SECTION -A- MULTIPLE CHOICE QUESTIONS (M.C.Qs)
Q.1 Choose the correct answer for each from the given options
(i) Pakistan is a country of:
(ii) In Karachi, Pakistan Steel Mills was set up with the cooperation of:
(iii) One rupee currency note is issued by:
(a) Education Ministry
(b) Health Ministry
(c) Finance Ministry
(d) Law Ministry
(iv) In Economic, commodity exchanged by.commodity is called:
(a) Islamic system
(b) Barter system
(c) Islamic system
(d) None of them
(v) The famous book “Capital” has been written by: .
(a) Professor Marshall
(b) Carl Marx
(c) Adam Smith
(d) Professor Robbins
(vi) . The Rate of Zakat is:
(d) None of them
(vii) The best definition of Economic is given by:
(a) Professor Marshall
(b) Adam Smith
(d) Professor Robbins
(viii) In Capitalism, production resources are owned by:
(ix) The city of Pakistan famous for the production of surgical instrument is:
(x) When the. price of commodity falls, its supply:
(xi) In Economics, forests and minerals are parts of:
(xii) Per Capita Income in Pakistan is very:
(xiii) The part of Income which is left after meeting daily expenses is called:
(xiv) In Pakistan, the first census was held in the year
(a) 1951 A.D.
(b) 1961 A.D.
(c) 1971 A.D.
(d) 1981 A.D.
(xv) The most important characteristics of Money is:
(b) Borrowing and lending
(d) General accptance
(xvi) Goods that we sell to other countries are called:
(a) Consumer goods
(d) Capital goods
(xvii) The definition of Wages was first presented by:
(xviii) The solidarity and integrity of a country depends on its:
(xix) Human wants are:
(xx) The payment made for the use of Land is called:
SECTION -B- SHORT QUESTION ANSWER
Q.2 write four causes of per capital Income?
Four causes of low per capita income in Pakistan are following.
(i) The economy of Pakistan is agricultural based. 25% of the. Gross National Product is gained from agriculture but the agriculture in Pakistan depends upon seasonal and climate changes, therefore agricultural efficiency falls, due to which per capita income becomes low.
(ii) The increasing and rapidly growing population of Pakistan is also a reason of low per capita income. 3% population of Pakistan is increased every year. As compared to that the productive means and the opportunities of employment are very short.
(iii) The efficiency of saving of people in Pakistan is very low which is also a cause of low per capita income
(iv) The prices have become high due to inflation from the last twenty years, there is a scarcity of capital in the country which is further per capita income.
Q.3 Write the difference between Supply and Stock.
Q.4 Write the four functions of the State Bank of Pakistan.
Four functions of the State Bank of Pakistan are following.
(i) State Bank of Pakistan acts as Central bank and issues currency notes.
(ii) State Bank of Pakistan deals with the intimate connection between public finance and monetary affairs of the country.
(iii) State Bank of Pakistan ensures the internal value of the currency by controlling the prices in the money market.
(iv) State Bank of Pakistan acts as the custodian of all the scheduled commercial banks in Pakistan.
Q.5 In the light of Haditla, write the rate of Ushr.
The Prophet Hazrat Muhammad (S.A.W) fixed the ratio of the Ushr and said: “One-tenth of the produce has to be taken as Ushr for the lands irrigated by rain, river and lake. One twentieth of the produce has to be charged as Ushr from the land irrigated by well.”
Q.6 Write two advantages and disadvantages of Foreign trade.
advantages of Foreign
Two advantages of Foreign Trade are following.
(i) Foreign trade enables a country to obtain the goods which cannot be produced within a country because of a high rate of production.
(ii) A country eams foreign exchange by exporting its surplus production which brings prosperity and stability to it. Had there not been trade; the surplus production of agriculture, minerals and industries would have been destroyed.
disadvantages of Foreign
Two disadvantages of Foreign trade are following.
