Solving ICSE Class 10 Economics Previous Year Question Papers ICSE Class 10 Economics Question Paper 2013 is the best way to boost your preparation for the board exams.
ICSE Class 10 Economics Question Paper 2013 Solved
Section – I (40 Marks)
(Attempt ALL Questions)
Question 1.
(a) State two advantages of opening a bank account. [2]
(b) What is the difference between impact of taxation and incidence of taxation ? [2]
(c) Define cost-puch inflation. State two factors causing it. [2]
(d) The bus fare between two cities is reduced. How will this affect the demand curve for bus travel between the two cities? [2]
(e) Distinguish between Real capital and Debt capital with the help of suitable examples. [2]
Answer:
(a) Two advantages of opening a bank account are:
- One can keep his savings safe and risk free through a bank account.
- A bank account encourages the habit of saving.
- Bank account helps in making payments.
- Bank account helps in smooth transactions.
- Bank account holders get a safe deposit locker.
(b)
| Impact of Taxation | Incidence of Taxation |
| When the Government of any country imposes a tax, then the person or institution which bears the tax burden at the first instance is known as the impact of tax. | If the tax payer can shift the burden of tax, then the final resting point of the tax burden is called the incidence of tax. |
(c) The prices, instead of being pulled up by demand factors may also be pushed up as a result of rise in the cost of production such as wages, profits or raw material costs. The increased price of factors of production leads to decreased supply of these goods. This is called cost push inflation.
Two factors causing cost-push inflation are:
- Rise in wages.
- Increase in the price of basic raw materials.
(d) The bus fare between two cities is reduce, so the demand for bus travel will rise and the demand curve will move downward.
(e)
| Real Capital |
Debt Capital |
| Real capital refers to those assets which help in the production process such as machines, buildings, etc. | Debt capital is the capital invested in shares, stock, debentures, government securities etc. which yield income to their investors. |
Question 3.
(a) Mention two causes of low efficiency of labour in India. [2]
(b) Mention any two forms of consumer exploitation. [2]
(c) Define Public debt. [2]
(d) Indirect taxes are regressive in nature. How can they be made progressive ? [2]
(e) Distinguish between demand deposits and fixed deposits. [2]
Answer:
(a) Two causes of low efficiency of labour in India are :
- Climate : India is a sub-tropical country and its climate is hot. This is the most important natural cause of low efficiency of labour in India.
- Low wages : The wages of labour in general are low and so is the standard of living. Indian workers are poorly fed. As they are unable to keep themselves physically and mentally fit.
(b) Two forms of consumer exploitation are :
- Under weight and under measurement: The goods being sold in the market are sometimes not measured or weighed correctly.
- Sub-standard quality: The goods sold are sometimes of sub-standard quality. Selling of medicine beyond their expiry dates and supply of defective home appliances are the regular grievances of consumers.
(c) Public debt refers to the loans raised by a Government within or outside the country. The Government has to pay interest and repay the principal amount to the public.
(d) Indirect taxes or taxes on necessaries are regressive in nature because they take away a larger proportion of lower income as compared to higher income. Therefore, regressive taxes are unjust in nature.
They can be made progressive by reducing the rate of indirect taxes on necessary items like food, clothes, shelter etc.
(e)
| Demand Deposits | Fixed Deposits |
| 1. The rate of interest is nil on demand deposits.
2. The demand deposit account holder gets the facility of overdraft. |
1. These deposits get the highest rate of interest.
2. They do not get such facility. |
Question 4.
