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In This Post we are  providing MONEY AND BANKING NCERT MOST IMPORTANT QUESTIONS for Class 12 which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON MONEY AND BANKING

Question 1.
Explain the role of reverse repo rate in controlling money supply.
Answer:
Reverse repo rate is the rate at which the RBI or Central Bank borrows from other commercial banks. It plays an effective role in controlling the money supply. For example, an increase in the reverse repo rate implies that the bank will get a higher rate of interest from the RBI on their lendings.

As a result, the banks will lend more to the RBI and less to the public thus, resulting in a decrease in the money supply. Similarly, in case the RBI decreases the reverse repo rate, the banks will get a lower rate of interest on their borrowings. As a result, they will lend more to public, which will in turn increase the money supply.

Question 2.
Distinguish between ‘Qualitative and Quantitative tools’ of credit control as may be used by a Central Bank.
Answer:
Two types of methods are adopted by the central bank to control credit. These are quantitative methods and qualitative methods.
(a) Quantitative methods aim at controlling the cost and volume of credit created by commercial banks by using instruments like bank rate, open market operation and legal reserve ratios.

(b) Qualitative methods regulate the direction of flow of credit among various users rather than influencing just the availability of credit. Example: margin requirement, credit rationing, direct action and moral suasion.

Question 3.
Define money. Explain its main functions.
Answer:
Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.
The following are the important functions of money:
(i) Medium of Exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a medium of exchange for all goods and services.

(ii) Unit of Value: Money acts as a convenient unit of account. The value of all the goods and services can be expressed in monetary units. Money as a unit of value helps in measuring the value of exchange for various goods and services.

(iii) Store of value: Money is not a perishable item and its storage costs are also considerably low. Moreover, it is acceptable to anyone at any point of time, Thus, money acts as a store of value for individuals.

(iv) Standard of Deferred Payments: Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time.

Question 4.
What is meant by the supply of money? Discuss the factors which determine the supply of money.
Answer:
Money supply refers to the amount of money, which is in circulation in an economy at any given point of time.

Following factors determine the money supply:

• Monetary Standard: Money supply is affected by the monetary standard. If gold standard is adopted, there will be less supply of money. On the other hand, if paper currency system is adopted, money supply can be increased on the basis of demand.
• Production Volume: Volume of production also determines the money supply. If the level of production is high, the money supply will be more.
• Monetary Policy: Monetary policy of the government also affects the money supply. If the Central Bank increases the Cash Reserve Ratio there will be contraction in money supply.
• Fiscal Policy: Fiscal policy of the government determines the money supply. If government prepares deficit budget, money supply will increase.
• Other Factors: Banking habits, velocity of money, liquidity preference and the volume of money multiplier also determine the supply of money.

Question 5.
What are the various money stock measures?
Answer:
The various money stock measures are M₁, M₂, M₃, and M₄.
These are defined as follows:
M₁= C + DD + OD
C is currency held by the public. It consists of paper currency as well as coins. DD is the demand deposits in banks. Only the net demand deposits of banks are included in money supply because the part of demand deposits that represents inter-bank deposits held by one bank with another does not constitute demand deposits held by the public.OD is other deposits with the RBI.

OD includes demand deposits of Public Financial Institutions (like IDBI etc.), Foreign Central Banks and Government, the IMF, the World Bank, etc.

M₂ = M₁ + savings deposits with post office savings bank M₃ = M₁+ net time deposits of banks.
M₄ = M₃ + total deposits with post office savings organisation (excluding National Savings certificates)

Question 6.
Explain the main functions of central bank.
Answer:
The main functions of Central bank are as follows:
(i) Bank of Note Issue: In the modem time, issuing of notes is the main function of the central bank of every country in the world. Central bank has the monopoly in this regard. In India, RBI issues notes as a central bank of the country except one rupee note, which his issued by the ministry of finance, government of India.

(ii) Banker, Agent and Advisor to the Government: The central bank acts as a banker, agent and advisor to the government

(iii) Banker’s Bank: Central bank acts as a banker to all other banks in the country just as commercial banks act as a banker to general public.

(iv) Lender of the Last Resort: During crisis, central bank acts as a lender of the last resort. The central bank stands by the commercial banks as a guarantor and extends loans to ensure the solvency of the latter. This saves the commercial banks from possible breakdown.

(v) Custodian of the Foreign Exchange Reserve: The central bank acts as a custodian of the foreign exchange reserves of the country.

(vi) Custodian of Cash Reserve of the Commercial Banks: The central bank also keeps the cash reserves of the commercial banks.

(vii) Bank of Central Clearance, Settlement and Transfer: Central bank is an institution where all the transactions of commercial banks are cleared, settled, and transferred very easily.