(i) Advanced countries, possessing more capital and high techniques, produce better goods while under developed countries are unable to get advantages of same facilities.
They cannot cornpe te with advanced countries. Thus foreign trade hampers their progress inversely.
(ii) The political and economic ability encourages foreign trade and international marketing. The countries involved are dependent’ to each other freely. When one of them faces serious crisis like war and political unrest, its economy is badly disturbed. It affects the economy of many countries. Thus foreign trade either disturbed badly or closed.
Q.7 Write five difficulties of Barter system.
Five difficulties of Barter System are following.
(i)The great difficulty in Barter System was that it had lack of double coincidence of wants, it was difficult to meet such two persons which had commodities for needs to each other.
(ii)If two persons with commodities for the needs of each other met by chance then it was a difficulty that how much quantity of one commodity exchanged with the quantity of the other. For example if one person had cloth and other had wheat then how its decided that one metre of cloth was exchanged with how much quantity of wheat. Thus Barter System had no common measuring value for the exchange of commodities.
(iii)Goods were vcPueor wealth only, under Barter System. If a person did not want to exchange his goods immediately he stored them and exchanged them in future to fulfill his needs. But many goods are perishable and cannot be stored for long time. The value of such commodities was not safe, therefore the exchange of such goods was not possible under Barter System.
(iv)The indivisible commodities were very difficult to be exchanged under Barter System. Commodities like rice, wheat, sugar and pulses are divisible but cow, goat, house, shop furniture and carts etc. are indivisible. It was difficult to a cow seller to cut pieces of flesh from an alive cow even he himself wanted wheat, cloth, pulses, rice and eggs. Thus the lack of divisibility of certain goods like causes a failure to Barter System. .
(v)Barter System was not suitable for deferred payments, Borrowings and landings are parts of exchange but during Barter System, people suffered a lot in such transactions. Either borrower or lender had to suffer a loss if deferred payment transactions were dealt in.
(i) Wants are uncountable, they have no limit at all.
(ii) After satisfaction. wants do not fulfill but they occur again and again.
(iii) Wants compete each other with respect to preference.
(iv) Wants can be satisfied by using alternative commodities.
Q.l i Name any four factors of Production.
The names of four factors of production are following.
Q.12 Name five sources of income of the Central Government.
Five sources of income of the Central Government are following.
(i) The government implements taxes on common people and institutions and receives taxes on surplus income which is over than a specific range of income.
(ii) The government provides same services to the citizens, the charge of these services is Fee. For example Fees is received on the provision of T.V. license. arms license. driving license. The Court Fee is also charged on provision of the copies of the court documents.
(iii) Different commodities are imported and exported under Foreign Trade. The government implements duties on the trade in export or import and receives a good revenue.
(iv) All the commodities which are manufactured in the country. the government receives sales tax on them.
(v) The citizens of the country have to act according to the laws. On breaking the laws. the courts announced punishment for the law-breakers. They are either sentenced to imprison or charged with heavy cash fines. The cash’ amounts received through fines is also a source of income of the central government.
Q.13 Name any five famous Industries of Pakistan.
The names of five famous industries of Pakistan are following,
(i) Cotton textile industry
(ii) Woolen textile industry
(iii) Fertilizer industry
(iv) Sugar industry
(v) Cement industry
Q.14 Define Land and write is four characteristics.
Land means all the materials and powers of nature which man adopts for his own use and consumption. Land in economic . sense does not mean a dry piece of ground but it includes sunshine, rain. climate. soil. water. surface of earth. sea. underground water, springs. snow. dew. moisture in the air, minerals and other free goods. The land in economics means all free gifts of nature in the original form in which they exist
Characteristics of Land
Four characteristics of land are following.
(i) Man has not produced land. It is a free gift of nature.
(ii) Inspite of using a lot of labour and capital we cannot produce unlimited goods from a particular piece of land, therefore its productivity is limited.
