Economics Class 12 CBSE

Q. Who is known as father of Economic?

Ans. ‘Adam Smith’ is known as father of economic.

Q. Define economy?

Ans. An economy is a system by which people get their living. Economy is therefore, concerned with the production consumption, Distribution and investment of goods and services.

Q. How many types of economy are there?

Ans. There are three types of economy – 

1) Capitalist economy / Market Economy

2) Socialist Economy / Planned Economy.

3) Mixed Economy

Q. Write a characteristics of Capitalist Economy?

Ans. The characteristics of Capitalist or Market Economy are – 

1) In market economy all goods & services are produced by private sector.

2) It means all resources are owned by private sector.

3) Prices of goods and Economic resources are determined by demand and supply forces.

4) Goods are produced for profit objective.

5) Standard of living of people in a market economy is generally high.

6) Rate of economic growth is high.

7) Example of Capitalist Economy are USA, UK, Canada etc.

Q. Write 4 Characteristics of the Centrally Planned or Socialist economy?

Ans. The Characteristics of the centrally planned economy or Socialist Economy are-

1) In centrally planned economy or Socialist Economy all good and Services are produced by government sector.

2) It means all resources are owned by government sector.

3) Planned Economy doesn’t follow price mechanism.

4) Goods are produced for social Objective.

5) Standard of living of people in a centrally planned economy or Socialist Economy is generally low.

6) Rate of economic growth is low/no so high.

7) Example of planned economy are Russia, Thailand, Malaysia etc.

Q. Write characteristics of Mixed Economy.

Ans. 1) A mixed Economy has both features of market economy and centrally planned Economy.

2) It means, goods are produced by private and government sector.

3) Private sector has profit objective and government sector has social objective to produce goods and services.

4) Example of mixed Economy are India, Bhutan, Pakistan, Sri- Lanka etc. 

Q. Distinguish between market and planned economy?

Ans. refer to other ans.

Q. What is the meaning of economic problem?

Ans. An economic problem is basically the problem of choice, which arises due to scarcity of resources having alternative uses.

Q. Why do economic problems arise?

Ans. Economic problem arise due its following facts of economic life.

1) Unlimited wants Human wants are unlimited. As we satisfy one want, many more new wants come up. Similarly, with the development of education, knowledge, Scientific advancement and economic growth wants go on increasing.

2) Limited Resources –  If resources (means) would have also been unlimited to satisfy unlimited wants there would have been no economic problem. The reality of life is different i.e. the existing supply of resources is inadequate in relation to the known desires of individuals. This give rise to the problems of scarcity which is the basis of all economic problem.

3) Resources having alternative uses – Resources are not only limited but they can also be used for different alternative uses. for example wood may be used for fuel, furniture, house construction and many other uses.

Q. Define Scarcity?

Ans. Scarcity means shortage of resources in relation to their demand is called scarcity.

Q. Define central problem?

Ans. Central problem is concerned with the problems of choice or the problem of resources allocation.


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