(viii) Control of Credit: The central bank has got so many instruments to control credit like bank rate, open market operation, cash reserve ratio, credit rationing, moral suasion and direct actions.

Question 7.
Explain any two methods of credit control used by Central Bank.
Answer:
Methods of credit control used by central bank are as follows:
(i) Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to’the commercial banks. The central bank increases the bank rate to correct the situation of inflationary gap or excess demand in the economy, Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank.

Consequently, money supply contracts in the economy as the public borrows less at high rate of interest. Similarly, the central bank decreases the bank rate to correct the situation of deflationary gap or deficient demand in the economy, Lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from the central bank Consequently, money supply expands in the economy as public borrows more at low rate of interest.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank sells government securities to commercial -banks and general public in a bid to correct the situation of inflationary gap or excess demand.

This decreases the stock of high powered money in the economy. Similarly, the central bank- purchases government securities from commercial banks and general public in a bid to correct the situation of deflationary gap or deficient demand. This increased the stock of high powered money in the ecbnoitiy.

Question 8.
Explain the main functions of central bank.
Answer:
The main functions of Central bank are as follows:
(i) Bank of Note Issue: In the modem time, issuing of notes is the main function of the central bank of every country in the world. Central bank has the monopoly in this regard. In India, RBI issues notes as a central bank of the country except one rupee note, which his issued by the ministry of finance, government of India.

(ii) Banker, Agent and Advisor to the Government: The central bank acts as a banker, agent and advisor to the government

(iii) Banker’s Bank: Central bank acts as a banker to all other banks in the country just as commercial banks act as a banker to general public.

(iv) Lender of the Last Resort: During crisis, central bank acts as a lender of the last resort. The central bank stands by the commercial banks as a guarantor and extends loans to ensure the solvency of the latter. This saves the commercial banks from possible breakdown.

(v) Custodian of the Foreign Exchange Reserve: The central bank acts as a custodian of the foreign exchange reserves of the country.

(vi) Custodian of Cash Reserve of the Commercial Banks: The central bank also keeps the cash reserves of the commercial banks.

(vii) Bank of Central Clearance, Settlement and Transfer: Central bank is an institution where all the transactions of commercial banks are cleared, settled, and transferred very easily.

(viii) Control of Credit: The central bank has got so many instruments to control credit like bank rate, open market operation, cash reserve ratio, credit rationing, moral suasion and direct actions.

Question 9.
Explain any two methods of credit control used by Central Bank.
Answer:
Methods of credit control used by central bank are as follows:
(i) Bank Rate: Bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.

The central bank increases the bank rate to correct the situation of inflationary gap or excess demand in the economy, Higher bank rate reduces the lending capacity of the commercial banks as they get funds at a higher interest rate from the central bank.

Consequently, money supply contracts in the economy as the public borrows less at high rate of interest. Similarly, the central bank decreases the bank rate to correct the situation of deflationary gap or deficient demand in the economy, Lower bank rate increases the lending capacity of the commercial banks as they get funds at a lower interest rate from the central bank Consequently, money supply expands in the economy as public borrows more at low rate of interest.

(ii) Open Market Operations: Open market operation is the policy of the central monetary authority to sell and buy the government securities in the market. The central bank sells government securities to commercial -banks and general public in a bid to correct the situation of inflationary gap or excess demand.

This decreases the stock of high powered money in the economy. Similarly, the central bank- purchases government securities from commercial banks and general public in a bid to correct the situation of deflationary gap or deficient demand. This increased the stock of high powered money in the economy.

Question 10.
How does money solve the problem of double coincidence of wants? Explain with an example.
Answer:
Money acts as an intermediary in the exchange transactions of goods and services. Money solves services. For example, if a vegetable grocer wants a cart but the cart manufacturer wants clothes, and not vegetables, then the grocer can use money to buy a cart. Similarly, the cart manufacturer can then use the money to buy clothes. Thus, everyone’s wants can be satisfied as money acts as a medium of exchange.

Money is also called a bearer of options or generalised purchasing power. This indicates the freedom of choice that the use of money offers. This function can only be performed properly if the value of money remains constant.

In This Post we are  providing AGGREGATE DEMAND AND ITS RELATED CONCEPT NCERT MOST IMPORTANT QUESTIONS for Class 12 MACROECONOMICS which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON AGGREGATE DEMAND AND ITS RELATED CONCEPT

1. Define Marginal Propensity to Consume.
Ans. The ratio between the change in consumption expenditure with the change in income is called Marginal Propensity to Consume.

2. Give the meaning of Marginal Propensity to Save.  
or
Define Marginal Propensity to Save.              (All India 2009; Delhi 2008C)
Ans. Marginal Propensity to Save is the ratio of change in saving with the change in income.

