SECTION -A- MULTIPLE CHOICE QUESTIONS (M.C.Qs)
Q.1 Choose the correct answer for each. from the given options:
(i) The price at which demand and supply are equal, is called:
(a) Equilibrium price
(b) Amount of demand
(c) Amount of Supply
(d) None of these
(ii) Islam restrictly prohibits:
(a) Investment of money
(c) To earn money
(iii) The solidarity and integrity of a country depends on its:
(a) Strong defence
(iv) The part of income which is left over after meeting daily expenses is called:
(v) Finance Corporation was set up in the year:
(a) 1951 A.D
(b) 1950 A.D
(c) 1949 A.D
(d) 1948 A.D
(vi) In Pakistan Interest free banking was introduced in:
(a) 1980 A.D
(b) 1981 A.D
(c) 1982 A.D
(d) 1983 A.D.
(vii) Capitalism is based on:
(c) Private property
(d) None of these
(viii) Commercial Banks receive the:
(b) Prize Bond
(d) None of these
(ix) Central Bank advises the Government on:
(a) Financial problems
(b) Economic problem
(c) Industrial problems
(d) Business problem
(x) The trade which takes place within the different areas of country:
(a) Internal trade
(b) External trade
(c) Foreign trade
(d) None of these
(xi) Yarn, Cotton, Rice and Sports goods are main:
(d) None of these
(xii) The numbers of the kinds of money are:
(xiii) In Islamic Economic system, Zakat is deposited in:
(xiv) In food crops, Pakistan cultivates on large areas:
(xv) The famous city of Pakistan for Sports goods is:
(xvi) The free gift of Nature is:
(xvii) In Economics, Commodity exchanged by commodity is called:
(a) Barter system
(b) Economic system
(c) Exchange system
(d) Islamic system
(xviii) When the price of commodity falls, its demand:
(xix) All the ancient civilizations of the world are related to:
(xx) (PIDC) Pakistan I~trial Development Corporation provides load for:
Section -B- Short Question Answer
Q.2 Define capitalism
For Answer See Q.No. 9 in Solved Paper Economics 2010
Q.3 Define law of Demand.
The Law of Demand can be defined as following.
“Otlwr tlUngs remaining the same, when the price of a particular commodity falls, its demand expands and when the price rises demand contracts.”
Q.4 Write the names of the factors of Production.
The names of the factors of production are following.
Q.5 Write any five coerces of Industrial Bukwardess.
Five causes of industrial backwardness of Pakistan are following.
(i) The cost of production ‘in the industries of Pakistan is very high therefore they are facing backwardness.
(ii) The important cause of industrial backwardness is the limited country- market which is great obstacle for the extension and progress of industries in Pakistan.
(iii) People do not co-operate in purchasing domestic production, the reason for this, the cost of production of the domestic commodities in high with less standard quality.
(iv) The basic natural resources like coal, iron, petrol and other minerals which are required for industrial progress are not available in Pakistan in large quantity.
(v) In Pakistan there is a shortage of skilled and technical labour working for industries.
Q.6 Write down the Marshall’s definition of Economics.
The definition of Economics as given by Professor Marshall is following:
Political Economy or Economics is tlu study of mankind ill tlu ordinary business of life, it requires how he gns his income and how he uses it. Thus, it one side is a study of wealth and 011 the other side is a part of the study or man
Q.12 Whrt is meant by Utility
The want satisfying power of goods and services is called Utility. Utility may be harmful inspite of being useful sometimes. Because it satisfies our wants. It is called Utility. Everything has utility but it depends upon the ability of consumer to get use of it. For example cigaretes are useful for the smokers but useless for non-smokers because they find no utility in them.
Section -C- Detailed ANSWER QUESTION
Q.17 What is meant by Evolution of Economic life? Describe
the differc!lt stages of economic development?
Evolution of Economic life:
A long historical period and evolution is associated to the present Economic and Prosperity of man. Man was not much civilized and his life was not so comfortable in the beginning of history. The gradual changes which occured with respect to history are collectively known as Economic Evolution of Life
Stages Evolution Of Economic life:
The stages of the evolution of Economic life are following.
(i) Hunting and Gathering Stage
(ii) Pastral Stage .
(iii) Agriculture and Handicraft Stage
(iv) Industrial Stage
Hunting and Gathering Stage:
In the beginning of the history, man was unknown to civilized life and lived upon hunting like animals. He invented tools and weapons made of stone wood and metals to hunt and kill the animals. This was an uncertain way of getting food. Thus for many a time, he was left without food. This condition led him to store animals by catching them alive, thus he started gathering animals. Due to this reason, this stage is called as Hunting and gathering stage.