(iii) The quantity, volume and area of land cannot be increased or decreased. It remain fixed, on the other hand other three factors of production can be increased or decreased.
(iv) All the regions of the land possess different qualities regarding their economic productivity. Thus the fertility of land differs from region to region
Q.15 Write five causes of Agricultural backwardness of Pakistan.
Five causes of agricultural backwardness of Pakistan are following.
(i) Literacy rate in Pakistan is quite low. Majority of the farmers in Pakistan are not educated. They have little knowledge about the modern ways of farming.
(ii) The structure of agriculture in Pakistan is based on Landlordism. The Landlords are Zameendars have the ownership of million acres of land. They get cultivated their lands by the poor and helpless cultivators on hard terms and conditions due to which the power of labour of the cultivators is eliminated.
(iii) In Pakistan, the modern equipments and modern methods of cultivation are used on a very limited scale. Good seeds and fertilizers are not used for production, therefore per acre production becomes low.
(iv) There is no proper management in Pakistan of saving the crops from diseases.
(v) The distribution of agriculture loans in Pakistan is unsatisfactory, small cultivators who need more agricultural loans are not able to receive them easily.
Section “C” Detailed Question Answer
Q.17 Define Economic and explain the advantages of Economics in the daily life.
Economic and advantages of Economics:
A sector of human knowledge which states the techniques and balanced method to fulfill human wants and desires according to the necessities is called Economics. The definitions of Economics which have been given till now state.
(i) Economics is a science of Wealth.
(ii) Economics is a science of Welfare.
(iii) Economics is a science of scarcity and choice
Economic And Experts
The definition of Economics has been given in different ways by the experts to express their views about Economics. The defmition of Economics as given by two economists are following
Definition of Alferred Marshall:
“Economics is a study of mankind in the ordinary business of life. it requires how he gets his income and how he uses it. Thus it is on one side a study of wealth and on the other side. a part of the study of man.”
Definition of Professor Robbins:
According to Professor Robbins,
“Economics studies human behaviour as a relationship between ends and scarce means which has alternative uses”
Advantages of the Study of Economics
(i) The study of Economics produces a balance between necessities and resources by which the society can be made prosperous. Economics gives a collective revive of all natural and productive resources and also describes about their uses.
(ii) The partial sale and purchase of the production obtained is called Trade. In Economics the informational about all the principles and laws which are helpful for a successful trade.
(iii) The will of acquiring wealth in man is due to his necessities of life, he can only achieve the commodities of daily life by using wealth. The study of economics not only gives knowledge about earning wealth but also gives knowledge about the expenditure of wealth.
(iv) The study of Economics describes the individual and collective effort of man which are related to acquire material necessities of wealth.
(v) All those principles and rul~s are studied in life which are used by the people to acquire their food requirements and for receiving other commodities.
(vi) All the human e ffo rr s are included in the study of economics which are done to fulfill the requirements of peaceful life. .
(vii) In Economics the knowledge is gained about all the production factors Land, Labour, Capital and Organization.
(viii) The study of economics is a powerful means of the development and prosperity of a nation. With the study of Economics, a nation becomes able to observe its national income and resources then it makes plans for the national development.
Q.18 Define the Law of Demand or Law of Supply and explain it with the help of a schedule.
