Economics (general group) Solved Past Paper 10th Class 2014 Karachi Board

SECTION -A- MULTIPLE CHOICE QUESTIONS (M.C.Qs)

Q.1 Choose the correct answer for each from the given options

(i)He is called the father of economics:
(a) Alfred Marshal
(b) Robin
(c) Ricardo
(d) Crowther

(ii) Capital for business is provided by:
(a) Banks
(b) World bank
(c) National investment corporation
(d) None of these

(iii) Every country tries to keep:
(a) Unfavourable balance of payments
(b) Favourable balance of payments
(c) Value of money
(d) Purchasing power

(iv) Those who are rendering services in foreign countries, provide the country:
(a) Interest
(b) Foreign exchange
(c) Man power
(d) None of these

(v) This bank deals in foreign currencies:
(a) Industrial bank
(b) Saving bank
(c) Exchange bank
(d) Agricultural bank

(vi) Every currency note bears this statement:
(a) The bearer will be paid on demand
(b) The bearer will be not be paid on demand
(c) It is the possession of the bearer
(d) All of these are not correct

(vii) The payment made for the use of capital is:
(a) Wages
(b) Interest
(c) Rent
(d) Wealth

(viii) It is obtained from the mutual equilibriumon demand and supply:
(a) Determination of Price
(b) Determinatin of Time
(c) Fluctuation in Price
(d) Decrease in Price

(ix) The part of stock that is offered “forsale at a particular price is called:
(a) Demand
(c) Supply
(d) Value
(d) Price

(x) The increase “in the income of the consumer, causes an
increase in:
(a) Demand
(b) Supply
(c) Production
(d) All of these

(xi) It is “part of wealth which is used for further production is,
called:
(a) Capital
(b) Utility
(c) Scarcity
(d) Transferability

(xii) The national bank of Pakistan is come into being in:
(a) 1974A.D.
(b) 1948A.D.
(c) 1949 A.D.
(d) 1950A.D.

(xiii) Islam strictly prohibits give and take of:
(a) Gold and silver
(b) Interest
(c) Ushr
(d) Loan

(xiv) Both are part and parcel for economic stability:
(a) Agriculture and industry
(b) Trade and bank
(c) tax and interest
(d) All of these

(xv) The percentage of income spent on defence in Pakistan is about:
(a) 40%
(b) 50%
(c) 56%
(d) 100%

(xvi) This department of the state bank of Pakistan issues . currency notes:
(a) Banking department
(b) Currency Issuing department
(c) Exchange control department
(d) None of these

(xvii) The thing which has the capacity to satisfy any human want is called:
(a) Price
(b) Transferability
(c) Scarcity
(d) Utility

(xviii) In this system, every individual has the right to do his own business and earn profit:
(a) Socialism
(b) Capitalism
(c) Islamic system
(d) Economic system

(xix) The first and the most important factor of production is:
(a) Labour
(b) Capital
(c) Land
(d) Organizer

(xx) The central Bank of Pakistan is:
(a) National bank
(b) Habib bank
(c) United bank
(d) None of these

SECTION ‘B’ SHORT QUESTION ANSWER

Q.2 Write down five advantage of foreign trade.
Advantages of Foreign Trade

Five advantages of Foreign Trade are following:
(i) Foreign trade enables a country to obtain the goods which cannot produce or bears a high rate of the cost of production.
(ii) A country earns. foreign exchange by exparting its surplus production which brings prosperity and stability to it.
(iii) Foreign trade provides opportunities to the poor and under developed countries to make progress. The bilateral and cultural relations of the countries engaged in foreign trade are strengthen by it which creates international peace and friendship.
(iv) Foreign trade creates a very efficient use of productive forces of the world, since each country employs itself in producing surplus goods. Thus a country obtain many commodities more cheap up than horae productions.
(v)Foreign trade enables a country to be specialized in a frew  agricultural or industrial products, which are generally produced on large scale. Mass production provides employment opportunities and to earh more foreign exchange.

Q.3 Give the reference of a Hadith about the rate of Ushr?

