Branches of Economics
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What does Micro Economics primarily focus on?

  • Global economic trends and policies
  • Behavior of individual economic variables (correct)
  • Aggregate demand and supply
  • Macroeconomic indicators and national income

    • What can be inferred about human wants in Micro Economics?

  • Wants are recurring and can arise repeatedly. (correct)
  • Wants remain constant over time.
  • Wants are limited and can be satisfied completely.
  • Human wants occur only once in a lifetime.

    • Who issues notes of higher denominations?

  • State Governments
  • Commercial Banks
  • Reserve Bank of India (correct)
  • Private Banks

    • Which term was coined by Sir Ragnar Frisch to represent the study of individual economic actions?

    <p>Micro Economics</p> Signup and view all the answers

    Which quality of money allows it to be divided into smaller units?

    <p>Divisibility</p> Signup and view all the answers

    According to Kenneth Boulding, what does Micro Economics study?

    <p>Individual firms, households and specific commodities</p> Signup and view all the answers

    What term refers to deposit money that can be withdrawn and transferred on demand?

    <p>Bank Money</p> Signup and view all the answers

    What key characteristic of wants suggests they are never fully satisfied?

    <p>Wants are unlimited.</p> Signup and view all the answers

    Which of the following is an example of non-legal tender money?

    <p>Cheques</p> Signup and view all the answers

    How do human wants differ according to age?

    <p>Wants and their satisfaction evolve with chronological age.</p> Signup and view all the answers

    What characteristic of money ensures that it can be used repeatedly over time?

    <p>Durability</p> Signup and view all the answers

    Which of the following is NOT a characteristic of wants?

    <p>Wants are entirely predictable.</p> Signup and view all the answers

    What influences the differences in wants between men and women?

    <p>Gender-based needs and preferences</p> Signup and view all the answers

    Which of the following is NOT a difficulty experienced in the barter system?

    <p>Excessive production costs</p> Signup and view all the answers

    What kind of cards are classified as plastic money?

    <p>Debit and Credit Cards</p> Signup and view all the answers

    Which innovation has contributed to the rise of cashless transactions?

    <p>Plastic Money</p> Signup and view all the answers

    What makes storage difficult for certain goods?

    <p>The perishable nature of some goods</p> Signup and view all the answers

    In the context of the barter system, what is a major issue related to indivisibility?

    <p>Exchange of live animals requiring full barter</p> Signup and view all the answers

    Which of the following is NOT a quality of money?

    <p>Scarcity</p> Signup and view all the answers

    What is the primary challenge associated with deferred payments?

    <p>Absence of immediate transaction</p> Signup and view all the answers

    Which commodities are difficult to store due to their nature?

    <p>Perishable goods like vegetables</p> Signup and view all the answers

    What makes it difficult to compare goods in a barter system?

    <p>Different measurements and value systems</p> Signup and view all the answers

    Why might heavy and bulky goods present storage difficulties?

    <p>They require a significant amount of space</p> Signup and view all the answers

    What is the consequence of the problem of double coincidence of wants in the barter system?

    <p>Prevents exchanges if needs don't align</p> Signup and view all the answers

    What is the primary function of money considered to be?

    <p>A medium of exchange</p> Signup and view all the answers

    What characteristic ensures that money maintains a consistent value over time?

    <p>Stability</p> Signup and view all the answers

    Which of the following best describes portability in the context of money?

    <p>Ease of carrying from one place to another</p> Signup and view all the answers

    How does money function as a measure of value?

    <p>It compares prices of commodities</p> Signup and view all the answers

    What does homogeneity in money refer to?

    <p>Identical features of a denomination</p> Signup and view all the answers

    Which function of money is illustrated by its ability to provide liquid assets for credit creation?

    <p>Basis of credit</p> Signup and view all the answers

    In the context of economic transactions, what role does stability of money play?

    <p>Maintains consistent purchasing power</p> Signup and view all the answers

    What does liquidity of wealth mean when referring to money?

    <p>The ability to be exchanged quickly without loss</p> Signup and view all the answers

    What function of money allows for future payments to be made with ease?