(a) Indicate the degree of elasticity of a supply curve parallel to the x-axis. [2]
(b) Distinguish between Creeping inflation and Running inflation. [2]
(c) How does money act as a standard of deferred payment? [2]
(d) Briefly explain the importance of public expenditure in the industrial development of developing countries. [2]
(e) Distinguish between Statutory Liquidity Ratio and Cash Reserve Ratio. [2]
Answer:
(a) If there is an infinite change in quantity supplied in response to a small change in price, the supply of that commodity is said to be perfectly elastic (i.e., Cs = ∞)
(b)
| Creeping Inflation | Running Inflation |
| When the rise in prices is very slow like of a snail or creeper, it is called creeping inflation. It occurs when the price level increases at a mild rate, say around 2 to 3 per cent per year. | When a price level rises at a faster rate and is generally around 10 per cent per annum, it is called running inflation. Running inflation is a warning signal indicating the need for controlling it. |
(c) Money acts as a standard of deferred payment. It means payment to be made in future can be expressed in terms of money. Money is accepted as a standard of deferred payment because it has a general acceptability and it can be expressed in definite and standardised units.
(d) Public expenditure on the establishment of heavy and basic goods industries in the developing countries increases the growth rate of the economy. By constructing the infrastructure of the economy, the economic development of the economy can be accelerated.
(e)
| Statutory Liquidity Ratio | Cash Reserve Ratio |
| 1. It can be in the form of cash, precious metals or securities.
2. It controls the credit growth in the economy. |
1. It can only be in the form of cash.
2. It controls the liquidity in the economy. |
Section – II (40 Marks)
(Attempt any FOUR Questions)
Question 5.
(a) What is meant by increase in demand ? Discuss any four factors affecting price elasticity of demand. [5]
(b) Define land. Explain the importance of land as a factor of production. [5]
Answer:
(a) Increase in demand refers to a situation when there is more demand at the same price of the same commodity. Factors affecting price elasticity of demand are :
- Nature of commodity : Luxury or comfort goods are more elastic than necessity goods, for example demand for wheat, rice, sugar will remain practically the same with price changes, whereas demand for cars, fridge and AC’s is more responsive to price changes.
- Availability of substitutes: Commodities for which other substitutes are available in the market have more elastic demand as compared to commodities without proper substitutes.
- Time period : Longer the time period, greater is the elasticity of demand and vice-versa. This is because in the long run, consumers can adjust their consumption habits in favour of cheaper substitutes, which may become available over time.
- Durability of goods : Demand for most durable goods are elastic but that for most non- durable goods are relatively inelastic.
(b) The term “Land” generally refers to the surface of land. But in economics, it includes all the free gifts of nature called natural resources for example mineral resources, mountains, rivers, lakes, forests, wind, climate, sunshine, rainfall etc.
Land is an important factor of production in spite of the factor that land is a passive factor of production. Importance of land becomes evident from the following facts :
- Promoting agricultural development : The agricultural development of a country largely depends upon the quantity and quality of land. Availability of fertile soil with abundant supply of water for irrigation purposes provides favourable conditions for agricultural development.
- Promoting industrial development : Mineral resources like iron ore, aluminium, copper, uranium etc. provide the basic raw material for the development of industries. It also provides site for the construction of factory buildings and industries.
- Generations of electricity : Rich resources of coal, petroleum, water, wind are an important source for the generation of electricity. These natural resources are the source of both hydel and thermal electricity.
- Source of transport : All the important modes of transport i.e., roadways, railways, waterways and airways are based on the surface of land, rivers, oceans and air, which are all constituents of land.
Question 6.
(a) Define supply. State the law of supply and explain it with the help of a diagram. [5]
(b) Define a consumer. Explain the importance of educating consumers of their rights. [5]
Answer:
(a) Supply of a commodity refers to the quantity of that commodity which a seller is willing to sell corresponding to a given price. Law of supply expresses the functional relationship between price of the commodity and the quantity of the commodity supplied. It states that—‘Other things remaining the same (CETERIS PARIBUS), if the price of the commodity falls the quantity supplied of it also falls and if price rises, quantity supplied of it also rises.’ Thus, there is a positive relationship between price of a commodity and its quantity supplied. Law of supply indicates only the ‘direction’ of change and not the ‘magnitude’ of change in supply, in response to change in price.
| Price of rice (₹ per kg) | Quantity supplied (kg) |
| 20 | 5 |
| 25 | 10 |
| 30 | 15 |
(b) An individual who buys products or services for personal use and not for manufacturer or resale is called a consumer. He uses services which are availed of with the approval of one who hires the services.