The Rate Of Ushr

The part of income which levied like Zakat and is taken from the income of agricultural production is called Ushr. The Prophet Hazrat Muhammad (S.A.W.) said

“One-tenth of the produce has to be taken as Ushr from the lands irrigated by rain, river and lake and one-twentieth of the produce has to be taken as Ushr from the land irrigated by well.
(Hadith of Prophet S.A.W.)

Q.4 Explain the kinds of money in two sentences each.
The Kind Of Money
The kinds of money are following:
(i) Coins
The coins are made of metals of different types. Generally they are called metallic money. They differ in shape, size and weight, with both sides stamped with the symbol of the state, so that they may not be copied by culprits.
(ii) Paper Money
Paper money is issued by the Government. It includes notes of various denominations. The Government authorities. the Central Bank to issue them. These notes differ in value, size colour and shape. People easily recognize them even on illiterate person can easily distinguish their denominations according to their face value.

Q.5 Mention some responsibilities of an organizer in the production of wealth.
Responsibilities Of Organizer

Some responsibilities of an organizer are following:
(i) An organizer may rightly called a manager or a director of a business organization .
(ii) He is an expert of utilizing all the four factors of production .
(iii) He achieves the goal of profit earning by his utmost skill.
(iv) The organizer holds responsibilities in full, regarding production.
(v) An organizer renders his services mentally at the most. He is the captain of his business ship. but is not directly risk-bearer regarding profit and loss

Q:6 Which factor affects the quantity of supply. Describe
Factors Affecting the Quantity Of Supply

The factors which affect the quantity of supply are following:
(i) Time Factor
Supply of a particular commodity is relevant to its period of production. The supply can be increased only when the required commodity is produced in short period. On the other hand certain goods require a long period to be produced and cannot be supplied instantly. For example wheat, rice, fruits, machines, motor cars etc. In this case their supply cannot be increased and will not be affected by any change in price. .

(ii) Production Factor
If there is a rise in the cost of production and the price remains on the previous level, the supply will be decreased ultimately. The profit of the producers will decrease due to higher cost of production; consequently, the supply will tend to decrease and it may be that a few producers will stop their production.
Q.7 Mention any five objectives of payment of zakat?
Objectives Of Payment Of Zakat

Five objectives of the payment of Zakaat are following:

(i) Zakaat provides social security to the poor, needy, handicaped and helpless persons and they can fulfill their necessities of life.
(ii) The system of Zakaat eliminates the difference between rich and poor.
(iii) The balance of economy can be achieved through the system of Zakaat.
(iv) The circulation of wealth increases through zakaat and a trend of investment is also increased.
(v) The capital is circulated among the individuals of a society and requirements of people also fulfilled.

Q.8 What do you mean by the factors of production? Describe any two of them in some sentences.
Factors Of Production
Some production resources which are required to produce a proposed product or service are called as Factors of Production. The factors of Production are following:

(i) Land
(ii) Labour
(iii) Capital
(iv) Organizer
(v) Entrepreneur

Land

Land means all gifts of nature in the form in which they exist, before man begins to work upon them. Land is fixed quantity. It cannot be decreased or increased because its supply is fixed

Labour

In Economics, labour means any work, whether physical or mental, undertaken for a momentary consideration; but any work done for the sake of pleasure, or love does not fall under labour

Q.9 Write in a few sentences the conditions for Demand.
Conditions For Demand

The conditions for Demand are following.
(i) The desire or need for a thing cannot be called want or demand in Economics unless we are capable to buy it.
(ii) Demand also depends upon will to purchase. The will to purchase a thing is as important as capacity to purchase.
(ill) Demand versus price. Unless we are aware of market price of a thing, we cannot decide its quantity to be purchased, though we have capacity and will to purchase it.