Man started to store and animals alive so that he protected himself from the uncertainty condition, thus the existence of Pastoral stage was the result of hunting and gathering and storing the animals. Water and grass, at least was necessary to feed these animals. Man started roaming from place to place with his cattle in search of grass and water, that is why this period is called Postral Stage. The tribes, the private properly poverty, precious stones, metals and food, clothing and transportation were the main features of the pastoral stage. The man, who owned a large number of animals in his cattle was said to be rich and wealthy person.
Agriculture and Handicraft Stage
Man was passing a wandering life during pastoral stage, the wandering process from one place to another was trouble some for bath man and the animals. Man found regular supply of water and vegetables near the river banks. He settled down there and learnt by nature, how to grow plants of food grains and fruits. After a long time he was able to cultivate land regularly. He also learnt rotation of crops and crops. By now, he was able to domesticate wild animals and to use them for agriculture, as well as for transportation purposes. In this way, vlllages came into being near rivers or lakes. These vlllages turned into great and fablaut cities after a long time. However the old civilizations were generally associated with rivers
With the increase in human needs. the handicraft system ‘Came into being. People adopted particular professions like ‘wearer. carpenter. goldsmith. patter etc. In this way. the remarkable development in the production. consumption and exchange took place with the introduction of the coins of gold and silver. The division of labour was improved durin~ this period. Domestic system followed by handicraft and family Economic System gave birth to master craftsman who opened small industries. They sold their production to the capitalists.who were responsible to sell those goods among the people. During this period the monetary system was also improved. Different types of machines were invented and banking system was also introduced. Thus the production of commodities was started on large scale in big factories. The industries like textile industry. glass industry. leather industry. iron industry and sugar industry started their production. thus a revolution was appeared in the Economic Life of man.
Q..18 Write the causes of the agricultural backwardness of Pakistan
Causes Of agricultural backwardness of Pakistan:
Pakistan is an agricultural country and the agriculture has great importance in the economy of Pakistan. The share of agriculture in the total production is 30% and 50% population of the country is directly and indirectly related to the agriculture. Agriculture contributes nearly 20% in the exports ‘of Pakistan. 35% of the foreign exchange is obtained from agriculture. The «U$es of Agricultural backwardness in Pakistan are following
Low Literacy Rate:
The rate of education in the villages of Pakistan is nearly outward. Lack of education creates many problems. Due to illiteracy. the cultivator not only unaware about its own sector but it also makes him deprived from conceptual awareness
Concentration of Land OwnerShip:
The structure of organization of agriculture of Pakistan is associated to landlordism. The big landlords are the owners of million acres of land. They give their land for cultivation on commission basis or rent basis to the cultivators. The cultivators do not get their rights under this system and the rate of commission is very small therefore the will of Labour in cultivatiors is eliminated
Problems Related to Land:
The fertility of land is affected by water logging and salinity. A large area of the fertile lands in Pakistan has become useless for cultivation due to water logging and salinity. 20% land has become useless for cultivation. Large areas of land become useless for cultivation in Sindh, Punjab, N.W.P.P and Balcchistan every year due to the problems of water logging and salinity. The land for Agriculture In Pakistan has divided into small fragments which are scattered and are not under it single ownership. Million ‘acres of land is not being used for eultivadon which is under the ownership of big landlords. The tradition of common culture and family traditions has come to an end, therefore the trend the division of land is increasing. Under small fragments of land large ,scale production and better use ofland is not possible
Problems Related to Production:
The agricultural loans are not available in such quantity for the cultivators and the farmers as compared to their total requirements. The division and availability of loans is not according to justice. The small cultivators who require a great need of acquiring agricultural loans but they have to face many difficulties in acquiring loans. No survey be made in the country till now which -gives the exact figures of the need of agricultural loans in the country. The cultivators also spend the amount of loans on non-productive activities.
Steps by The Government for the Government of Agriculture
The agricultural backwardness in Pakistan is also associated to the problems of production. Modern techniques an’d Modern equipments for agriculture arc not used on large scale-low-quality seeds and fertilizers arc commonly used for agricultural production. There is no good system present to protect the crops from diseases thus the agricultural production remains to low level. The natural calamities like floods and the attack of pests, the agricultural production is badly affected
Problems Related to Finance:
Pakistan is an agricultural country therefore the development of each sector in Pakistan is associated to agriculture. The Government of Pakistan paid attention on the development of agriculrure just after the independence. The Government changed but the agricultural policies always played their role in the development of agriculture. The steps taken by the Government in the development of agriculture can be described as following.
