ECONOMICS (856)

CLASS XII
There will be two papers in the subject: (statement, schedule) and conditions of
consumer’s equilibrium using marginal
Paper I - Theory: 3 hours ……80 marks utility; (b) Ordinal Utility Analysis:
Paper II- Project Work ……20 marks Indifference Curve – its meaning and
properties (including MRS and DMRS),
PAPER - I (THEORY) – 80 Marks indifference map, consumer’s budget line,
Consumer’s equilibrium – condition (to be
Part I (20 marks) will consist of compulsory short explained with the help of a diagram).
answer questions testing knowledge, application and
(ii) Elasticity of demand: meaning, types of
skills relating to elementary / fundamental aspects of
elasticity of demand, measurement of
the entire syllabus.
elasticity of demand; factors affecting
Part II (60 marks) will consist of eight questions out elasticity of demand.
of which candidates will be required to answer five Various methods of measurement of the
questions, each carrying 12 marks. elasticity of demand: point method -
percentage method, expenditure method and
Note: The syllabus is intended to reflect a study of the geometric method. (Numericals required on
theory of Economics with specific reference to the percentage method only). The cross and
Indian Economy. Therefore, examples and specific income elasticity of demand must be
references to the Indian Economy must be made explained. Degrees of elasticity of demand to
wherever relevant. be explained. Use diagrams wherever
necessary.
1. Micro Economic Theory
(iii) Supply: meaning; difference between stock
(i) Demand: meaning, factors affecting demand;
and supply; determinants of supply; Law of
Demand function; Law of Demand; derivation
Supply; movement and shift of the supply
of demand curve; movement and shift of the
curve; elasticity of supply
demand curve; exceptions to the Law of
Demand. Difference between stock (intended supply)
and supply (actual supply) with the help of
Law of Diminishing Marginal Utility, Law of
relevant examples. A supply function should
Equimarginal Utility, consumer’s equilibrium
be specified and explained. Law of Supply,
through utility approach (Cardinal) and
supply schedule and supply curve. Derivation
indifference curve analysis (Ordinal).
of market supply curve from individual supply
The concept of demand: meaning. A demand curve. Movement and shift of the supply
function to be specified incorporating the curve, exceptions to the Law of Supply.
determinants of demand. Diagrams should be Elasticity of Supply: Meaning and
used in explaining the Law of Demand, measurement of elasticity of supply by
reasons for downward slope of demand curve, percentage method and geometric method.
its derivation using demand schedule. (iv) Market Mechanism: Equilibrium and
Derivation of market demand curve from disequilibrium; Equilibrium price and effect
individual demand curve. of changes in demand and supply on the
(a) Cardinal Utility Analysis: meaning of equilibrium price. Simple applications of tools
utility, total utility, marginal utility, of demand and supply.
relationship of TU and MU, Law of A basic understanding of the concept of
Diminishing Marginal Utility (schedule and equilibrium. The effects of changes in demand
diagram, Only assumptions to be taught, and supply - both along the curves and shift of
criticisms not required), Consumer’s the curves to be explained. Basic
equilibrium – one commodity (schedule and understanding of Price control, rationing,
diagram), Law of Equimarginal Utility
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 Price ceiling and Floor price with the help of components, propensity to consume and propensity
demand and supply curves. to save (average and marginal), equilibrium
(v) Concept of production and production output.
function (short run and long run production
function), returns to a factor, total, average 3. Money and Banking
and marginal physical products; Law of (i) Money: meaning, functions of money, supply
Variable Proportions and its three stages.
of money.
A production function (concept only). Law of
Variable Proportions: statement, Meaning, kinds of money, functions of money
assumptions, schedule (for the purpose of (primary, secondary and contingent) to be
understanding and not for testing), diagram explained; supply of money (only meaning
and explanation to the three stages. of M 1 , M 2 , M 3 & M 4 ).
(vi) Cost and revenue: Basic concepts of cost; (ii) Banks: functions of commercial bank; high
fixed cost, variable cost, total cost, marginal powered money, credit creation by
cost and average cost – their relationships; commercial banks; Central Bank: functions.
opportunity cost; short run and long run cost
curves. Revenue: meaning; average revenue, Basic understanding of the functions of
marginal revenue and total revenue and their commercial banks, credit creation process
relationships under perfect competition and with limitation. The regulatory role of the
imperfect competition. Central Bank, its functions and the way it
Basic concepts – private cost, economic cost, controls the flow of credit needs to be
social cost, money cost, real cost, explicit explained. A brief mention may be made of
cost, implicit cost. quantitative CRR, SLR, Bank Rate policy
(repo rate and reverse repo rate) and Open
Cost concepts – Fixed cost, variable cost,
Market Operations) and qualitative methods.