                                                 ‘

3. Give the meaning of Aggregate Demand.
or
Define Aggregate Demand.      
Ans. The sum, total of the demand for all the goods and services in an economy during an accounting year is termed as Aggregate Demand of the economy. Aggregate Demand of an economy is measured in terms of the (expected) Total Expenditure on all products (goods and services) in the economy during an accounting year.

4. (i) Distinguish between autonomous investment and induced investment.
(ii) On the basis of the following information about an economy, Calculate its equilibrium level of income     
Autonomous Consumption                                = Rs. 100
Marginal Propensity to Consume                    = 0.75
Investment                                                               = Rs. 5000
Ans. (i) Differece between autonomous investment and induced investment

5.  (i) Distinguish between Aggregate Demand and Aggregate Supply.
(ii) From the following data about aneconomy, calculate its equilibrium level of income
Marginal Propensity to Consume    =    0.8
Investment                                               = Rs.  5000
Autonomous Consumption               = Rs. 500

6. Complete the following table  

7. C = 100 + 0. AY is the consumption function of an economy, where C is consumption expenditure and Vis National Income. Investment expenditure is Rs. 1100. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of National Income.                                                
Ans. Given,                                 C =100 + 0.4Y
l= Rs. 1100
(i) Equilibrium level of National Income
Y=C + I
Y= 100 + 0.4Y+1100
Y- 4Y = 100+1100
–                                                  0.6Y = 1200
Y= 1200/ 6
Y= Rs. 200
(ii) Consumption expenditure at equilibrium level of income
C = 100 + o.4y
C =100 + 0 .4 x 2000
C = 100 + 800=900
C =  Rs.900

8. C= 50+ 0. 5Y is the consumption function of an economy, where C is consumption expenditure and Y is National Income and investment expenditure is Rs. 2000 in an economy. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of National Income.                                                                     
Ans.               Y = C + l   or  C+5
Given,            C = 50+0.5Y
l=Rs. 2000
(i) Equilibrium level of National Income
Y= C + I
Y= 50 +0.5y + 2000
0.5 Y= 50 + 2000 =2050/0.5
Y = Rs. 4100      (therefore, National Income =Rs. 4100)
(ii) Consumption expenditure at equilibrium level of National Income
C = 50 + 05y
C = 50 +05×4100
C= 50 + 2050
C= Rs. 2100          (therefore, Consumption expenditure =Rs. 2100)

9. Explain consumption function, with the help of a schedule and diagram. 
Ans. The functional relationship between the consumption expenditure and the income is known as consumption function.
C = f(Y), Where C = Consumption expenditure,
y = Income, and f = Functional relationship.
Consumption function in terms of an algebraic expression can be written as



The point B represents the break even point, where the consumption expenditure equals the income. To the left of point B, consumption is greater than income and to the right of point B, consumption is less than income

10. Explain saving function with the help of a schedule and diagram.
                                                                                                             
Ans. The functional relationship between the savings and income is known as saving function.
S = f (Y), Where S = Saving, Y = Income and f = Functional relationship.
Saving function as an algebraic expression, can be written as

Point E represents the break even point where income is equal to consumption hence, saving is equal to zero. To the left of point E, there is negative savings or dissavings (represents the situation when income is less then consumption), to the right of E, there is positive savings (represents the situation when income is greater than consumption).

In This Post we are  providing EXCESS DEMAND AND DEFICIENT DEMAND NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON EXCESS DEMAND AND DEFICIENT DEMAND

1. Distinguish between inflationary gap and deflationary gap.
                                                                                                                   
Ans. The excess of Aggregate Demand above the level that is required to maintain full employment level of equilibrium, is termed as inflationary gap. Inflationary gap causes inflation and increases wage and price levels in the economy.
When there is involuntary unemployment in the economy, there is a shortage in Aggregate Demand from the level required to maintain a full employment equilibrium. This short fall is termed as deflationary gap. Deflationary gap causes reduction in wage and prices in the economy.

2. Explain the concept of excess demand in macroeconomics. Also, explain the role of open market operation in correcting it.
Ans. The situation in an economy, when Aggregate Demand is more than the Aggregate Supply corresponding to full employment level is termed as excess demand. In other words, the level of Aggregate Demand exceeds the level of Aggregate Supply even when there is full capacity production in the economy.

In the above figure, £ is the point where AD = AS, i.e. equilibrium point. But at the present. Aggregate Demand AD_ae is more than the Aggregate Supply. Hence, EF represents the excess demand in the economy.
Excess demand leads to reduction in inventories and inflation in the economy. High prices encourage producers to produce more to reach the desired level of stock. Hence, the AS will also rise and economy will attain a new equilibrium at point G with National Income of OP.
Role of Open Market Operations to Correct the Problem of Excess Demand
Open market operations refer to sale and purchase of securities by the Central Bank on behalf of government in the open market. It directly affects the supply of money in the hands of citizens of the country. –
In case of excess demand, the Central Bank sells its securities to common public and financial institutions. It reduces the supply of money in the economy and reduces the money/credit creation power of commercial banks. Thus, the Aggregate Demand comes down and the economy attains equilibrium.