(1) The forests are responsible to increase the fertility soil therefore the Government has taken many steps for the development of the forests. The department manages to plant millions of the plants forestery under the plantation programme during summer, winter and spring seasons with the co-operation of other departments.
(2) The government has expanded the networks of canals for and wide throughout the country so that the would be no shortage of water during the Irrigation of the crops. .
(3) The government has established Agricultural Bank at every nook and corner of the country. These banks are providing loans to the cultivators on easy terms and conditions. The cultivators can buy the necessary things like fertilizers, high quality seeds, machines tools, tractors and other things.
(4) The efforts had been made to develop communication system after the independence so that persons associated with the agriculture take advantage from it and agriculture production increased.
(5) The government has also established the centers which provide help in the provision of.better fertilizers and high quality seeds. These centers also provide training to the cultivators about the use of modern agricultural techniques. The Staff of these centers make a spray of pesticides. on the crops by using vehicles and aeroplanes thus they protect the crops from being destroyed.
(6) The agricultural system of Pakistan remained backward due to out date land tenure system. Most of cultivable lands were occupied by landlords who did not make any improvement in agriculturists. The government of’.Pakistan introduced Land Reforms in 1958 so the rights of the agriculture could be protected the land fragmentation and sub-division could be stopped
Store Of Value:
Money can be stored ill the form of savings which is not possible in the barter system. This stored money can be used any time when need arises. Many areas serves the function of store of value without difficulty. Under barter system, goods were stored. There was possibility of theft and fear of destruction of values. Large quantity of value needed a large amount of labour to look after. But, becuase of money the smallest, as well as the biggest amount of value can be stored easily
Standard of Deferred Payment:
Money is more stable medium or exchange then any other value. Its
value does not fluctuate at a rapid rate. Money makes borrowing and lending less risky and serves as a Standard measure of payment over time. The creditor and debt or- both remian satisfied it t hcir transcation is dealt with in money. If d person takes a loan or debt Rs. 100 for one month then he would pay Rs. Ion atrer t hc specific period without any misunderstanding.
Transfer Of Value
Money also performs the function of transfer the value. With the use of money, it has been possible that people can transfer their properties like land, shop, house etc -.from one place to another. The method or procedure which ls adopted in this case that the property is sold then the same property is bought with the money obtained through sale at any other place.
Q.20 Why is Islamic Economic System better than other systems? Explain.
The islamic Economic System:
The system of economy which is based upon the teachings stated in the Holy Quran and the Sunnah of the Holy Prophet (Peace be upon him) is called the Islamic Economic System
Importance of the islamic Economic System:
There arc several economic systems being applied in all the countries of the world. All these systems arc framed by man. They are based on selfishness of mankind. They arc unjust and unfit for all the people of the world. But the islamic System is not man made. It is given by Allah and based on justified rules. It is useful for all the men, for all times. This system provides equal opportunities for employment. The capable and hard working people find more chances to earn the living for themselves and for their nation. Out no one is allowed to earn wealth unlawfully. No one is allowed to earn the money in such a way that the poor, the helpless and the innocent people be prey of his unjust cleverness and intelligence. The basic objective of Islamic Economy is not to earn profit, but to fulfil the wants of mankind. This system has been based on the concept that man is vicegerent of Allah, he is ordered to utilize all the resources to earn living and he is answerable to Allah on the day of judgement for all his actions. If
this concept in mind, concept in mind, then a Muslim wiD try to earn livelihood and will not cause to harm to other eights. Thus the evils of selfishness, class-conflict and class-enmity will come to an end and the individuals will find opportunities to make the country a welfare state and a true Islamic state
To achieve the objectives of Islamic Economic the motivation has been given that the mankind should utilize all economic resources collectively.and should get benefit of it in full. The earning of livelihood should be lawful, the lawful earning should be spent according to Islamic rules. No one is allowed tospent money on luxuries narcotics and on other harmful articles. This system always gives instructions about unlawful hoarding. It is treated as sin. It is a social crime. The Islamic Economic System favors private ownership, complete Economic liberty and just distribution of wealth in society.
