If interest rates fall → Loans/EMIs become cheaper

🔸 Example: If EMI for a home loan is ₹10,000 and rate rises, EMI may go to ₹11,000.

It affects:

 Borrowing decisions
 Home/car purchases
 Business investments

✅ 7. What is the black market or black money?

 Black money = income not reported to the government → no tax paid

 Black market = illegal buying/selling of goods

🔸 Examples: Selling petrol, gold, or cinema tickets at a higher price in cash without a bill.

Problem: It reduces tax income and increases corruption.

✅ 1. Why do prices go up or down in the market?

Prices change due to demand and supply.

 If more people want a product but there is less supply, price goes up.
 If fewer people want it or there's too much supply, price goes down.

🔸 Example: Onion prices rise during shortage and fall during surplus harvest.

✅ 2. What is demand and supply, and how do they affect prices?

  Demand = How much people want to buy
 Supply = How much sellers can provide

Price is decided by their interaction.

🔸 Example: During festivals, demand for sweets increases → prices go up.

✅ 3. Why do companies lay off workers during bad economic times?

In tough times (like recession or low sales), companies earn less, so to cut costs, they:

 Reduce staff
 Stop hiring
 Lower production

🔸 Example: During COVID, airlines and hotels laid off many workers due to travel bans.

✅ 4. What is stock market and why do people invest in it?

The stock market is a place where people buy/sell shares (ownership) of companies.

People invest to:

 Earn profits when prices go up

 Get dividends (company profit share)

🔸 Example: If you buy TCS shares at ₹3,000 and sell at ₹3,500, you gain ₹500 per share.

✅ 5. Why are imported goods sometimes cheaper than Indian ones?

 Mass production in other countries (like China) reduces costs

 Cheaper raw materials or labor abroad
 Better technology

🔸 Example: Chinese toys or electronics may cost less than Indian ones due to low production
cost.

✅ 6. What is a monopoly and how does it affect prices?

Monopoly means only one seller for a product or service—no competition.

They can:

 Set high prices

 Control supply
 Lower quality, as buyers have no choice

🔸 Example: If only one company supplied water, they could raise prices without losing
customers.

✅ 1. How does the Indian economy get affected by what happens in the US or
China?

India is connected to the world through trade, investment, and finance. If something big
happens in the US or China, it can affect India.

 If US interest rates rise, foreign investors may pull money out of India → Rupee
falls.
 If China slows down, Indian exports to China reduce → Indian factories may suffer.

🔸 Example: During the 2008 US financial crisis, Indian stock markets also crashed.

✅ 2. What is foreign trade and why is it important?

Foreign trade means buying and selling goods/services with other countries.

It’s important because it:

 Brings foreign money (forex) into India

 Provides access to cheaper or better goods
 Helps Indian businesses expand globally

🔸 Example: India exports software and imports crude oil. Both help keep the economy
running.

✅ 3. Why does the value of the rupee rise or fall compared to the dollar?

The rupee's value is based on demand and supply in the currency market.

 If more people want dollars (for imports or travel), rupee value falls.
 If more dollars come into India (through exports or investments), rupee rises.
🔸 Example: If India imports more than it exports, demand for dollars increases → ₹
weakens.

✅ 4. What is the role of institutions like IMF and World Bank?

 IMF (International Monetary Fund) helps countries in financial crisis by giving

short-term loans and advice.
 World Bank gives long-term loans for development projects like roads, health, and
education.

🔸 Example: After COVID, IMF gave emergency funds to help countries recover.

✅ 1. Why is there economic inequality in society?

Economic inequality means some people have more money, property, or opportunities
than others. This happens due to:

 Unequal access to education, jobs, and resources

 Differences in skills, background, or location
 Some people inherit wealth, others start with nothing
 Government policies may favor certain groups or sectors

🔸 Example: A child born in a rich family in a city has better chances than one in a poor rural
area with no school nearby.

✅ 2. How can education and health improve a country’s economy?

Good education and healthcare create skilled and healthy workers, which makes the
economy stronger.

