| Non-Rationalised Economics NCERT Notes, Solutions and Extra Q & A (Class 9th to 12th) | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9th | 10th | 11th | 12th | ||||||||||||||||
| Class 12th Chapters | ||
|---|---|---|
| Introductory Microeconomics | ||
| 1. Introduction | 2. Theory Of Consumer Behaviour | 3. Production And Costs |
| 4. The Theory Of The Firm Under Perfect Competition | 5. Market Equilibrium | 6. Non-Competitive Markets |
| Introductory Macroeconomics | ||
| 1. Introduction | 2. National Income Accounting | 3. Money And Banking |
| 4. Determination Of Income And Employment | 5. Government Budget And The Economy | 6. Open Economy Macroeconomics |
Class 12th Economics NCERT Notes, NCERT Question Solutions and Extra Q & A (Non-Rationalised)
Introductory Microeconomics
1. Introduction
This chapter introduces **microeconomics**, the branch of economics that studies the behavior of individual economic units like consumers and firms. It discusses the central problem of **scarcity** – limited resources versus unlimited wants – leading to the need for **choice**. The chapter introduces the concept of a **production possibility frontier (PPF)**, illustrating opportunity cost and trade-offs. It differentiates microeconomics from macroeconomics and outlines the basic economic problems (what, how, and for whom to produce) faced by any economy, whether centrally planned, market, or mixed (like India's economy).
2. Theory Of Consumer Behaviour
This chapter explores the **theory of consumer behaviour**, explaining how consumers make decisions to maximize satisfaction (**utility**) given their budget constraints. It discusses utility concepts (total utility, marginal utility, Law of Diminishing Marginal Utility). Consumer's equilibrium is explained using utility analysis or the framework of **indifference curves** (showing equal satisfaction) and **budget lines** (showing affordable bundles). The chapter also covers demand, the **Law of Demand** (inverse price-quantity relationship), and factors influencing demand and its elasticity, crucial for understanding consumer choices in markets.
3. Production And Costs
This chapter focuses on the **theory of production** and the **costs** faced by a firm. It introduces the **production function**, showing the relationship between inputs (factors of production like labour, capital, land) and the maximum output produced. The concepts of **returns to a factor** (Law of Variable Proportions) in the short run and **returns to scale** in the long run are explained. Various cost concepts are discussed: total cost, fixed cost, variable cost, average cost, average fixed cost, average variable cost, and **marginal cost**. Understanding the relationship between production, input use, and costs is crucial for firms making profit-maximizing decisions.
4. The Theory Of The Firm Under Perfect Competition
This chapter analyzes the behavior of a **firm operating under perfect competition**, a market structure with many buyers and sellers, homogeneous products, perfect information, and free entry and exit. It discusses revenue concepts: total revenue, average revenue (= price), and **marginal revenue**. The chapter explains how a firm maximizes profit by producing the output where **marginal cost equals marginal revenue (MC = MR)** and MC is rising. The firm's equilibrium in the short run and the long run, and the derivation of the firm's and industry's supply curves under perfect competition are detailed.
5. Market Equilibrium
This chapter combines the theory of demand (from consumers) and the theory of supply (from firms) to explain how the price and quantity of a good are determined in a **market** under perfect competition. **Market equilibrium** is the state where the quantity demanded by consumers exactly equals the quantity supplied by firms at a specific price. Concepts like excess demand and excess supply are discussed, explaining how market forces (shortages/surpluses) drive the price towards the equilibrium level. The chapter also analyzes how shifts in demand and supply curves, caused by external factors, affect the equilibrium price and quantity in the market.
6. Non-Competitive Markets
This chapter explores market structures other than perfect competition, where firms have some degree of market power. It discusses **Monopoly** (single seller), explaining how a monopolist determines price and output to maximize profit (where MC=MR, but MR < Price) and the concept of price discrimination. **Monopolistic Competition** (many sellers, differentiated products) and **Oligopoly** (few sellers, interdependence) are also introduced. The chapter contrasts these market structures with perfect competition, highlighting differences in pricing behavior, output levels, and efficiency, providing a broader understanding of market dynamics beyond the idealized competitive model.