Q.10 Write down any five differences between a central and commercial bank.
Difference b/w Central Bank anti Commercial Bank

centeral and commercial bank

centeral and commercial bank

Q.11 Define in three sentences each:
(i) Per capita Income
Three sentences on Per Capita income are following

(1) The individual income of a person in a state is known as per capita income.
(2) Per capita income represents the whole standard of life of a state.
(3) The rate of employment and development of industry and business determine per capita income.
(ii) Production
Three sentences’ on production are following:

(1) The human efforts which creates additional utility or value into goods and services are known as production.
(2) According to Dr. Richard, production means the creation of economic utility. .
(3) According to Professor Fair child production consists of utility in wealth.

Q.12 Define “budget” in view sentences.
Budget:
Some sentences on Budget are following:
(i) The document which explains the detail of planning aspects of the income and expenditure of central and provincial governments is called Budget.
(ii) In Budget, the details of Passive Finance of Central and provicinal governments are written.
(iii) The budget is divided into two parts, one is called Income Budget while the other is called Expenditure Budget.

Q.13 Define any two:
(i) Wants

Certain goods and services which are required to meet the requisites of human life, these reuqisites are called as Wants. Food, clothing and shelter are the basic human wants. There are two kinds of wants which are Economic Wants and Non-Economic Wants.
(ii) Value
The power of exchange of a good with other goods is called as Value. The value of a good cannot be measured until it is composed to other goods or services. If a good possesses the exchangibility power with other, it has the value in exchange. The actual satisfaction of the use of commodity is called its value in use.
(iii) Wealth
Generally, the term wealth means money, gold or silver, but in Economics, it means all those goods and services which possess value together with its three factors which are utility, scarcity and transfer ability. If wealth is invested for further’ production of wealth, it is called Capital .

(iii) Saving:
The part of income which remains unused from the expenditure on daily life is called Savings. It is the difference between income and expenditure. Savings depends upon the factors which are power to save and will to save.

Q.14 Define profit and its kinds.
Profit
In ordinary words, profit means the excess of money over money costs. It is the remuneration to the organizer or entrepreneur because he supplies the fourth factor of production. The organizer makes plans and groups the other three factors efficiently to yield a beneficial product. He is also responsible for the sale and disposal of his products.
(i) Net Profit
By the term net profit we mean the pure profit which excludes all the other remunerations except itself. The entrepreneur gets profit in exchange of his services rendered as the efficient grouping of other three factors of production and taking the risk associated with business enterprise. If the entrepreneur renders ay other services and gets reward of them, it must not be included in the profit, which is more exactly called  Net Profit.
(ii) Gross Profit
Gross Profit is the opposite to that of net profit. It includes other rewards of the services rendered by the entrepreneur in the same business. Those who are bearing all the risks and have contributed their land, labour and capital or any of these agents to business, they receive their remunerations besides net profit. Their aggregate income is called “Gross Profit”. Besides net profit following are the constituents of Gross Profit. .
(i) Rent
(ii) Wages
(iii) Interest
(iv) Monopoly gains
(v) Windfall gains

Q.15 Write down any five heads of expenditure of the central governments
Heads Of Expenditure of Central governments
Five heads of expenditure of the central government are
following:
(i) Defense
The defense of a country requires top most priority. It .means the maintenance and equipment of armed forces including police. The state maintains Army, Navy and Air Force for the defense of its borders to create the protection and to flight .against invaders. 56% approximately is spent on the defence of Pakistan.
(ii) Law Enforcing Agencies .
The department of police and other law enforcing agencies are responsible to maintain peace in the country. Recent types of communication equipment, vehicles, arms and ammunition have
been provided to these law enforcing agencies
(iii) Civil Administration ,.
The machinery of civil administration includes different
kinds of ministries such as foreign affairs, education, public
health, food etc. These departments solve the public problems and
issues. They undertake the responsibilities to maintain the rights
and duties and peace among citizens.
(iv) Transport and Communication .
The means of transport and communication play very important role in the economic progress and for the welfare of the people of an under development nation. The government spends a large amoung of money on construction of new roads and extension of old roads. The government also pays attention to develop the means of communication.
(v) Social Welfare
The Government is responsible for the welfare of its subject. It provides all kinds of educational, health and  employment facilities to the people. The government invests a large amount of revenue on the establishment of educational institutions including arts, science, commerce and other specialized technical training centres. It also spends fairly large amount of public health and establishes general hospitals, maternity homes and family planning centres. It also provides medicines and equipment to these organizations