 Education improves productivity, innovation, and income

 Healthy people work longer and better, reducing losses
 Countries with better human capital attract more investment

🔸 Example: IT sector in India grew because of educated youth. Kerala’s development is

also linked to better health and literacy.

✅ 3. What is the role of women in the economy?

Women play a huge role in the economy—both in paid jobs and unpaid work (like
household chores, caregiving).

 More women in jobs → Higher family income and national growth

 Women entrepreneurs → More businesses and innovation
 Gender equality improves overall social progress

🔸 Example: Self-help groups and women-led startups in India are creating jobs and changing
communities.

✅ 1. Is India a rich country or a poor country?

India is neither fully rich nor fully poor. It is a developing country with both:

 Rich people and big industries (like IT, pharma)

 Poor people who struggle with basic needs
 Large economic potential, but challenges like poverty, inequality, and unemployment

🔸 Example: India has billionaires and also people living in slums.

✅ 2. Why is India called a developing economy?

India is still working on:

 Improving healthcare, education, jobs

 Reducing poverty and inequality
 Building infrastructure like roads, electricity, internet

So, it's not fully developed yet but is making progress. That’s why it's called a developing
economy.

🔸 Example: Metro cities are advanced, but many villages still lack clean drinking water.

✅ 3. Why does India's GDP grow some years and fall in others?

GDP (total value of goods and services) can grow or fall due to:

 Good or bad monsoon (affects farming)

 Global factors like oil prices or war
 Government policies, reforms, or elections
 Shocks like COVID-19, which reduced business activity
🔸 Example: During 2020 (COVID), GDP fell sharply; it bounced back in 2021–22.

✅ 4. How does economic growth benefit ordinary people?

When the economy grows:

 More jobs are created

 Incomes rise
 Government gets more taxes → spends on schools, hospitals, roads
 Businesses expand, giving more services/products

🔸 Example: Growth in mobile and internet industry made smartphones and data affordable.

✅ 5. What is a 5 trillion dollar economy, and why is it important?

It means India wants the total size of its economy (GDP) to reach $5 trillion in value.

 It shows growth in production, exports, income

 Helps attract global investors
 Indicates better living standards, jobs, and infrastructure

🔸 Example: Bigger economy means more startups, highways, airports, and welfare schemes.

✅ 1. Why are farmers in India often in debt?

Many Indian farmers fall into debt because:

 They borrow money to buy seeds, fertilizers, or tractors

 If the crop fails due to drought, flood, or pests, they can't repay the loan
 They often get low prices for their produce
 High-interest loans from moneylenders make things worse

🔸 Example: A small farmer borrows ₹50,000 for his crop. If there's no rain, he loses the crop
and still owes the money.

✅ 2. Why is farming not profitable for many farmers?

Farming is often not profitable because:

  High input costs (seeds, fertilizers, machines)
 Low prices at markets or middlemen take a cut
 Lack of storage leads to crop waste
 No proper irrigation, so farmers depend on rain
 Small landholdings mean less income

🔸 Example: A tomato farmer grows 1 ton of tomatoes but gets only ₹2 per kg when the
market is flooded with supply.

✅ 3. What is MSP (Minimum Support Price) and how does it help farmers?

MSP is the minimum price the government promises to pay farmers for certain crops.

 It protects farmers from price falls

 Ensures they earn at least a basic income
 Helps them plan their farming without fear of loss

🔸 Example: If the MSP of wheat is ₹2,200 per quintal, and market price drops to ₹1,800, the
government still buys it at ₹2,200.

✅ 4. Why is agriculture still the main source of employment in India?

 A large part of the population lives in villages

 Not everyone has skills or education for factory or office jobs
 Farming is inherited, so families keep doing it
 Other sectors haven’t grown enough in rural areas to provide alternatives

🔸 Example: In some villages, more than 70% of people depend on farming for income.

✅ 5. What is the Green Revolution and how did it change Indian agriculture?