Consumer education is a right of every individual. It is in fact, one of the eight basic rights consumers have recognised internationally. Consumers must be aware of the rights they enjoy against the loss they suffer on account of goods and services purchased by them. It should be incorporated in school curriculums and in educational programmes for lifelong learning.
- If the consumer is educated and knows his rights, it will not be possible for the business to exploit him.
- The businesses will be forced to provide good service and goods to the consumer. benefitting society as a whole.
- It provides feedback for the business to constantly improve upon its products to give maximum satisfaction to the consumers.
Question 7.
(a) Name the institution that enjoys the monopoly of note issue in India. Briefly explain two qualitative methods of credit control adopted by this institution. [5]
(b) Define labour. Explain four important characteristic features of labour. [5]
Answer:
(a) Reserve Bank of India enjoys the monopoly of note issue in India.
The instruments used under the qualitative methods of credit control are :
- Margin requirements: Margin requirements refers to the difference between the amount of loan and the market value of the security offered by the borrower. By changing the margin requirement, the Central Bank can effect the amount of loans. High margin requirements discourage speculative activities and vice-versa.
- Moral suasion : It is the method of persuasion, request, informal suggestion and advice to the commercial banks by the Central Bank. Central Bank convenes the meeting of the heads of the commercial banks and explains to them the need for adoption of a particular monetary policy and appeals to them to follow this policy.
(b) Labour refers to the human effort, both physical and mental, with a view to earn income. Characteristics of labour as a factor of production are as follows :
- Labour is Perishable : If a worker does not work on a particular day, his labour for that day is wasted. Labour is, thus, perishable. Labour cannot be stored. The labourer has to sell his labour immediately irrespective of the prices (i.e„ wages) paid to him.
- Labour is an Active Factor of Production: Land and Capital are passive factors, but labour is an active factor of production. Without labour, other factors of production viz., land and capital cannot produce anything.
- Labour sells his labour, not himself: The labourer does not sell himself, he sells his labour only. A labourer may or may not agree to do work. He remains quite independent while doing his task.
- Labour in Mobile : Labour alone is a factor which is mobile. It can move from one place to another and also from one occupation to another. Other factors of production such as land lacks mobility.
Question 8.
(a) What is meant by food adulteration ? Give an example. Mention two harmful effects of food adulteration. Name any one measure formulated to prevent the problem of food adulteration in India. [5]
(b) Explain two methods adopted by Commercial Banks to advance loans to the general public. [5]
Answer:
(a) Food adulteration is the act of intentionally debasing the quality of food offered for sale either by substitution of inferior substances or by the removal of some valuable ingredients.
Example : Addition of melamine into milk, addition of Vanaspati into Ghee, Honey is adulterated with other sugar, brick powder in chilly powder.
Harmful effects of food adulteration are :
- Food adulteration reduces the quality of the food and this weakens the health of the one whp consumes them, thereby increasing the cost of health care.
- It can also cause heart diseases, loss of eye-sight or tumour.
Measure to prevent the problem of food adulteration in India:
“Prevention of Food Adulteration Act, 1954 was drafted for this purpose by Ministry of Health and Family Welfare in India”.
(b) Lending is the second primary function of the Commercial Banks. There are various ways by which banks advancing loans to the general public. Bank charges interest from the borrowers.
- Cash credit : The entire sanctioned amount of loan by the bank is not given to the borrowers at particular time. The borrower is allowed to withdraw the sanctioned amount as and when he requires money. Interest is charged only on the actual amount withdrawn from the bank.
- Overdraft : The customer is allowed to overdraw his current account balance. The customer can draw cheques in excess of the balance standing in his deposit to the extent of the overdraft amount. The bank charges interest only on the amount overdrawn. For a businessman, the overdraft facility is the easiest and the most convenient method of borrowing from banks.
Question 9.
