| Latest Economics NCERT Notes, Solutions and Extra Q & A (Class 9th to 12th) | |||||||||||||||||||
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| 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 | |
| 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 |
Latest Class 12th Economics NCERT Notes, NCERT Question Solutions and Extra Q & A
Introductory Microeconomics
1. Introduction
This chapter introduces **microeconomics**, a branch of economics that studies the behavior of individual economic units such as households and firms. It discusses the central problem of **scarcity** – that resources are limited while wants are unlimited – leading to the need for **choice**. The chapter introduces the concept of a **production possibility frontier (PPF)**, illustrating the trade-offs and opportunity cost involved in production decisions. It differentiates between microeconomics and macroeconomics and highlights the basic economic problems (what, how, and for whom to produce) faced by any economy, whether centrally planned or market-oriented.
2. Theory Of Consumer Behaviour
This chapter explores the **theory of consumer behaviour**, explaining how individual consumers make decisions about what to consume to maximize their satisfaction or utility, given their limited income and the prices of goods. Concepts like total utility, marginal utility, and the **Law of Diminishing Marginal Utility** are discussed. Consumer's equilibrium is explained using utility analysis or the framework of **indifference curves** and budget lines. The chapter also covers the concepts of demand, the **Law of Demand** (inverse relationship between price and quantity demanded), and factors influencing consumer demand, including elasticity of demand.
3. Production And Costs
This chapter focuses on the **theory of production** and **costs** faced by a firm. It introduces the **production function**, which shows the relationship between inputs (factors of production like labour, capital) and output. The concept of **returns to a factor** (Law of Variable Proportions) in the short run and **returns to scale** in the long run is explained. Various cost concepts are discussed: total cost, fixed cost, variable cost, average cost, and **marginal cost**. Understanding how output relates to costs helps firms make production decisions aimed at maximizing profits.
4. The Theory Of The Firm Under Perfect Competition
This chapter analyzes the behaviour of a **firm operating under perfect competition**, a market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit. It discusses revenue concepts: total revenue, average revenue, and **marginal revenue**. The core of the chapter is explaining how a firm maximizes its profits by producing at the output level where marginal cost equals marginal revenue (**MC = MR**). The chapter details the firm's equilibrium in the short run and the long run, and derives the firm's and industry's supply curve under these conditions.
5. Market Equilibrium
This chapter combines the theories of consumer behavior (demand) and firm behavior (supply) 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 equals the quantity supplied by firms. Concepts like excess demand and excess supply are discussed, explaining how market forces naturally push the price towards equilibrium. The chapter also analyzes how shifts in demand and supply curves, caused by various factors, affect the equilibrium price and quantity in the market.
Introductory Macroeconomics
1. Introduction
This chapter introduces **macroeconomics**, the branch of economics that studies the aggregate behavior of an economy as a whole, focusing on issues like national income, employment, inflation, and economic growth. It contrasts macroeconomics with microeconomics. The chapter discusses key macroeconomic variables and the importance of studying them to understand the overall performance of a national economy. It highlights how governments use macroeconomic analysis to formulate policies related to taxation, government spending, and monetary matters to achieve macroeconomic objectives like stability and growth, highly relevant for policy discussions in India.
2. National Income Accounting
This chapter delves into the methods used for measuring the aggregate economic activity of a nation, known as **National Income Accounting**. It introduces key concepts like **Gross Domestic Product (GDP)**, Gross National Product (GNP), Net Domestic Product (NDP), and Net National Product (NNP), distinguishing between market price and factor cost. The three methods of measuring national income – Value Added Method (Production Method), Income Method (sum of factor incomes), and Expenditure Method (sum of final expenditures) – are explained. The chapter also discusses the limitations of GDP as an indicator of social welfare, crucial for interpreting economic data.
3. Money And Banking
This chapter discusses the role of **money** in a modern economy, highlighting its functions as a medium of exchange, unit of account, and store of value, which overcomes the limitations of the barter system. It explores the evolution of money and different forms of money. The chapter then focuses on **banking**, explaining the functions of **commercial banks**, particularly their role in creating credit through the deposit multiplier process. It introduces the **Central Bank** (Reserve Bank of India - RBI) and its vital functions, including issuing currency, acting as banker to the government and banks, and controlling the money supply and credit through monetary policy tools (e.g., repo rate, cash reserve ratio).
4. Determination Of Income And Employment
This chapter explains the Keynesian theory of **income and employment determination** in the short run. It introduces the concepts of **aggregate demand (AD)** and **aggregate supply (AS)**. The components of aggregate demand (consumption expenditure $\textsf{C}$, investment expenditure $\textsf{I}$, government expenditure $\textsf{G}$, net exports $\textsf{X-M}$) are discussed, along with the consumption function ($\textsf{C} = \bar{\textsf{C}} + \textsf{c}\textsf{Y}$) and investment function. The equilibrium level of income and employment is determined where AD equals AS. Concepts like full employment, unemployment, inflationary gap, and deflationary gap are explained. The role of the **multiplier** in amplifying changes in autonomous expenditure is also covered.
5. Government Budget And The Economy
This chapter focuses on the role of the **government budget** in influencing the economy. It explains the components of the budget: **revenue receipts** (taxes, non-tax revenue), **capital receipts** (borrowings, disinvestment), **revenue expenditure** (consumption, administration), and **capital expenditure** (asset creation). Different measures of budget deficits (revenue deficit, fiscal deficit $\textsf{Fiscal Deficit} = \textsf{Total Expenditure} - \textsf{Total Receipts except Borrowings}$, primary deficit) are discussed, indicating the extent of government borrowing. The chapter highlights the objectives of fiscal policy (stabilisation, resource allocation, reducing inequality) 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, balance of payments (a record of 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 the determination of the exchange rate (fixed vs. flexible) are discussed. The chapter explores how international flows 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.