Introductory Macroeconomics
1. Introduction
This chapter introduces **macroeconomics**, the branch of economics that deals with the aggregate behavior of an economy, looking at the big picture. It focuses on economy-wide phenomena such as national income, employment, inflation, aggregate consumption, aggregate investment, and economic growth. It contrasts macroeconomics with microeconomics, which studies individual units. The chapter highlights the importance of macroeconomic analysis for understanding the overall performance of a national economy and for guiding government policy related to fiscal (taxation, spending) and monetary matters (money supply) to achieve macroeconomic stability and growth, highly relevant for India's economic policy.
2. National Income Accounting
This chapter explains how the aggregate economic activity of a nation is measured, a process called **National Income Accounting**. It introduces key concepts like **Gross Domestic Product (GDP)** (total value of goods/services produced within a country's borders in a year), Gross National Product (GNP), Net Domestic Product (NDP), and Net National Product (NNP). The three methods used to calculate national income are detailed: the Value Added Method (Production Method), the Income Method (sum of factor incomes), and the Expenditure Method (sum of final expenditures). The chapter also discusses important aggregates like disposable income and the limitations of GDP as a measure of social welfare, crucial for interpreting economic statistics.
3. Money And Banking
This chapter discusses the role of **money** in a modern economy, highlighting its functions as a **medium of exchange**, a unit of account, and a store of value, which facilitates economic transactions. It explores the evolution of money. The chapter then focuses on **banking**, explaining the functions of **commercial banks** (accepting deposits, giving loans, credit creation). It introduces the **Central Bank** (Reserve Bank of India - RBI in India) and its vital functions, including issuing currency, acting as banker to the government and commercial banks, and controlling money supply and credit through monetary policy tools (e.g., Cash Reserve Ratio - CRR, Statutory Liquidity Ratio - SLR, Repo Rate, Reverse Repo Rate).
4. Determination Of Income And Employment
This chapter presents the Keynesian theory of how the level of **income** and **employment** is determined in the short run. It introduces the concepts of **aggregate demand (AD)** (total planned spending in the economy) and **aggregate supply (AS)** (total planned output). The components of AD (consumption $\textsf{C}$, investment $\textsf{I}$, government spending $\textsf{G}$, net exports $\textsf{X-M}$) are discussed, along with the consumption function ($\textsf{C} = \bar{\textsf{C}} + \textsf{c}\textsf{Y}$). The equilibrium level of income and employment is determined where AD equals AS. Concepts like full employment, voluntary/involuntary unemployment, and the **multiplier** effect are explained.
5. Government Budget And The Economy
This chapter focuses on the **government budget**, an annual statement outlining the government's estimated receipts and expenditures. It explains the components of the budget: **revenue receipts** (taxes, non-tax revenue), **capital receipts** (borrowings, disinvestment), **revenue expenditure** (consumption, subsidies), and **capital expenditure** (asset creation, infrastructure). Different measures of budget deficits (revenue deficit, fiscal deficit $\textsf{Fiscal Deficit} = \textsf{Total Expenditure} - \textsf{Total Receipts except Borrowings}$) are discussed, indicating the government's borrowing needs. The chapter highlights the objectives of fiscal policy (stabilisation, resource allocation, income redistribution) and how government spending and taxation impact the economy, relevant for understanding India's annual budget proposals ($\textsf{₹}$).
6. Open Economy Macroeconomics
This chapter extends macroeconomic analysis to an **open economy** that interacts with other countries through international trade and capital flows. It introduces concepts like exports and imports, exchange rates, and the **balance of payments** (a systematic record of all economic transactions between a country and the rest of the world), including the **current account** (trade in goods/services, transfers) and **capital account** (investment, loans). The foreign exchange market and different exchange rate systems (fixed vs. flexible) are discussed. The chapter explores how international economic transactions impact the domestic economy and highlights the challenges of managing an open economy in a globalized world, important for understanding India's trade and exchange rate policies.