The Islamic Economic System offers the best and confirmed rules for consumption, production, exchang and distribution of wealth. Production of wealth is encouraged. with the restrictions of earning lawful livelihood and it should be spent for the welfare of individual and society. Zakaat is a direct tax on hoarded wealth, property and income. Its aim to minimize the gap between the rich and the poor classes. There are laws of inheritance for just distribution of a deceased’s wealth in Islamic Society. The so-called advanced countries arc also facing the socio-economic crisis today. Their people have become greedy, selfish and wealth hoarder. Thus they have lost their mental peace. Love and brotherhood have also been crushed under their curse of greed. Every body is trying to compete other in economic field and running for maintaining his living standard. The best solution of all these social evils is the Islamic Economic System. The Government of Pakistan is trying to enforce the Islamic Economic System and the Government has achieved some success in this aspect but the cooper~tion of general public is required for its complete implementation after this it can be excepted that the better results would be achieved. The Government of Pakistan has enforced the Islamic rules of Zakaat, Ushr and interest free banking. Though it only beginning but better results are coming out. It is hoped that by the grace of Allah we shall soon achieve the goal of Islamization in our country. The Islamic Economic System, then fully be applied and Pakistan will become an Islamic Welfare State.
Q.21 Write notes on any TWO of the following.
Objective of zakat:
The literal meaning of Ubat is demlineu and growth. Cleanliness means, the zakaat is imposed on .the wealth by the command of Allah than that wealth becomes pure and spiritually dean. Growth means when Zakaat is paid from a certain amount of wealth, then Allah gives the blessing to that wealth and its increases. In Islamic code of law, zakaat is that duty for a Muslim which he pays according to the fixed ratio directly or indirectly by the source of the Government. Ubat is a kind of capital levy or wealth tax imposed by Allah on us. It is payable to the poor and needy people, to charitable institutions and to welfare organizations. Ubat is not levied on following persons.
(i) Zakaat is not levied on the property of minors.
(it) Zakaat is not levied on the property of mad and mentally retarted
(iii) Slaves-are also exempted from the payment of zaJc.aat.
(iv) Personal food, dothing ‘residential place and domes-tic goods are also free from zakaat.
Objective Of Zakaat
Importance Objectives of zukaat are following.
(i) Zakaat provides social security to the poor. needy. handicapped and helpless persons and they can fulfil their necessities of life
(ii) The system of ukaat eliminates the difference between rich and poor.
(iii) The balance in economy can be achieved throudl the system of zakaat.
characteristic of labour:
The characteristics of labour ate following.
(i) Labour is not only a means of production but also an end of production.
(ii) Labour is inseparable from the labourer because his work has to be delivered by himself and not by others.
(iii) Labour has to sell his services in person. A labourer. being the owner of his efficiency sells his services only but not himself or his art.
(iv) Labour is perishable, it does not last. If a labourer docs not sell his labour for a day, it is perished and causes him loss of wage of that day.
(v) Labour has weak bargaining power because it can not be stored and perishes with time, if not sold at any rate.
(vi) The supply of labourers remains fixed for a long time. It . can not be increased or decreased immediately. due to any change in its demand. ,
(vii) No production is possible without labour. as it is an indispensible factor of production.
(viii) The efficiency of labour differs due to various causes attached to it
Characteristics of Land:
Land means all the materials and powers of nature which man adopts for his own use and consumption. Land economic sense does not means a dry piece of ground but It includes sunshine. rain. climate. soil. water. surface of earth, rivers. lakes, sea water below the surface of earth. under ground water, springs. snow. dew. moisture in the air. minerals, birds and, other such free goods. The Land in economics means all free gifts of nature in the original form in which they exist
Characteristics of Land:
Land Is Free Gift of Nature:
Man has not produced land. It is free gift of nature to man. Man has utilized his abilities to make the most of land. He has built dams, bridges. cities and towns on it but he has neither created Dor produced it.
Land’s Productivity Is Limited:
Inspire of using lost of labour and capital. we can not produce unlimited goods from a particular piece bf land. If it had been possible, then only one region of land could have produced crops for all the people of the world.
Land’s Quantity Is Fixed:
The quantity, volume and area of land can not be increased or decreased. it remains fixed, on the other hand other three factors of production (Labour, capital and organizer), can be increased or decreased according to their need
Fertility of land Differs from Region to Region:
All the regions of the land (world) possess different qualities regarding their economic productivity. why some countries have large deposits of minerals while ether have none. The are dense forests in some regions of the world while some regions cover large deserts