3. Explain all the changes that will take place in an economy when Aggregate Demand is not equal to Aggregate Supply.
Ans. (i) AD > AS When AD is greater than AS, flow of goods and services in the economy tends to be less than their demand. The existing stocks of the producers would be sold out. To rebuild the desired stocks the producer would plan greater production. AS would increase to become equal to AD.
(ii) AD < AS When AD is less than AS, flow of goods and services in the economy tends to exceed their demand. As a result, some of the goods would remain unsold. To clear unwanted stocks, the producers would plan a cut in production. Consequently, AS would reduce to become equal to AD. This is how AS adapts itself to AD

4. Explain the meaning of under employment equilibrium. Explain two measures by which full employment equilibrium can be reached.
                                                                                                                   
Ans. In an economy, when AS = AD or S = I but without the fuller utilisation of labour force, the economy is said to be in under employment equilibrium.
Under employment equilibrium occurs when AS= AD but without the fuller utilisation of labour force.

Measures to Correct Under Employment Equilibrium
(i) Bank rate Central Bank should decrease the bank rate. A decrease in bank rate lowers the rate of interest and credit becomes cheap. Accordingly, the demand for credit expands and Aggregate Demand increases.
(ii) Open market operations By buying the government securities, the Central Bank injects additional purchasing power into the system which results in the expansion of credit. As a result Aggregate Demand increases.

5. Explain the concept of deficient demand in macroeconomics. Also, explain the role of bank rate in correcting it.

Ans. A situation in an economy, when the Aggregate Demand is less than the Aggregate Supply, corresponding to full employment level, is termed as deficient demand.

Deficient demand gives rise to a deflationary gap and leads the economy to an equilibrium level of income/output that is less than the full employment level of income. This leads to deflationary pressures on economy and increases the inventory of producers as sales falls. The producers are discouraged to produce more as price level fall. The economy therefore will attain a new equilibrium at point C with National Income of OP
Role of Bank Rate in Correcting the Problem of Deficient Demand
The rate at which the Central Bank lends money to commercial banks is termed as bank rate. In case of deficient demand, the Central Bank reduces the bank rate to increase the money supply in the economy. Reduction in bank rate increases the credit/money creation capacity of commercial banks and also reduces the market rate of interest which encourages people to borrow more. In this way, the Aggregate Demand increases to the level of Aggregate Supply and the economy attains equilibrium.

6. Explain the concept of deflationary gap. Also, explain the role of margin requirement in reducing it.
Ans. When there is involuntary unemployment in the economy, there is a short fall in Aggregate Demand from the level that is required to maintain a full employment equilibrium. This short fall is termed as deflationary gap.

Role of Margin Requirements to Reduce Deflationary Gap Margin requirement refers to the difference between the amount of loan granted and the current value of security offered for loans. In case of deflationary gap, the margin requirements are lowered to increase the flow of credit by encouraging people to borrow. As a result of that, the Aggregate Demand increases and ultimately the economy attains equilibrium.

7. Explain the role of the following in correcting deficient demand in an economy.
(i) Open market operations
(ii) Bank rate         
Ans. (i) Role of open market operations in correcting deficient demand Open market operations refers to sale and purchase of securities by the Central Bank on behalf of government in the open market. It directly affects the supply of money in the hands of commercial banks and citizens of the country. In case of deficient demand, the Central Bank purchase securities from public.
It increases the supply of money in the economy as well as credit/money creation power of commercial banks. Thus, the Aggregate Demand increases and ultimately the economy attains equilibrium.
(ii) Role of bank rate In correcting deficient demand The rate at which the Central Banks lends money to commercial bank is termed as bank rate. In case of deficient demand, the Central Bank reduces the bank rate to increase the money supply in the economy.
Reduction in bank rate increases the money/credit creation power of commercial banks and also reduces the market rate of interest which encourages people to borrow more. In this way, the Aggregate Demand increases and ultimately the economy attains equilibrium.

8. Explain the role of the following in correcting excess demand in an economy
(i) Bank rate
(ii) Open market operations
Ans. (i) Role of bank rate in correcting excess demand The rate at which the Central Bank lends money to commercial bank is termed as bank rate. In case of excess demand, the Central Bank increases the bank rate to decrease the supply of money in the economy. Increase in bank rate reduces the money creation power of commercial banks and also increases the market rate of interest which discourages public to borrow loans. The Aggregate Demand comes down and the excess demand is corrected.
(ii) Role of open market operations in correcting excess demand Open market operations refer to sale and purchase of government securities by the Central Bank in open market. In case of excess demand, the Central Bank sells the securities to public.
It reduces the supply of money and also reduces the credit creation power of commercial banks. In this way, the Aggregate Demand of economy comes down and the problem of excess demand is corrected.