    <p>Standard of deferred payments</p> Signup and view all the answers

    How does money serve as a store of value according to economic principles?

    <p>It provides a means for future satisfaction of wants through savings.</p> Signup and view all the answers

    What term describes money that is received but not reported for tax purposes?

    <p>Black money</p> Signup and view all the answers

    Which of the following is NOT a consequence of black money?

    <p>Economic stability</p> Signup and view all the answers

    What is one method countries use to control black money?

    <p>Demonetization</p> Signup and view all the answers

    Which macroeconomic variable can be estimated using monetary values?

    <p>Gross National Product (GNP)</p> Signup and view all the answers

    Money acts as a measure of value by serving which primary function?

    <p>Unit of account</p> Signup and view all the answers

    Which of the following accurately defines the relationship of money as described by J.M. Keynes?

    <p>Money is a link between present and future economic stability.</p> Signup and view all the answers

    Study Notes

    Overview of Economics

    • Economics studies human behavior in everyday life, focusing on individual and social actions connected to material well-being.
    • Early definitions emphasize economics as a behavioral science beyond mere wealth analysis.

    Branches of Economics

    • Coined by Sir Ragnar Frisch in 1933, economics is divided into Micro and Macro Economics.
    • Micro Economics deals with individual units (households, firms, etc.), while Macro Economics covers overall economic phenomena.

    Key Definitions

    • Kenneth Boulding defines Micro Economics as the study of specific firms, households, industries, and individual prices and wages.

    Concepts of Micro Economics

    • Want: Represents a feeling of lack that drives individuals to seek satisfaction; influenced by improvements in living standards and population growth.
    • Characteristics of Wants:
      • Unlimited in nature; satisfying one want often leads to another emerging.
      • Recurring and sometimes occasional, variable based on age, gender, and individual preferences.

    Barter System Challenges

    • Problem of Double Coincidence of Wants: Difficulty in finding someone who wants to trade what you have for what you need.
    • Indivisibility of Goods: Challenges arise from items that cannot be easily divided for barter (e.g., livestock).
    • Storage Difficulties: Perishable goods complicate future consumption and storage logistics.
    • Making Deferred Payments: Difficulty in structuring payments that will occur in the future under a barter system.

    Evolution of Money

    • Bank Money (Credit Money): Refers to deposits convertible on demand; not actual money but instruments like cheques that facilitate transactions.
    • Plastic Money: Includes debit and credit cards, enhancing transaction ease and security.
    • Electronic Money (E-money): Monetary value stored electronically, transferable via digital means like mobile devices.

    Qualities of Money

    • General Acceptability: Must be widely accepted for exchange.
    • Divisibility: Should be easily divisible into smaller units for transactions.
    • Durability: Must withstand repeated usage over time.
    • Cognizability: Easily recognizable features to prevent confusion.
    • Portability: Should be convenient to carry around.
    • Homogeneity: Units of the same denomination must be identical in nature.
    • Stability: Should maintain stable value to facilitate trade.

    Functions of Money

    • Primary Functions:
      • Serves as a medium of exchange for transactions.
      • Acts as a measure of value, allowing price comparison across commodities.
    • Secondary Functions:
      • Facilitates deferred payments and acts as a standard for loans and debts.
      • Functions as a store of value for current and future needs.
      • Enables smooth transfer of value across individuals and locations.

    National Income Measurement

    • National income is expressed in monetary terms, assessing contributions from various production factors and facilitating economic analysis.

    Concept of Black Money

    • Defined as unaccounted cash earnings where taxes are evaded, fostering illegal activities like corruption and hindering economic growth.
    • Demonetization has been employed as a strategy to combat black money countries face economically.

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    Chapter 1: Basic Concepts in Economics PDF

    Description

    Explore the foundational concepts of economics through this quiz, focusing on the definitions and distinctions between micro and macroeconomics. Delve into the contributions of Sir Ragnar Frisch and Alfred Marshall, and understand how these branches are essential to the study of individual and social actions in economic contexts.

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