The Green Revolution (1960s–70s) was a period when:

 New technology, seeds, fertilizers, and irrigation were introduced

 Crop production, especially wheat and rice, increased rapidly
 It helped reduce hunger and made India self-sufficient in food

🔸 Example: Punjab and Haryana became major wheat producers due to Green Revolution
methods.
✅ 1. Why is there so much unemployment in India despite many young
people?

India has a huge youth population, but not enough quality jobs.

 Education often doesn’t match industry needs

 Many youth lack practical skills
 Growth in job-creating sectors like manufacturing is slow
 Too many people compete for very few government jobs

🔸 Example: A graduate might apply for a peon job because no better job is available.

✅ 2. What is disguised unemployment in villages?

Disguised unemployment means more people are working than needed, but not everyone is
truly “employed.”

 Common in farming: 5 people may be working on a small farm, but only 2 are really
needed.
 Others are technically “employed” but not adding value.

🔸 Example: A family of 6 works on a tiny piece of land—only 2 are doing productive work;
others could do something else.

✅ 3. Why are so many Indians still working in the informal sector?

The informal sector means jobs without contracts, job security, or benefits.

 It’s easier and cheaper for businesses to hire informally

 Many small businesses can’t follow all government rules
 Formal sector jobs are limited and competitive
 Informal jobs are easy to find but often low paid

🔸 Example: Street vendors, construction workers, and helpers in shops are all part of the
informal sector.

✅ 4. What is Make in India, and has it been successful?

Make in India is a government initiative started in 2014 to:

 Encourage companies to manufacture in India

 Create jobs
  Boost exports and reduce imports

📉 Mixed success: It helped attract some investment and improved India's image, but job
creation has been slower than expected, especially in rural areas.

🔸 Example: Mobile phone manufacturing increased in India due to Make in India.

✅ 5. Why are small businesses important for the Indian economy?

Small businesses:

 Provide jobs to millions, especially in rural and semi-urban areas

 Need less capital to start
 Are flexible and innovative
 Contribute to exports and local supply chains

🔸 Example: A small textile unit in Surat gives jobs to 20 workers and helps local economy
grow.

✅ 1. Why are cities growing so fast in India?

Cities are growing fast because people from villages move to urban areas for:

 Better job opportunities

 Access to education and healthcare
 More facilities and comforts of life

This process is called urbanization.

🔸 Example: A young man from a village in Bihar moves to Delhi to work in a private
company and earn better.

✅ 2. Why are roads, electricity, and water supply still poor in some areas?

Some areas lack good infrastructure because of:

 Poor planning or delays in government projects

 Lack of funds or corruption
 Remote or difficult terrain
 Rapid population growth that outpaces development
🔸 Example: A village may have electricity poles but still face daily power cuts due to lack of
proper supply.

✅ 3. What is Digital India and how is it changing the economy?

Digital India is a government program started in 2015 to:

 Make government services available online

 Improve internet access across the country
 Promote digital payments and online business

📱It is changing the economy by:

 Helping small shops use UPI and QR codes

 Letting people apply for jobs, ID cards, and schemes online
 Boosting startups and IT companies

🔸 Example: A vegetable vendor using a smartphone to accept payments through Google Pay.

✅ 4. How does tourism contribute to India's economy?

Tourism brings in foreign currency and creates jobs in:

 Hotels and restaurants

 Transport (taxis, buses)
 Handicrafts and local shops
 Heritage and entertainment services

It promotes local culture and economy.

🔸 Example: Tourists visiting Jaipur boost income for guides, hotels, rickshaw drivers, and
local artisans.

✅ 1. What is the Union Budget and how does it affect common people?

The Union Budget is the government's annual financial plan. It tells us:

 How the government will earn (mainly through taxes)

 Where it will spend the money (on roads, health, defence, education, etc.)

📌 It affects common people because it decides:

  Tax rates (like GST, income tax)
 Prices of goods (by changing duties on petrol, mobile phones, etc.)
 Spending on public welfare (like health, education, farmer support)

🔸 Example: If tax on LPG is reduced, your gas cylinder becomes cheaper.