Q.16 Draw the schedule and the curve only of the law of Demand (Explanation not required)

law of Supply

The schedule and curve of the law of supply are following:

Schedule

price and quantity

price and quantity

Curve

Curve

SECTION “C” DERAILED ANSWER QUESTION

Q.17 What is meant by public Debt? Explain its kinds and sources in detail.
Public Debt
The loan which is taken by the government to meet either development expenditure or for unavoidable circumstances which exist all of a sudden in the country is called as Public Debt.

Sources OF Public Debt
The government, first of all tries to adjust accidental expenditure within the range of its budget. In case of failure, the government takes loans from domestic sources. The domestic sources are central bank and the loans from public. The government also imposes new kinds of taxes or increases the rate of old taxes. The government also takes loans from foreign resources.

Kinds Of Public Debt
Important kinds of public debts are following:

(i) Unproductive Public Debt
This kind of public debt is meant to provide recreation and amusement to the people. It is used to construct playgrounds, stadiums, meuseums, public parks etc. It is not meant for productive motive. It neither increases national product nor rises
national income, or per capita income. Anyhow it is one of the necessities of human life.

(ii) Productive Public Debt
Productive public debt bring socio-economic progress and prosperity to the country. They are used to utilize natural and human resources of the country which increases n,tional product as well national income. They are meant to establish multipurpgse dams, barages, canals, mills, power-houses and to construCl highways etc. These measures if taken by the government prove to be very useful for all the classes of people of a country resulting and increase in their incomes and promoting their standard of living

Q.18 What role do banks play in the economic development of a country, Also explain the main function. of a central bank

The Role of Banks In Economic Development:

A financial institution which is established in, the form of a joint stock company, partnership or cooperation and performs a business of money received constructive and non-constructive purposes is called Bank. A bank receives savings at low rate of interest and provide loans at high rate of interest. The role of banks in the economic development of a country can be described as following:
(i) The Central Bank of a country gives help to the government in making stability in the economic system of the country.
(ii) All commercial banks receive deposits from general public and issue loans on the basis of them in order to gain profit.
(iii) Agricultural banks issue loans for the cultivators and fanners for the development of agriculture.
(iv) Saving banks receive deposits of small amounts of saving. They work to make people habitual of saving. They also issue saving certificates.
(v) Exchange banks deal in foreign currency and promote foreign trade. Foreign currency is required in foreign trade and these banks provide foreign currency

The Functlons of Central Bank

The important functions of a central bank are following:

(i) The Central Bank has an authority to issue notes. It issues the 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 Central Bank.
(iii) All the banks of the country follow the monetary policy of the 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 effects on prices.
(v) The central bank provides advisory services to the government on financial affairs

Q.19 Elaborate the importance of industrial development in the country. Also explain the step taken by the government in this regard.

Importance Of Industrial Development In Pakistan .

The importance of industrial development Pakistan can be described as following.
* Industries are the source of economic progress in a country because’ the other economic sectors are directly related to the industries due to which chances for the development are produced. Those countries are considered developed which are developed in industry.
* Industries helps in large scale production of consuming products. Commodities are manufactured on large scale to fulfill local and national needs and are also exported to other countries to meet their needs. Valuable foreign exchange is also earned. Thus industries not only give local requirements of life but also help in achieving international requirements.
* Industries are a source of providing employment. In industries different skillful and expertise ~.re/needed. Thus industries provide employment to a number of people like’ labourers, expertise and other professionals.
* Industries help in changing the raw material into beneficial products thus value of raw material is raised by manufacturing them into finished goods. Cotton as raw r-iaterial has less value as compared to Cotton Yarn or Cotton Cloth. Similarly simple metal has less value than the products formed by this metal.
* Due to industries, different kinds of comforts and facilities are obtained to the lives of human beings. For example washing of clothes has become easy with the help of washing machine. Different kinds of vehicles, railways and aeroplanes provide travel facilities. Similarly radio, television, air conditioner, refrigerator and many other goods have added to the comfort of the people.
* Industry makes ~be country economically strong. Strong economy helps in political and strategic stability. Due to the ‘industrial production not only the country requirements are fulfilled but these industrial products are also exported to other countries and where the demand of these products is made. Thus a country gains internal and external money exchange. This process makes the standard of living of common man high and gives economic stability
to a country

Steps taken by the government

After the creation of Pakistan the government of Pakistan started its efforts to provide an industrial base to the country and in 1948, an industrial policy was announced which encouraged private investment in the industrial field. In 1962, Pakistan Industrial Development Corporation (P.I.D.C) was set up by the government and large industries were set up with public investment. But in 1972, ten categories of factories were nationalized by the government. This action of the government created uncertainty for the private investors and they hesitated to invest in the industrial sector. Presently the government is trying to privatize the industries, besides allowing the private sector to setup new industrial units. Foreign investors have also been invited and encouraged to invest in Pakistan.

Q.20 How dose economic problem take place and how can it be . Explain in detail.

Economic Problem:

The problem which is related to the economic needs, income, expenditure and economic activities of man is called as Economic; Problem.

The Appearance Of Economic Problems

Mankind has to face uncountable economic problems at a time, the reasons for the appearance of an economic problem are following.

(i)unit. wants are unlimited
(ii) The means to satisfy human wants are scarce
(iii) How the means can assessed to solve the economic problems .

We know the fac that human wants are unlimited in numbers and that they remain existing continuously for whole life. We possibly cannot satisfy them all. Sometimes we feel thirst and hunger;’ Sometimes we want clothing and conveyance, .when we satisfy these wants, the other wants exist continuously, which follow up to the end of life. Thus the economic problem exist due to unlimited human wants. We {allow a particular line of action to solve it because of aUf scarce means. The phrase ‘scarce’ does not mean that the~.~ is a vast s~ge of goods. and services hi. the world. It is not’ ~o,at all because we produce many million tons of crops, millions yard of clout. millions of cars and motor bikes and all the necessities of life. It seems very strange seven mass-production is short for human necessities; but infarct it is true that all these products are insufficient to meet all the requirements of mankind. The production of goods differ from country to country. So, if a country faces the problem of shortage of. food, the other faces the problem of clothing. All these facts prove that human resources or means are less than human wants.

The Solution of Economic Problem

Man keeps natural resources like land, water. minerals, forests, seas, oceans etc in order to fulfill his economic wants. Artificial resources like machines, t091s instruments, dams, electricity, roads, railways, bridges etc and human resources like labour foces, skilled labourers, engineers, doctors, professors, teachers, businessmen etc also help in meeting the human wants. Though all these resources are not less in number or quantity, but they are less than human demand. That being so, an economy has to decide how to use it scarce means there are problems of food and houseing both; the land should be used in such a way, that both the problems be solved. It should be determined according to the condition of the problem and available resourcces so that the maximum satisfaction be derived for the members of~e society. The economic problems differ according to the conditions of an economy. They keep charging their stable, always. It is the first and foremost duty of an Economist to pay full attention to solve these problems in accordance with the economic condition and resources of the society. It is necessary to assess and determine the economic resources versus economic problems.

Q..21 write a note on any one of the following?

(i) Different stages of Evolution of Ecollomlc life

The stages of the evolution of Economic life are following

(1) In the beginning of the history. man was unknown to civilized life and lived upon hunting like animals. He invented tools and weapons made up or stone, .wood and metals to hunt and kill animals. This was an uncertain way of getting food. Thus for many times. 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 Hunting and gathering stage.
(2)- Man started to store animals alive so that he protected humself from the uncertainity condition. thus the existence of pastoral stage was the result of hunting, ga~ering andstoring of the animals. Man started roaming from place to place with his cattle in search of grass and water, that is why this period is called Pastoral Stage.
(3) Man was passing ‘a wandering life during pastoral stage, the wandering process from one place to another was troublesome for both man and animals. Man found regular supply of water and vegetables near the river banks. He sected down there and learnt by nature, how to. growable to cultivate land regularly, thus this stage is called as Agriculture and Handicraft Stage.
(4) With the increase in human needs, the handicrafts system came into being. People adopted particular professions like weaver, carpenter, goldsmith, potter etc. In this way a remarkable development in the production, consumption and exchange took place, this way a line was developed for Industrial Stage

(ii) Functions Of Money

Money performs following functions

(1) Medium of Exchange

Medium of Exchange Money acts as a medium of exchange. As a medium of exchange, it removes the difficulties of bartes. It facilitates the exchange of goods and services among people as means of transferring from one party to another, possessing the command over commodities in general. We can pay the wages, as well as, buy or sell anything, at anytime by money.

(2) Standard of Value

Money serves as a standard or measure to find the value of wealth, goods and services. It was very difficult to ascenain the value of goods and services during barter economy, but now we are in a position to measure their values in terms of money. In the present economy, money enjoys the central position as a value measuring rod. By money we measure the value of a thing and ascertain its price. Thus money serves as a standard or measure of value.

(3) Standard of Deferred Payments

Money is more stable medium of exchange than 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 debtor, both the parties remain satisfied

(4)Store of Value

Money serves the function of store of value without any difficulty. Under barter economy goods WeEe stored. There was possiliility of theft and fear of de&truction of values. Large quantity of value needed a large amount of labour to look after But, because of money the smallest, as well as, the biggest amount of value can be stored easily

(5) Transfer of Value

the introduction of money has solved the problem of transfer of value. For example if a man wants to transfer his business or house from Karachi to Islamabad, he can easily do that by selling his property in Karachi and buying the same in Islamabad. Thus, the difficulty of transfer of value from one place  to another. without losing its worth has been removed by money.

(iii) Zakat and Ushr

The literal meaning of Zakat is cleanliness and growth. Cleanliness means. the Zakat of imposed on the wealth by the commad of Allah then the wealth becomes pure and spiritually clean. Growth means when Zakat is paid from a certain code of law. ZakarIs the duty for a Muslim which he pays according to the fixed ratio directly or indirectly by the source of the government. Zakat is of levy or wealth tax and to welfare organizations. Zakat is no levied on following persons.

(1) Zakat is not levied on the property of minors. .
(2) Zakat is not levied on the property of mad and mentaIiy retarted persons.
(3) Slaves are also exempted from the payment of Zakat.,.,
(4) Personal food. clothing residential place and domestic goods are also free from the payment of Zakat.

Zakat provides social security to the poor. needy, handicapped and helpless persons and they can fulfill their necissities of life. The system of Zakat eliminaes the difference between rich and poor. The balance in economy can be achieved through the system of zakat. The circulation of wealth increases through zakat and a trend of investment is increased. The capital is circulated among the individuals of a society and requirements of people are also fulfilled. The people leave the bad habit of over expenditure through the payment of Zakat. As Zakat is meant for the welfare of mankind. so Allah is pleased with its payer. Therich pay the one-fortieth of their wealth as Zakat for neeCiy persons by which the wealth circulates insociety. The part of income which levied like Zakat is taken from the income of agriculture produce is called Ushr. The Prophet
Hazrat Muhammad (Peace be upon him) said fixing the rate of Ushr. “One-tenth of the produce has to be taken as Ushr from the lands irrigated by rain. river and and one-twentieth of the produce has to be taken as Ushr from the land irrigated by well.

(The Hadith of Prophet (SAW).

The rent of the land is not connected to Ushr is charged for deserving people and rent is to be paid to the landlord. If the Zakat payer is landlord. he was to pay ushr also. The land which
produces less than 940kg is exempted from Ushr. It is also levied on period of one year is not necessary for the payment of ushr, Ushr is also taken from the property of non-adults and slaves.
Ushr is also levied on the land owned by a trust. Ushr is also levied on Batai lands. the land whose produce is to be divided between the landlord and the cultivator.

Posted on December 18, 2015 in 10th Class 2014 Karachi Board Past Papers

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