(a) Why is the income of an entrepreneur residual in nature? Discuss any three functions of an entrepreneur. [5]
(b) Distinguish between [5]
(i) Voluntary debt and Compulsory debt.
(ii) Regressive tax and Degressive tax.
Answer:
(a) There are four factors of production, land, labour, capital and enterprise. Factors of production namely land, labour, capital are separately owned and are available at different places. Thus, there should be somebody who can bring these factors of production together at work place, combine them in right proportions and make them together for production.
The entrepreneur undertakes the responsibility to distribute proper remuneration to each factor of production, i.e., rent to landlord, wages to labourers and interest to capitalist and rest of the income is the reward of an organisation which is called ‘profit’.
Three functions of an entrepreneur are as follows :
(i) Risk-Bearing Function : It is the most important and specific function of an entrepreneur. Every business involves risk. There is no other factor of production except the entrepreneur, who bears risk of the business. The risk is caused by uncertainties attached to production, investment and profits. Another big risk is of technological obsolescence and frequent changes in Government policies. The entrepreneur has to calculate all these risks and then plan the organisation of various factors of production in different proportions.
(ii) Decision-making function: All the vital decisions of business are taken by the entrepreneur. He conceives the idea of a particular business after making an intensive study of the market conditions, business projects and economic viability. He takes all the vital decisions with regard to ‘what to produce’, ‘how much to produce’ how to produce and in what proportion to combine the factors of production.
(iii) Co-ordination and administration: An entrepreneur not only brings together different factors of production but establishes and co-ordinates an effective functional relationship among them. He frames the overall policies and keeps, a vigil eye and control on business.
(b)
(i)
| Voluntary Debt | Compulsory Debt |
| Voluntary debt is a debt which is taken from the people by the Government on a voluntary basis. In case of voluntary loans, people voluntarily and willingly subscribe to the Government loans. | Compulsory debts are those loans which are forcibly taken from the people by the government. When the Government exercises its power or pressure for getting loans, such loans are known as compulsory loans. |
(ii)
| Regressive Tax | Degressive Tax |
| 1. It implies that the rate of tax decreases with the increase in income. | 1. It implies the rate of tax begins to increase simultaneously with the increase in income. |
| 2. It is levied at a higher rate on the individuals having low income and the rate of tax is lower for the individuals with high income. | 2. After reaching a specific limit, the tax- rate becomes proportional. or constant. |
Question 10.
(a) Define a tax. Explain briefly two merits and two demerits of direct taxes. [5]
(b) What is inflation ? Discuss the effects of inflation on :
(i) Fixed income groups.
(ii) Producers. [5]
Answer:
(a) Tax is a compulsory contribution from a person to the Government to defray the expenses incurred in the common interest of all without reference to special benefit conferred.
Advantages of direct taxes :
- Equitable : A direct tax is an equitable tax as it is levied according to the tax paying capacity of the people. Under progessive taxation system, tax rate increases as the income increases.
- Economical: Direct taxes are economical in the sense that cost of collecting them is low. They are usually collected ‘at the source’.
Disadvantages of direct taxes :
- Inconvenience : Direct taxes cause inconvenience to the tax payers mainly businessmen because of the need to maintain, elaborate accounts and to observe various formalities.
- Tax evasion : By submitting false return of income or by concealing the income, some people evade tax.
(b) Inflation is sustained in the general price level of goods and services in an economy over a period of time.
The effects of inflation :
(i) On fixed income groups: Fixed income earners such as pensioners lose during inflation. First, in many cases, pension is fixed so that the money income of the pensioner remains same during inflation. Even when pensions are revised periodically, increase in pension does not keep pace with the rising prices, second, pensioners keep their savings in the form of bank and postal deposits which give them a fixed income in the form of interest.
(ii) On producers : During inflation, they gain in the short period. Usually, the cost of production does not rise as fast as the price of their product and so there is artificial margin of profit. However, they may be affected adversely in the long run. If the price level goes on increasing, the total consumption of their product would fall. The reduced consumption will ultimately raise the per unit production cost and reduce the profits.