It is explained for the schedule, when the price of the commodity is Rs. 10 per kg then the quantity of demand is 8 kg. When the price increases and becomes Rs. 12 per Kg then the quantity of demand is also decreased and becomes 7 Kg. Thus the quantity of demand decreases with the increasing in price. The quantity of demand is 6 Kg at price Rs. 14, 4 Kg at Rs. 16 and 2 Kg at Rs. 20. This is the complete description that the quantity of commodity is decreasing with the increase in price which is according to the Law of Demand. The Demand Curve is a curve which represents the change in the demand of a commodity with respect to the change in the price. Two lines are drawn for this representation. On a horizontal line OX the quantity of demand is shown while on vertical line OY the price is shown. Different points on both lines OX and OY show the change in demand with respect to change in price. According to Demand Curve, the price of the commodity has been shown on axis OX. Different points A, B, C, D and E are plotted. According to this diagram, the price of the commodity is Rs. 20 per Kg and the quantity of demand is 2Kg at OA. The price is Rs. 16 and the quantity of demand is 4Kg at OB. The price is Rs. 12 and demand is 6 Kg at OC. The ice is Rs. 8 and the quantity of demand is 9 Kg. DD is called as the Demand Curve. The Demand Curve falls upwards to the downwards and also moves from leftwards to rightwards. The Demand Curve shows the trend of decreasing the ‘price with the increase in the quantity of demand
Law Of Supply:
The quantity of the commodity which is presented for sale In the market at a certain period with a specific price is called supply. If 500 Kg of Sugar is brought to the market (or sale as Rs.J8 per Kg, then this quantity is called as Supply of Sugar
THE LAW Of SUPPLY:
When other things remain the same, if the price of a commodity rises, its supply is extended and if the price falls, its supply is contracted
EXPLANATION OF THE LAW Of SUPPLY
The Law of Supply can be explained by a schedule and diagram.
Q.20 Define a Bank Give its kinds and describe the function of Central Bank.
Bank kinds and Function of central Bank:
A financial institution which is established in the form of a joint stock company. Partnership or corporation and performs a business of money receives money from the savings of general public and constitutes fund then issues loans on interest for constructive and non-constructive purposes is called Bank. A bank receives savings at low rate of interest and provides loans at high rate of interest. According to Professor Crow ther Banking means the business of money and Bank is an institution whose main business is receiving deposits from the public and on the basis on them making advances and loans in such a manner as to make a profit for itself
Kinds of Bank:
The important kinds of bank are following:
There is a central bank of every country. The Central Bank of Pakistan is the State Bank of Pakistan. It gives help to the government in making stability in the economic system of the country. It has no purpose of earning profit.
All those scheduled banks which provide their services to common people. They receive deposits from general public and issue loans on the basis of them in order to gain profit are called Commercial Bank
The banks which provide long term loans for the development of industry are called Industrial
The banks which issue loans for the cultivators and farmers for the development of agriculture in the country are called Agricultural Bank
These banks receive deposits of small amounts of saving
They work to make people habitual for saving. Post offices in Pakistan also perform the functions of Saving Bank. The Saving counters have introduced saving accounts, they also issue saving certificates
These banks have been established generally on the principles of the self co-operation. The purpose of these banks is to provide loans to the farmers and cultivators. Co-operative Societies in rural areas also get benefit from these banks. The Co-operative Societies and Co-operative banks are established for rural development and for the progress of agriculture.
Exchange Banks deal in foreign currency and promote foreign t~ade Foreign Currency is required in foreign trade and these banks provide foreign currency.
The Functions of a Central Bank
The important functions of a Central Bank are following
(i)The Central Bank baa an authority to issue notes. It issuesthe notes of different values in different colour and designs.
(ii)” The Central Bank performs all those services to the government which commercial banks provide to their customers. To protect the securities ‘of the government to issue loans for the government, to provide foreign currency are the duties of a cenfr~~ank.
(iii) All the banks of the country follow the monetary policy of central bank. It is the lender of last resort to the commercial banks. It keeps the cash reserves of the commercial banks as a custodian and finally it acts as a bank of central clearance, settlement and transfer.
(iv) A central bank acts as a guardian of money market and keeps the prices on level because the circulation of money produces its effect on prices.