9. Explain the concept of inflationary gap. Also, explain the role of legal reserves in reducing it.  
or
Define and represent inflationary gap on a diagram. Explain the role of the varying reserves requirement in removing the gap.
or
Explain the concept of inflationary gap. Use diagram. Also, explain the role of legal reserve ratio in removing the gap. 
Ans. (i) Inflationary gap occurs when AD > AS corresponding to full employment level. This inflationary gap i.e. excess of Aggregate Demand causes inflation in the economy and price levels tend to rise.

(ii) Role of legal reserves to correct the problem of inflationary gap
Legal reserves like Cash Reserve Ratio and Statutory Liquidity Ratio are the tools to correct the problems of inflationary gap.
(i) Cash Reserve Ratio (CRR) Every commercial bank has to keep a certain proportion of its total demand and time deposits in the form of cash and other liquid assets with the Central Bank. This ratio is termed as cash reserve ratio. To correct the problem of inflationary gap the Central Bank increases the CRR. It reduces the supply of money and credit money creation capabilities of commercial banks. Due to lesser supply of money, the Aggregate Demand comes down and the economy attains equilibrium situation.
(ii) Statutory Liquidity Ratio (SLR) It refers to a fixed percentage of the total assets of a bank in the form of cash or other liquid assets that is required to be maintained by the bank with themselves. During the situation of inflationary gap, SLR is increased. This reduces the credit creation capacity of commercial banks and reduces the flow of money in the economy. As a result of that, the Aggregate Demand comes down and ultimately the economy attains equilibrium again.

10. Explain the meaning of equilibrium level of income. Can there be an unemployment in the economy at an equilibrium level of income? Explain.
Ans. Equilibrium level of income is the level at which Aggregate Demand is equal to Aggregate Supply in the. economy i.e. AD = AS. In other words, when desired output equals desired expenditure , equilibrium output or income is attained.

In This Post we are  providing NATIONAL INCOME AND RELATED AGGREGATES NCERT MOST IMPORTANT QUESTIONS for Class 12 MACROECONOMICS which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON NATIONAL INCOME AND RELATED AGGREGATES

1. Distinguish between stock and flow variables with suitable examples.

Ans:- Difference between stock and flow is.

Basis	Stock	Flow
Time	It relates to a point of time	It relates to the period of time
Dimension	It is not time dimensional	It is time dimensional as per hour, per month, per year.
Impact	It influences the flow. for example, more is capital, greater is the flow of goods and services.	It influences the stock, for example, the more is the flow of investment, the greater would be the capital.
Concept	Static concept	Dynamic concept
Example	capital, wealth, bank balance	Income, expenditure, profit

2. What are capital goods? How are they different from consumption goods? 

Ans:- Capital goods are those final goods that are capable of being used for producing other goods and services. These are goods are used for generating income.

For example:- plant and machinery, equipment, etc.

Basis	Consumption Goods	Capital Goods
Meaning	These goods are purchased or own produced by consumers to satisfy their wants and not for resale	These goods are purchased or own produced by producers for the production of other goods. such goods are not meant for resale.
Use	used by consumers for consumption purposes.	Used by producers to produce other goods and services
Demand	High	Less
Example	bread, butter, tv fridge by consumers.	equipment, machinery, plant by producers

3. Which among the following are final goods and which are intermediate goods? Give reasons. 

a) Milk purchased by a tea stall
b) Bus purchased by a school
c) Juice purchased by a student from the school canteen.

Ans:-

a) Milk purchased by a tea stall is an intermediate consumption. As milk will be used as a raw material to make tea (final goods) within a year.

b) Bus purchased by a school is the final goods. As it would be used by schools for the long term and not meant for resale.

c) Juice purchased by a student from the school canteen is the final good. As it is purchased by a consumer (student) for the satisfaction of his own wants not for resale.

4. Explain with the help of an example. the basis of classifying goods into final goods and intermediate goods.

Ans:- The basis of classification of final goods and intermediate goods is the end-user or end use of the product.

If the goods are in the hand of the end-user (final user) and not going to be sold further. It is termed as final goods. For example, machines purchased by producers, food purchased by households. such goods have come out of the production boundary line and are in the hand of the final user.

On the other hand, if the goods are within the production boundary line and will still be used as raw material in making further goods or if it is final goods but meant for resale. Such products are not in the hand of end-users and are termed as intermediate goods.

5. Distinguish between final goods and intermediate goods. Give an example of each. 

Ans:- difference between intermediate goods and final goods.