✅ 2. What is the role of NITI Aayog?

NITI Aayog (replaced the Planning Commission in 2015) is a think tank for the
government. It:

 Gives ideas and suggestions for long-term development

 Encourages cooperation between Centre and States
 Promotes innovation and digital transformation

🔸 Example: NITI Aayog helps in drafting health or digital policies for rural areas.

✅ 3. Why does the government launch schemes like PM-KISAN or

MGNREGA?

To support weaker sections of society:

 PM-KISAN gives ₹6,000 per year to farmers as income support

 MGNREGA gives guaranteed 100 days of work to rural households

These schemes reduce poverty and give basic income or jobs to those who need them.

🔸 Example: A small farmer in Uttar Pradesh receives ₹2,000 every 4 months directly into
their bank account under PM-KISAN.

✅ 4. How does the government help the poor and unemployed?

The government runs welfare programs like:

 Free or subsidized food (Public Distribution System - PDS)

 Job training (Skill India Mission)
 Unemployment allowances (in some states)
 Affordable housing (PM Awas Yojana)
 Health insurance (Ayushman Bharat)

These reduce the struggle of poor families and help them live with dignity.
✅ 5. What is the role of public sector companies (like LIC, SBI, etc.)?

Public sector companies are government-owned businesses. They:

 Provide important services (like banking, insurance, transport)

 Ensure fair prices for all citizens
 Offer jobs and contribute to economic stability

🔸 Examples:

 SBI gives loans to farmers, students, and small businesses

 LIC provides life insurance to rural and urban families
 Indian Railways connects the entire country affordably

✅ 1. Why does India import oil, gold, and electronics?

India imports these items mainly because:

 Oil: India doesn’t produce enough crude oil to meet its huge energy demand. So, we
import it, mainly from the Middle East.
 Gold: Indians have a cultural love for gold, used in weddings and savings, but
domestic production is very low.
 Electronics: India doesn’t make enough chips, phones, or laptops locally, so we
import them from countries like China, South Korea, etc.

🔹 Real-life impact: Rising oil prices increase petrol/diesel prices in India, which affects
inflation.

✅ 2. What is the role of FDI (Foreign Direct Investment) in India?

FDI is when foreign companies invest money directly in Indian businesses, factories, or
services.

FDI helps India by:

 Bringing in capital (money) and technology

 Creating jobs (e.g., in retail, telecom, manufacturing)
 Boosting exports and local production (e.g., Make in India)

🔹 Example: Apple and Samsung setting up mobile manufacturing units in India due to FDI
policies.
✅ 3. How is India competing with China economically?

India competes with China by:

 Becoming an alternative manufacturing hub (under "Make in India")

 Offering a huge consumer market (1.4 billion people)
 Promoting digital economy, startups, and service exports

However, China is still ahead in:

 Infrastructure
 Global trade share
 Advanced manufacturing

🔹 India's strength: IT services, startups, skilled labor

🔹 China’s strength: Large-scale production, exports, supply chains

✅ 4. Why is the rupee falling or rising against the dollar?

The value of the rupee changes based on:

 Demand and supply of dollars in India

 Imports vs exports (more imports = more demand for dollars = weaker rupee)
 Foreign investment flows (FDI, FII)
 Interest rates and inflation

🔹 When rupee falls: Imports (like oil, electronics) become costlier

🔹 When rupee rises: Imports become cheaper, but exports may reduce

✅ 5. How do NRIs (Non-Resident Indians) help the Indian economy?

NRIs support the Indian economy by:

 Sending remittances (money to families in India) – over $80 billion per year
 Investing in Indian real estate, stocks, and banks
 Promoting India’s image abroad
 Supporting tourism and creating demand for Indian goods

🔹 Example: An NRI in Dubai sending ₹50,000 monthly to their family in Kerala contributes
to both family income and local economy.
✅ 1. How does poverty affect the economy?