(v) The Central Bank provides advisory service to the government on financial affairs
Q..21 Describe the economical condition of Pakistan at the time
of its establishment.
economical condition of Pakistan at the time of its establishment:
Pakistan came into being on August 14th, 1947. At the time of independence, there were neither industrial units nor developed agricultural sectors in the country. Whatever industries were present here were old and out of date and very poor in condition. Similarly machines were not introduced to agriculture. There were few broken roads and few useless railway lines in Pakistan. The people were uneducated because of lack of educational institutions in these areas. The banks and other financial inst irur ion s were run by Hindus. They shifted their capitals to !India and migrated from here. Pakistan faced following economical problems at the ti ne of establishments,
Pa kis t an had very poor e con orni c set up after its establishment. The people were prey of poverty and misery. They mostly e ar ne d their living by agriculture but it as in very backward position as the yield per acre was very low. The cultivators were living hand to mouth. Even the country being agricultural faced the problem of food deficiency. The agriculture and the marketing of agricultural products were quite unsatisfactory. The greater part of cultivable land was the property of landlords. Millions of farmers worked on these lands on very poor terms. Due to unjust distribution of land, the farmers did not want zealously. At the time of independence, the
irrigation was uone by means of wells, canals while the “Barani Lands’ were left on the mercy of uncertain rainfall. The modem eans of irrigation were not available then. Thus uncertain rainfall and lack of proper means of irrigation were also responsible for agricultural backwardness.
The farmers in Pakistan are used to work with old and primitive tools at the time of establishment of Pakistan. At the time of establishment of Pakistan neither there were better seeds and manure nor medicines for the cure of crops diseases. In Pakistan by that time there was no fertilizer industry or Agricultural Research Centre. Farmers were compelled to use inferior type of seeds and animal manure
The British Government from the very beginning adopted the policy of not establishing industries in the Muslim majority areas. There were few cloth making factories and some industries of cement manufacturing were present at the time of establishment of Pakistan. Thus Pakistan had to face many individual problems. Although Pakistan is rich in natural resources but they were not discovered upto independence, because of economic and political policies of British Government. Whatever natural resources were discovered were unqualitative and costly. There were few industries in Pakistan, at the time of partition. The people were not interested in industrial and t echnical professions. Thus Pakistan had to import skilled labourers, technicians and engineers from other countries and lack ot skilled labour became the cause of industrial backwardness.
Migration and Population Pressure
I he department of Trade and Commerce was notably very backward at the time of establishment of Pakistan. There were
causes of its backwardness, the main cause was the country being agriculturist the people were professionally inclined with cultivation. They had neither experience nor capital for trade. Ultimately they used to earn their living through agricult ur e. Secondly the British were responsible to end the Muslim Rule in India. The other causes were that the Hindu traders and capitalist migrated to India. The Indian refugees were educated and skilled but penniless. Due to al these causes the department of trade and commerce remained backward for many years after independence.
Backward of Banking System
The Commercial Blnks of Pakistan were mostly owned by non-Muslims. Although the Muslims were, also traders and businessmen, but they were handicapped by lack, of-capital. The Hindus being more experienced with more capital, dominated the trade, business and Banking~¥the country. They paid more . attention towards economic and financial organizations being expert in accounts. They started transferring their capital to India, after the announcement of 3rd June Plan. The banking system of Pakistan was disturbed badly. There were 631 scheduled banks in country at the time of independence, but afterwards they began to dose, due to lack of capital. There was no central bank in Pakistan and “The Reserve Bank of India” was entrusted the duties of the Central Bank of Pakistan. This bank took no interest in the economy of Pakistan. Under such circumstances the establishment of a central bank was badly needed in Pakistan. The government made plans for it and established the Central Bank .nam e ly, “The State Bank of Pakistan”, inaugurated by Quaid.e-Azam Muhammad Ali Jinnah on 1st July 1948.
Afterwards a chain of Banking Organizations and financial institutions ran up continuously in Pakistan.
Low Per Capita Income
The national income of Pakistan was very low at the time of the establishment of Pakistan. It is increasing slowly year after year. Per capita income in 1948 was Rs. 205. It rose upto Rs. 246 in 1961-,Rs. 257 in 1969. According to Pakistan Economic Survey, 1982-83, it was 939 in 1972-73 which rose to Rs. 4176 in