Basis	Intermediate Goods	Final Goods
end-user	end-user is a producer	end-user may producer or consumer
Purpose	used as raw material in producing other goods.	is used as consumption goods by consumer or capital goods by producer
Production Boundary	is still within the production boundary	is outside the production boundary
Examples	leather used in the shoe industry, the steel used in the production of kitchen utensils	fridge purchased by households, Machine purchased by producers

6. Explain the circular flow of Income. [All India 2017], [Delhi c 2014], [All India C 2012]

Ans:- Circular flow of Income refers to unending flows of production of goods and services and income and expenditure in an economy.

It show the redistribution of income in a circular manner between production units and households

It comprises of three phases:-

Production Phase:- This phase is also called the income generation phase. In this phase, households provide factor services to production units and produce goods and services. Income is generated.

Income Distribution Phase:- Production units distribute this income to the factor owners.

Expenditure Phase:- Income received by households, spent on goods and services produced by those units. In this phase, all income received by households returns to production units.

Once, the goods and services purchased by households are completely consumed. They again demand goods. Now again producer has the opportunity to produce goods and these three phases go on in circular format again & again.

It can be better understood with the diagram given below.

7. Distinguish between real and nominal gross domestic product. [All India c 2014], [All India 2010]

Ans:- Difference between the Real and Gross domestic product is.

Basis	Real GDP	Nominal GDP
Other Name	It is also called GDP at a constant price	It is also called GDP at the current year price.
Definition	It is the market value of the final goods and services produced within the domestic territory of a country during an accounting year, as estimated at base-year prices.	It is the market value of the final goods and services produced within the domestic territory of a country during an accounting year, as estimated at current year prices.
Welfare	It is a better measure of the welfare of people than Nominal GDP	It is not a good measure of the welfare of people
Changes	Its value changes, when the quantity of output changes.	Its value can changes either quantity of output or price changes.

8. Find Net Value Added at Factor Cost.

Items	(₹ in lakh)
i) Durable use producer goods with a life span of 10 years	10
ii) Single-use producer goods	5
iii) Sales	20
iv) Unsold output produced during the year	2
v) Taxes on production	1

Ans:-

Value of Output = Sales + Change in Stock

Value of Output = iii) + iv) = ₹ 20 + ₹ 2 = ₹ 22

GVA at MP = Value of Output – Intermediate Consumption

Intermediate Consumption = Single use producer goods = ₹ 5

GVA at MP = ₹ 22 – ₹ 5 = ₹ 17

Consumption of fixed capital = Total value of durable use goods/Total life span = ₹10/₹10 = ₹ 1 lakh

Net Indirect tax = Taxes on production – subsidy of production = ₹ 1 – ₹ 0 = ₹ 1

Net Value added at FC = GVA at MP – consumption of fixed capital – Net Indirect tax (Indirect Tax – Subsidy)

NVA at FC = ₹ 17 – ₹ 1 – ₹ 1 = ₹ 15

9. Find the Net Value Added at Market Price. 

Items	(₹ in crore)
1. Output Sold (units)	800
2. Price per unit of output	20
3. Excise	1600
4. Import Duty	400
5. Net Change in Stock	– 500
6. Depreciation	1000
7. Intermediate cost	8000

Ans:-

Sales = Quantitiy * Price

Sales = 800 * 20 = ₹ 16000 crore.

Value of Output = Sales + Change in Stock

Value of Output = 16000 + (- 500)

Value of Output = ₹ 15500

GDP at MP = Value of Output – Intermeciate cost

GDP at MP = 15500 – 8000

GDP at MP = ₹ 7500 crore

NDP at MP = GDP at MP – Depreciation

NDP at MP = 7500 – 1000

NDP at MP = ₹ 6500 crore

10. Find Net Value Added at Market Price. 

Items	(₹ in crore)
1. Depreciation	700
2. Output Sold (Units)	900
3. Price per nit of Output	40
4. Closing Stock	1000
5. Opening Stock	800
6. Sales tax	3000
7. Intermediate cost	20000

Ans:-

Sales = Quantity * Price

Sales = 900 * 40 = 36000

Value of Output = Sales + Change in Stock (Closing stock – Opening stock)

Value of Output = 36000 + (1000 – 800)

Value of Output = 36200

GDP at MP = Value of Output – Intermediate cost

GDP at MP = 36200 – 20000 = 16200

NDP at MP = GDP at MP – Depreciation

NDP at MP = 16200 – 700

NDP at MP = ₹ 15500 crore

In This Post we are  providing  INTRODUCTION TO MACROECONOMICS AND ITS CONCEPTS NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON INTRODUCTION TO MACROECONOMICS AND ITS CONCEPTS

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1. Describe the five major sectors in an economy according to the macroeconomic point of view.
Ans: An economy may be’ divided into different sectors depending on the nature of study. 

1. Producer sector engaged in the production of goods and services.
2. Household sector engaged in the consumption of goods and services.
   Note: Households are taken as the owners of factors of production.
3. The government sector engaged in activities like taxation and subsidies.
4. Rest of the world sector engaged in exports and imports.
5. Financial sector (or financial system) engaged in the activity of borrowing and lending.

2. What are the four factors of production and remunerations to each of these called?
Ans: 

3. What are the important features of a capitalist economy?
Ans: Features of capitalist economy are: 

1. Private ownership of land and capital.
2. Profit is the only motive.
3. Free play of the market forces of demand and supply.
4.  Government looks after growth, stability and social justice in the economy.

4. Define consumption goods and what are its categories.
Ans: Consumption goods are those which satisfy the wants of the consumers directly.
For example, cars, television sets, bread, furniture, air-conditioners, etc. Consumption goods can further be subdivided into the following categories:

1. Durable goods: These goods have an expected life time of several years and of relatively high value. They are motor cars, refrigerators, television sets, washing machines, air-conditioners, kitchen equipments, computers, communication equipments etc.
2.  Semi-durable goods: These goods have an expected life time of use of one year or slightly more. They are not of relatively great value. Examples are clothing, furniture, electrical appliances like fans, electric irons, hot plates and crockery.
3. Non-durable goods: Goods which cannot be used again and again, i.e., they lose their identity in a single act of consumption are known as non durable goods. These are food grains, milk and milk products, edible oils, beverages, vegetables, tobacco and other food articles.
   goods which satisfy the human wants directly. They cannot be seen or touched, i.e., they are intangible in nature. These are medical care, transport and communications, education, domestic services rendered by hired servants, etc.

5. Define capital goods and its categories.
Or
Define ‘capital goods’
Ans: 

1. Capital goods are defined as all goods produced for use in future productive processes.
2. For example, All the durable goods like cars, trucks, refrigerators, buildings, air crafts, air-fields and submarines used to produce goods and services for sale in the market are a part of capital goods.
3. Stocks of raw materials, semi finished and finished goods lying with the producers at the end of an accounting year are also a part of capital goods.
4. Some more examples of capital goods are machinery, equipment, roads and bridges.
5. These goods require repair or replacement over time as their value depreciate over a period of time.

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6. Explain that Domestic territory is bigger than the political frontiers of a country.
Ans: In layman terms, the domestic territory of a nation is understood to be the territory lying within the political frontiers (or boundaries) of a country. But in national income accounting, the term domestic territory is used in a wider sense. Based on ‘freedom’ criterion, the scope of economic territory is defined to cover:

1. Ships and air crafts owned and operated by normal residents between two or more countries. For example, Indian Ships moving between China and India regularly are part of domestic territory of India. Similarly, planes operated by Air India between Russia and Japan are part of the domestic territory of India. Similarly, planes operated by Malaysian Airlines between India and Japan are a part of the domestic territory of Malaysia.
2. Fishing vessels, oil and natural gas rigs and floating platforms operated by the residents of a country in the international waters where they have exclusive rights of operation. For example, Fishing boats operated by Indian fishermen in international waters of Indian Ocean will be considered a part of domestic territory of India.
3. Embassies, consulates and military establishments of a country located abroad. For example, Indian Embassy in Russia is a part of the domestic territory of India.
   ‘Consulate’ is an office or building used by consul (an officer commissioned by the government to reside in a foreign country to promote the interest of the country to which he belongs).

7. “All Producer Goods are not Capital Goods”. Explain.
Ans: Producer goods are all those goods which are used in the process of production i.e., which are used in the production of other goods. Producer goods include two types of goods:

1.  Single-use Producer Goods: Goods used as raw material by the producers. It includes raw material like coal, wood, etc. They are not capital goods as they cannot be repeatedly used in the production process.
2. Capital Goods: Goods which are used as fixed assets by the producers, like plant and machinery, which can be repeatedly used in the production process.
   So, it can be said that all capital goods are producer goods, but all producer goods are not capital goods.

8. “Machine purchased is always a final good.” Do you agree? Give reasons for your answer.
Ans: No, it is not necessary that machine purchased is a final good. It will depend upon its use.

1. If a machine is purchased by a household, then it is a final good. For example, washing machine purchased by a consumer household is a final goods.
2.  If it is purchased by a firm for its own use, then it is also a final good. For example, refrigerator purchased by a firm.
3.  If it is bought by a firm for resale, then it is an intermediate good. For example, machine purchased by a machine dealer.

9. “ Machine purchased is always a capital good.” Do you agree? Give reasons for your answer.
Ans: No, it is not necessary that machine purchased is a capital good. It will depend upon its use.