total cost, marginal cost, average cost with
schedule and diagram; relationship between
4. Balance of Payment and Exchange Rate
average cost, marginal cost, total cost (only
concepts of long run and short run cost Balance of Payment – meaning, components;
curves, derivations not required). Opportunity foreign exchange – meaning, determination of
cost – meaning only. Difference between exchange rate (Flexible).
accounting cost and opportunity cost. Balance of Payment - Meaning and components;
Revenue – Average revenue, marginal Causes of disequilibrium and how the
revenue, total revenue – concepts and disequilibrium can be corrected; Foreign
relationships under perfect competition and Exchange Rate – meaning, meaning of fixed and
imperfect competition. flexible exchange rate, determination of exchange
rate in a free market. Concepts of depreciation,
(vii) Main market forms: perfect competition, appreciation, devaluation and revaluation
monopolistic competition, oligopoly, (meaning only).
monopoly, monopsony; characteristics of the
various market forms. 5. Public Finance
Features of perfect competition, monopolistic (i) Fiscal Policy: meaning and instruments of
competition, oligopoly, monopoly and fiscal policy.
monopsony (meaning only). Meaning and instruments of fiscal policy –
Public Revenue: Meaning, taxes (Meaning
2. Theory of Income and Employment and types), difference between direct and
Basic concepts and determination of Income and indirect taxes; Public Expenditure: Meaning
Employment and importance; Public Debt: Meaning and
redemption; Deficit Financing: meaning.
The concept of demand (exante) and effective
(expost) demand. Aggregate demand and its

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 (ii) Government Budget: meaning, types and 3. Compare the contribution made by different
components. sectors of the economy towards GDP growth
Meaning and types of Government budget – during the planning period.
union, state; components – revenue and 4. Prepare a report on the competition in the
capital. Concept of deficit budget: revenue Aviation Sector in India with reference to:
deficit, fiscal deficit, primary deficit – their
meaning and implications. (a) Performance of the Public Sector and Private
Sector.
6. National Income (b) Operational strategies adopted by budget/low
(i) Circular flow of Income. cost carriers.
A simple model explaining the circular flow of 5. Make a comparative analysis of lending
income with two, three and four sector models performance of five Commercial Banks in the past
with leakages and injections. six years with reference to the changing CRR and
SLR.
(ii) Concepts and definition of NY, GNP, GDP,
NNP. 6. Many thinkers believe that we are rapidly
A brief understanding of the mentioned depleting our natural resources. Assume that there
national income aggregates is needed. The are only two inputs (labour and natural resources)
concepts of GNP and NNP should be producing two goods (wheat and gasoline) with
explained both at factor cost and market no improvement in technology over time. Show
prices, real GDP and nominal GDP. what would happen to the Production Possibility
Curve over time as natural resources are
exhausted. How would invention and
PAPER II – PROJECT WORK – 20 Marks technological improvement modify your answer?
Candidates will be expected to have completed two On the basis of this example, explain why it is
projects from any topic covered in Theory. said “economic growth is a race between
The practical work will be assessed by the teacher depletion and invention.”
and a Visiting Examiner appointed locally and 7. Make a comparative study of the allocation of
approved by the Council. financial resources of the Central Government
Mark allocation for each Project [10 marks]: Budget on Agriculture, Defence, Industry and
Education in the last ten years. Prepare a report on
Overall format 1 mark your observations.
Content 4 marks 8. Prepare a trend Analysis of Growth and
Findings 2 marks Productivity of any one industry such as:
Viva-voce based on the Project 3 marks Textile / Automobiles / Electronic and
Tele-communication, etc. in India for the past ten
A list of suggested Projects is given below: years.
1. Study a Public Sector Enterprise with reference to
its relevance to the Indian Economy and its future NOTE: No question paper for Practical work will be
prospects. Analyse the trend of its growth for the
set by the Council.
last ten years.
2. Conduct a Socio-Economic survey of a locality
(minimum sample size should be 30 households)
with reference to:
(a) Demographic features.
(b) Consumption Pattern – Expenditure on
necessities, comforts and luxuries.
(c) Occupational structure.
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 SAMPLE TABLE FOR PRACTICAL WORK
S. Unique PROJECT 1 PROJECT 2 TOTAL
No. Identification MARKS
Number A B C D E F G H I J
(Unique ID) Teacher Visiting Average Viva- Total Teacher Visiting Average Viva- Total (E + J)
of the Examiner Marks Voce by Marks Examiner Marks Voce by Marks
candidate (A + B ÷ Visiting (C + D) (F + G ÷ Visiting (H + I)
2) Examiner 2) Examiner
7 7 Marks* 7 Marks 3 Marks 10 7 7 Marks* 7 Marks 3 Marks 10 Marks 20 Marks
Marks* Marks Marks*
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*Breakup of 7 Marks to be awarded separately by Name of Teacher: