SECTION “A” MULTIPLE CHOICE QUESTIONS (M.C.Qs)
Q.1 Choose the correct answer for each from the given options:
SECTION “B” SHORT QUESTION ANSWER
Q.2 Write names of any five developed countries according to
per capita income?
Per Capita Income and Developed Countries:
The names of five developed countries according to per capita income are following
(i) United States of America
(iii) The Great Britain
Q.3 What is meant.by “Value” Describe its three characters
Value and characters
The power of exchange of a good with other goods is called Value. There characteristics of value are following.
(i) The value of a good cannot be measured until it is compared to other goods or services.
(ii) The utility of a thing or service creates its value.
(iii) Scarcity of a commodity or service creates the value of that commodity or service.
Q.4 Describe definition of Economics given by Robins and also write three nature of economic problems.
Ans: Definition 0’Economics by Professor Robbins
The definition of Economics as given by Professor Robbins is following:
“Economics is the study of such human behaviour which is adopted as a relationship between ends and scarce means while the means can be used alternatively. (Professor Lionel Robbins)
Nature of Economic Problems
Three nature of the economic problems are following.
(i) Human Wants are Unlimited
(ii) Resources are Limited
(iii) Resources have Alternative Uses
Q.5 Explain personal income and name three important concepts of National Income.
Ans: Personal Income
The income which is received by a person through his labour, skills, service or business is called as Personal Income
Important Concepts of National Income
The names of three important concepts of National income are following:
(i) Gross National Product (GNP)
(ii) Net National Product (NNP)
(iii) Gross Domestic Product (GDP)
Q.6 What is meant by Labour? Write tile Economic names of remunerations paid to the factors of production.
All physical and mental efforts made by humans for the production of goods and services which are undertaken in the expectation of reward are called Labour
Remuneration Paid to the Factors of Production
The remuneration paid to the factors of Production are following.
(i) Rent (The Remuneration of Land)
(ii) Profit (The Remuneration of an Entrepreneur)
(iii) Wage (The Remuneration of Labour)
(iv) Interest (The Remuneration of Capital)
Q.7 Define Money with its four functions
An instrument which is used as a medium of exchange in bilateral transactions is called Money
Functions of Money
Four functions of money are following
(i) Money is an important means of sale and purchase of goods and services.
(ii) It is the important functions of money that the value of all goods or services can be measured because of money.
(iii) Money acts as a store value and it is also an important functions of money.
(iv) Money also acts as transfer of value.
Q.8 Name any five kinds of banks which are found in Pakistan
Ans: Kinds of Banks in Pakistan
The names of five kinds of banks found in Pakistan are following.
(i) Central Bank
(ii) Commercial Bank
(iii) Industrial Bank
(iv) Agricultural Bank
(v) Exchange Bank
Q.9 Describe any five functions of commercial banks.
Ans: Functions of Commercial Banles
Five functions of commercial banks are following.
(i)Commercial banks receive deposits from public and put them into various accounts.
(ii) These banks issue short term, medium term and long term loans.
(iii) Commercial banks provide lockers for their customers.
(iv) Commercial banks issue various kinds of credit instruments like travellers cheque, bank drafts, cheques and bills of exchange
Q.10 what is meant by “Trade”? Describe four distinctions between Domestic and Foreign Trade
Buying and selling of goods and services among two or more persons in a society is called as Trade. The buyer satisfies his wants while the seller earns profit through this process. Trade is a process of buying and selling of goods and services and it is classified into following two groups.
(i) Domestic Trade
(ii) Foreign Trade
Disinctions between Domesic and Foreign Trade
Four distinctions between Domestic Trade and Foreign Trade are following.
Q.11 Write down any five major Imports of Pakistan.
Major Exports 01 Pakistan
Five major exports of Pakistan are following.
(i) Cotton is the most important export of Pakistan. Cotton cloth and cotton farm is exported to other countries.
(ii) Sports goods of Pakistan are exported to many countries of the world.
(iii) Different kinds of surgical instruments like knives, scissors, blades etc. are exported to various countries.
(iv) Pakistan exports skins and hides, leather and leather products to other countries and earns a lot of foreign exchange.
(v) Pakistan also exports fish and fish products to other countries for earning foreign exchange.
Q.12 Name any five resources of “Public Revenue
The Resounes 01 Public Revenue
Five sources of Public Revenue are following.
(i) The government implements taxes on common people and institutions and receives takes on surplus income which is over than a specific range of income.
(ii) The government provides some services to the citizens, the charge of these services is “Fee”. It is a source of public revenue.
(iii) Different commodities are imported and exported under foreign trade. The government implements duties on trade in export and import and receives a good revenue.
(iv) All the commodities which are manufactured in the country, the government receives seeks taxes, then which is a source of public revenue.
(v) The citizens of the country have to act according to the laws. On breaking the laws, the courts announced punishments for the law-breakers. They are either sentenced to prison or changed with heavy fines in cash. The amount received through these cash fines is also a source of public revenue.
Q.13 Write down three assumptions of the Law of Supply and
state two causes affecting supply
The Assumptions of the Law of Supply
Three assumptions of the Law of Supply are following.
(i) When there is any change in the cost of Production, there is a change in price also. In this condition, supply is inversely affected and there is no increase or decrease in supply. .
(ii) Sometimes the new techniques of production make the cost of production less. In this case, the supply may increase without any rise in price.
(iii) Machines and raw material are basic requirements of Production. They play very important role to change the cost of production. When there a rise in the prices, there is a rise in the selling price of commodity. In this case, a rise in price will not be followed by the rise in supply
The Cause Affecting Supply
Two causes which affect supply are following
(i) Time Factor
The supply of a certain commodity has a very close relation with the period of its production. If a commodity can be produced within a very short period of time then its supply can also be increased.
(ii) The Changes in Cost of Production
The change in the prices of the factors of production brings changes in the cost of Production. When the cost production of a certain commodity rise while its selling price remains on the previous level, then the supply will be decreased.
Q.14 Differentiate between Stock and Supply
Difference b/w Stock and Supply:
Q.15 Name any five financial corporations established in Pakistan
Financial Corporations Established in Pakistan
The names of Financial Corporations established in Pakistan are following
(i) Pakistan Industrial Credit and Investment Corporation (PICIC)
(ii) House Building Finance Corporation (HBFC)
(iii) Small Business Finance Corporation (SBFC)
(iv) National Finance Corporation (NFC)
(v) Pakistan Investment Corporation (PIC)
Q.16 Write down any five objectives of Zakat.
The Objectives of Zakat
Five objectives of the payment of Zakat are following.
(i) Zakat provides social security to the :poor, needy, handicapped and helpless persons and they fulfills their necessities of life.
(ii) The system of the payment of Zakat eliminates the difference between rich and the poor.
(iii) The balance of economy can be achieved through the payment of Zakat.
(iv) The circulation of wealth increases through the payment of Zakat and a trend of investment is also increased in society.
(v) The capital is circulated among the individuals of a society and the requirements of people also fulfilled.
SECTION “C” DETAILED ANSWER QUESTION
Q.17 Describe the kinds of Economic System. Define any two with their characteristics.
The Kinds of Economic System
The kinds of Economic System are following.
(iii) Islamic Economic System
A system of economy in which the trade, business and production is under control of capitalists and they participate as a powerful element directly or indirectly in the affairs of the state is called Capitalism
The Characteristics of Capitalism
In Capitalism, the factors ~f production are owned by private individuals for perfect motive. The consumers are given due importance for the choice of liking land disliking. Free competition among producers and consumers in the market are allowed. Consequently, the consumers enjoying to buy better and cheaper goods but there is a risk of the accumulation of wealth. The characteristics of capitalism are following
(1) In capitalism, the profit plays a role of basic motivating factor. The investment is increased in that business where the opportunities of large profit are available. The profit earning is associated to better management, successful advertising and suitable cost of production.
(2) Competition is the best characteristics of capitalism, competition means the survival of the business firms in the market. The merit and success of capitalism is based on competition. There is no concept of monopoly in this system. The production of commodities increases due to competition. The standard of production becomes high and the consumers get goods and services at cheap prices.
(3) The important characteristics of Capitalism is capital. All the process or production depends upon capital. The private sector provides the capital. All the factories and business institutions are established by using private capital. The capital is borrowed from the banks and other financial institutions.
(4) In Capitalism, after the production, the second step is to bring the commodities in the market for sale. For the achievement of success in this step, middlemen like agents, brokers, wholesalers play their role
(5) The prices of the commodities in capitalism are determined on the basis of open market, thus the process of the determination of prices is done on the basis of demand and supply
An economic system in which total means of production are owned by the government and there is no concept of private ownership and competition and there is a full authority of the government officers on business is called Socialism.
The Characteristics of Socialism
The concept of socialism was first presented by Plato. After this Sir Thomas Moore gave the concept of collective ownership. The concept of modern socialism was presented by Karl Marx and Fredriech Engles. In socialism, the factors ·of production are owned by the State and utilized by the government for the Welfare of the people. Production is not meant for profit motive. Private property, business and production are not allowed. Important char actor istics of socialism are following.
(1) It is characteristics of socialism that under this system, all Ihe meant>01 production came under the ownership of the Si.ue and concept of private ownership is eliminated. The officers appointed by the government get their control on all means of production. Due to the control of the government on the means of production. many changes arc occurred from which the chances of getting the advantage and disadvantages are equal.
(2) The great advantage of the socialism is the elimination of interest. Socialism or communism is the economy free from interest because there is no private ownership in socialism. thus an economy of free from interest is developed in the
(3) There is no concept of private ownership in socialism and all the means of production are under the control of the government. Thus the ownership of the productive institutions is collective thus owners, management and the workers of a public institutions are the collective owners.
(4) It is a characteristics of > socialism that there is no open market competition. The ownership of all the institutions is collective and there is complete control of the government over the institutions and the policies are made according to the instructions of the government.
(5) The determination of the prices is done by the instructions of the government and such prices are fixed which are affordable to a common man in purchasing of that commodities.
Q.18 Write down the causes of backwardness. of trade in Pakistan.
The Causes of the Backwardness of Trade in Paklstan
Trade sector was extremely backward at the time of establishment. The causes of the backwardness of trade in Pakistan can be described as following.
(i) Agriculture Oriented Economy
At the time of establishment. the country was mainly related to agriculture and most of the people throughout the country were inclined towards cultivation. They had neither capital nor experience for trade. so they used to earn their living through cultivation.
(ii) The Opposition of the British
The British were responsible to end the Muslim Rule in India, they always took the Muslims as their strongest rivals. They did not like that the Muslims to be stable and prosperous in any way. The British paid no attention in the promotion of trade in the Muslim majority areas
(iii) The British Policy
The British Government POllCYwas rhat the Muslim majority areas like Sindh, Punjab. Khyber Pakhtun Khwa and Baluchistan should be kept economically backward because of using the people from these areas in defence services.
(iv) Departure of Hindu Trade after Partition
A large number of Hindu Traders were doing their business in the area which included in Pakistan after partition. There were Hindu Capitalist also who used to invest their capital in business. After the partition these Hindu traders and the capitalists migrated to India, therefore trade in Pakistan could not be established and promoted in the beginning
(v) Lack of Capital
The refugees who entered Pakistan from India were skilled and educated but they had no capital for the arrangement of business. Even now lack of capital is an obstacle in the way of the promotion of trade in Pakistan.
The Step. Taken by the Government lor the Development 01 Industries.
The steps taken by the government in the development of industrial sector can be described as following.
(i) Pakistan Industrial Development Corporation (P.I.D.C)
For the development of industrial sector, Pakistan Industrial Development Corporation (P.LD.C.) was established in 1952. It took steps to advise and encourage the capitalist. The corporation started founding these industries which were neglected by private section, These industrial now meet have demands and also yield foreign exchange Pakistan.
(ii) Industrial Loan and Investment Corporation
Industrial Loan and Development Corporation was established by the government of Pakistan in 1957. It grants loans for a period of seven to twelve years for establishing new industrial unit
(iii) Industrial Development Bank of Pakistan
Industrial Development Bank of Pakistan (IDBP) was established by the government of Pakistan in 1961. It issues loans tcourrneenwcie.asn. d
(iv) Industrial Scientific Research
An institute of scientific and industrial research was set up by the government of Pakistan in 1949. The Council of Industrial Research was also established in 1953. Both of these institutes were set up to find out new methods of production
(v) Industrial Protection
The government of Pakistan has established a tariff board to protect home industries and their protection. This board imposes heavy duties on the imports. It sometimes hampers and restricts the import of certain goods
(vi) Concession in Taxes
The government of Pakistan has granted some special concessions to the capitalists who are looking for to establish new factories in the country. Some industrial estates are declared as tax-free for five to ten years while many new units are granted concession in taxes
Q.20 Define “Law of Demand” and explain it with the help of a schedule and diagram.
The Law of Demand
Other things remaining the same, when the price of a particular commodity falls, it demands expands and when the price rises demand contracts.
The phrase used in the words of the Law of Demand assumes that there is no change in the fashion, season, income or tastes of the consumers. It also assumes that the position regarding substitutes for the commodity, in question remains the same as before. The Law of Demand can be explained by a schedule and diagram
Q 21· write a note on anyone of the following:
Rent and Its Knds
The remuneration of land as a factor of production is called Rent. It refers to the payment which is paid by a tenant to the landlord for the use of his land.
There are two kinds of rent which are following
(i) Net Rent
The amount which is paid as the remuneration only for the use of land as a factor of production is called Net Rent. It is paid for the fertility and other characteristics of land
(ii) Gross Rent
The total amount which is paid as the remuneration of the use of land along with the use of other facilities provided by the land owner is called Gross Rent. Gross Rent includes net rent, interest, wages and profit
(ii) Difficulties 01 Barter System
The difficulties faced in Barter System can be described as following.
(i) Lack of Double Coincidence of Wants
The great difficulty was in the Barter System that it had very short opportunities of double coincidence of wants. If person wanted to exchange his cloth with Sugar that he had to search such a person who possessed Sugar to exchange. If the person who wanted to exchange his sugar but he did not require cloth but he wanted rice then it was the search for another person who wanted to exchange rice with cloth, thus a direct exchange of goods between the two persons was not possible and a lot of time was required to solve the problem of exchanging the goods.
(ii) Problems of Detennination of Standard Value
When two parties were eager to exchange their goods, the difficulty of measuring the standard values of their goods would have been arisen because there was nothing to measure the value of goods to be exchanged with each other. For example it was difficult to measure how much quantity of sugar would be exchanged with ten kilogramme of wheat or how much quantity of flour would be given in exchange of one sack of rice. This was a problem be solved, if the two parties were not agree to a decision then exchange of goods not possible.
(iii) Lack of Divisibility of Certain Goods
Some goods when they are divided into different parts, they loss their value therefore under Barter System, the exchange of tl:e goods which lack of divisibility was not possible. For example wheat, rice, sugar and pulses can be divided into small or large parts but the value of commodities like animals, bed, table or bull cart is eliminated on their division. If a person wanted to exchange his bull cart with sugar, rice and flour then many difficulties were present in this kind of exchange.
(iv) Lack of Store of Value
In present ,!ge money can be saved and it can be used after storing for a long period and there is no chance of economic loss. Goods were the wealth or value under Barter System but many a goods are perishable and can not be stored for a long period, the storing of such kind of goods was a serious problem.
(v) Difficulty in Deferred Payments
There are certain commodities, which always keep changing their values in exchange. Their credit transactions are easily dealt with in the presence of money under the prevailing monetary system. But in olden days, under Barter System, the credit transactions used to cause loss either to creditors or debtors, for if the value of the commodity decreased on its return, the creditor would have certainly suffered a loss. If the value increased, the debtor would have suffered a loss, therefore the deferred payments were risky under this system.
People used to face many difficulties of Barter System, in the early stages of economic life. The progress of trade, commerce and business could not pace rapidly due to backwardness of Barter System but the concept of money had existed in the form of certain commodities. Then people were in search of a commodity which could have served as a medium of exchange bearing the quality of general acceptability in it. At last, the discovery of gold and silver enabled man to adopt a reasonable medium of exchange which also possessed the quality of general acceptability. These metals helped man, not only to remove the difficulties of Barter System, but also gave birth the present monetary system. Afterwards the paper currency with credit money succeeded the metallic money.
(iii) PuIJllc ixpend;fure Heads
Five heads of expenditure of the central government are following:
The defence 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 defence of its borders to create the protection and to flight against invader-so56% 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 equipments, 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 amount of money on construction of new roads and extension of old roads. The government also pays attention to develop the means of communication.
(v) Sodal 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 .