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Questions and Answers
What does Micro Economics primarily focus on?
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?
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?
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?
Which term was coined by Sir Ragnar Frisch to represent the study of individual economic actions?
Which quality of money allows it to be divided into smaller units?
Which quality of money allows it to be divided into smaller units?
According to Kenneth Boulding, what does Micro Economics study?
According to Kenneth Boulding, what does Micro Economics study?
What term refers to deposit money that can be withdrawn and transferred on demand?
What term refers to deposit money that can be withdrawn and transferred on demand?
What key characteristic of wants suggests they are never fully satisfied?
What key characteristic of wants suggests they are never fully satisfied?
Which of the following is an example of non-legal tender money?
Which of the following is an example of non-legal tender money?
How do human wants differ according to age?
How do human wants differ according to age?
What characteristic of money ensures that it can be used repeatedly over time?
What characteristic of money ensures that it can be used repeatedly over time?
Which of the following is NOT a characteristic of wants?
Which of the following is NOT a characteristic of wants?
What influences the differences in wants between men and women?
What influences the differences in wants between men and women?
Which of the following is NOT a difficulty experienced in the barter system?
Which of the following is NOT a difficulty experienced in the barter system?
What kind of cards are classified as plastic money?
What kind of cards are classified as plastic money?
Which innovation has contributed to the rise of cashless transactions?
Which innovation has contributed to the rise of cashless transactions?
What makes storage difficult for certain goods?
What makes storage difficult for certain goods?
In the context of the barter system, what is a major issue related to indivisibility?
In the context of the barter system, what is a major issue related to indivisibility?
Which of the following is NOT a quality of money?
Which of the following is NOT a quality of money?
What is the primary challenge associated with deferred payments?
What is the primary challenge associated with deferred payments?
Which commodities are difficult to store due to their nature?
Which commodities are difficult to store due to their nature?
What makes it difficult to compare goods in a barter system?
What makes it difficult to compare goods in a barter system?
Why might heavy and bulky goods present storage difficulties?
Why might heavy and bulky goods present storage difficulties?
What is the consequence of the problem of double coincidence of wants in the barter system?
What is the consequence of the problem of double coincidence of wants in the barter system?
What is the primary function of money considered to be?
What is the primary function of money considered to be?
What characteristic ensures that money maintains a consistent value over time?
What characteristic ensures that money maintains a consistent value over time?
Which of the following best describes portability in the context of money?
Which of the following best describes portability in the context of money?
How does money function as a measure of value?
How does money function as a measure of value?
What does homogeneity in money refer to?
What does homogeneity in money refer to?
Which function of money is illustrated by its ability to provide liquid assets for credit creation?
Which function of money is illustrated by its ability to provide liquid assets for credit creation?
In the context of economic transactions, what role does stability of money play?
In the context of economic transactions, what role does stability of money play?
What does liquidity of wealth mean when referring to money?
What does liquidity of wealth mean when referring to money?
What function of money allows for future payments to be made with ease?
What function of money allows for future payments to be made with ease?
How does money serve as a store of value according to economic principles?
How does money serve as a store of value according to economic principles?
What term describes money that is received but not reported for tax purposes?
What term describes money that is received but not reported for tax purposes?
Which of the following is NOT a consequence of black money?
Which of the following is NOT a consequence of black money?
What is one method countries use to control black money?
What is one method countries use to control black money?
Which macroeconomic variable can be estimated using monetary values?
Which macroeconomic variable can be estimated using monetary values?
Money acts as a measure of value by serving which primary function?
Money acts as a measure of value by serving which primary function?
Which of the following accurately defines the relationship of money as described by J.M. Keynes?
Which of the following accurately defines the relationship of money as described by J.M. Keynes?
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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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