Poverty impacts the economy in several negative ways:

 Low productivity: Poor people often lack education, health, and skills—reducing
their economic output.
 Low demand: If large sections of society are poor, they can’t buy goods—hurting
businesses and slowing growth.
 Higher government burden: More spending is needed on welfare, food subsidies,
and healthcare.
 Poor human capital: Long-term poverty affects children's education and health—
hurting future growth.

🔹 Conclusion: Poverty leads to a cycle of low income, low demand, and slow
development.

✅ 2. Why is inequality rising even when the economy is growing?

Economic growth can increase inequality when:

 Growth benefits only the rich or urban areas, not the poor or rural.
 High-paying jobs require skills or education that many don’t have.
 Wealth from business or real estate is not redistributed.
 Automation and digitalization create jobs for some, but reduce jobs for low-skilled
workers.

🔹 India’s case: Urban India and top earners are growing faster than rural or informal sector
workers.

✅ 3️. What is the role of women in India’s economic development?

Women are vital for a strong economy:

 They contribute to workforce, entrepreneurship, and household income.

 Educated and employed women boost family health, education, and savings.
 Women-led SHGs (Self-Help Groups) and businesses support rural development.

However:

 India’s female labor force participation is low (around 20%).

 Many women work in the unpaid or informal sector.

🔹 Policies like Beti Bachao, PM Ujjwala, and MUDRA loans aim to empower women
economically.
✅ 4️. How is climate change affecting India’s economy?

Climate change has serious economic consequences:

 Agriculture suffers from irregular rainfall, droughts, floods (India depends heavily
on monsoons).
 Health costs rise due to heatwaves and pollution-related diseases.
 Coastal cities face risks from rising sea levels (e.g., Mumbai, Chennai).
 Damages to infrastructure, water resources, and energy supply affect industries
and services.

🔹 Sectors most affected: Farming, fishing, tourism, public health, and rural livelihoods.

🔹 India’s response: Focus on solar energy, EVs, green growth, and international efforts like
the International Solar Alliance.

✅ 1. How does poverty affect the economy?

Poverty impacts the economy in several negative ways:

 Low productivity: Poor people often lack education, health, and skills—reducing
their economic output.
 Low demand: If large sections of society are poor, they can’t buy goods—hurting
businesses and slowing growth.
 Higher government burden: More spending is needed on welfare, food subsidies,
and healthcare.
 Poor human capital: Long-term poverty affects children's education and health—
hurting future growth.

🔹 Conclusion: Poverty leads to a cycle of low income, low demand, and slow
development.

✅ 2. Why is inequality rising even when the economy is growing?

Economic growth can increase inequality when:

 Growth benefits only the rich or urban areas, not the poor or rural.
 High-paying jobs require skills or education that many don’t have.
 Wealth from business or real estate is not redistributed.
 Automation and digitalization create jobs for some, but reduce jobs for low-skilled
workers.
🔹 India’s case: Urban India and top earners are growing faster than rural or informal sector
workers.

✅ 3️. What is the role of women in India’s economic development?

Women are vital for a strong economy:

 They contribute to workforce, entrepreneurship, and household income.

 Educated and employed women boost family health, education, and savings.
 Women-led SHGs (Self-Help Groups) and businesses support rural development.

However:

 India’s female labor force participation is low (around 20%).

 Many women work in the unpaid or informal sector.

🔹 Policies like Beti Bachao, PM Ujjwala, and MUDRA loans aim to empower women
economically.

✅ 4️. How is climate change affecting India’s economy?

Climate change has serious economic consequences:

 Agriculture suffers from irregular rainfall, droughts, floods (India depends heavily
on monsoons).
 Health costs rise due to heatwaves and pollution-related diseases.
 Coastal cities face risks from rising sea levels (e.g., Mumbai, Chennai).
 Damages to infrastructure, water resources, and energy supply affect industries
and services.

🔹 Sectors most affected: Farming, fishing, tourism, public health, and rural livelihoods.
🔹 India’s response: Focus on solar energy, EVs, green growth, and international efforts like
the International Solar Alliance.