1.  If a sewing machine is purchased by a tailor, then it is a fixed asset of the tailor and considered to be a capital good. But the same machine purchased by a consumer household is considered to be a durable use consumer goods.
2. If a car purchased by a taxi driver as a taxi or if purchased by a firm for use in its business is a capital good. But the same car purchased by a consumer household is a durable use consumer goods.
   Note: So, finally, the end user of a good determine, whether it is capital good or durable use consumer goods. If an end user of a durable goods is a producer, it is a capital good. If an end user of a durable goods is a consumer household, it is a durable use consumer goods. So, capital goods are only those durable goods which are used as producer goods, not as consumer goods.

10. The concept of Normal Resident helps to estimate ‘National Product’. Defend or refute.

Ans: The concept of Normal Resident helps to estimate “National Product’. National Product includes production activities of normal residents irrespective of fact whether performed within the economic territoiy or outside it. The money value of national product is termed as National Income.

In This Post we are  providing Chapter- 12 CONSUMER PROTECTION NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON CONSUMER PROTECTION

1.Which claims can be appealable bt^core the Supreme Court under Consumer
Protection Act?  
Ans. An order passed by the National Commission in a matter of its original jurisdiction is appealable before the Supreme Court. It means only those appeals where the value of goods and services in question, along with the compensation claimed exceed ? 1 crore and where the aggrieved party was not satisfied with the order of the National Commission can be taken to the Supreme Court.

2.How does a business use self regulations for consumer protection?
Ans. Enlightened business firms realise that it is in their long-term interest to serve the customers well. Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service centres and grievance cells to redress the problems and grievances of their customers.

3.How are consumer grievances redressed by the three-tier machinery under CPA,
1986? Explain.
Ans. The three-tier-machinery under CPA, 1986 consist of District Forum, State Commission and the National Commission. A consumer can file a case in District Forum if the vaiue of goods and services alongwith the compensation claimed, does not exceed Rs 20 lakh, in the State Commission if the value of goods and services alongwith the compensation claimed is over Rs 20 lakh but less than rs 1 crore, and in the National commission, if the value of goods and services alongwith the compensation claimed is above Rs 1 crore.
On receiving the complaint, the District Forum/State Commission/National Commission shall refer the complaint to the party against whom the complaint is filed. If required, the goods or a sample, thereof, shall be sent for testing in a laboratory. The court shall pass an order after considering the test report and hearing to the party against whom the complaint is filed.

4.Give the definition of ‘Consumer’ as per CPA, 1986.
Ans. Under the Consumer Protection Act, 1986, the term ‘consumer’ has been defined as any person who buys goods or hires or avail any service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. It also includes any user of such goods with the approval of the buyer or any beneficiary of services when such goods or services are availed of with the approval of the person concerned but does not include a person who avails such services for any commercial purpose.

5.State any eight reliefs available to a consumer under the provision of CPA
Ans. The reliefs available to a consumer under the CPA, 1986 are:
(i) To remove the defects in goods or deficiency in services.
(ii) To replace the defective product with a new one, free from any defect.
(iii)To refund the price paid for the product.
(iv) To pay a reasonable amount of compensation for any loss suffered.
(v)To pay punitive damages in appropriate circumstances.
(vi)Not to offer hazardous goods for sale.
(vii)To withdraw the hazardous goods from sale.
(viii) To cease the manufacture of hazardous goods.

6.Anita purchased a book from Satish book stores. While reading the book, she found that ten pages were missing. She approached the book seller and complained about the missing pages. The seller promised that if the publisher was ready to change the book, he would change the same. After one week, the seller informed Anita that the publisher had refused to change the book.
Where can Anita file a complaint against the seller of the book? Give reason in support of your answer. Also, explain who is a consumer as per Consumer Protection Act, 1986. 
Ans. Anita can file a complaint against the seller of the book in the District Forum. District Forum is established by the State Government in each district. In District Forum, only such complaints can be filed in which the value of goods or services and the compensation claimed is not more than Rs 20 lakhs. Consumer as per CPA, 1986   Under the Consumer Protection Act, 1986, the term ‘consumer’ has been defined as any person who buys goods or hires or avail any service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. It also includes any user of such goods with the approval of the buyer or any beneficiary of services when such goods or services are availed of with the approval of the person concerned but does not include a person who avails such services for any commercial purpose.

7.Harish purchased a medicine from Bhatia Medical Stores for his son, who had high fever. Even after giving the medicine his son’s condition did not improve and he had to be hospitalised. Doctor informed Harish that medicine given to his son was spurious. Harish complained about this to Bhatia Medical Stores. As-a result, Bhatia Medical Stores decided to file a complaint against the manufacturer in the consumer court. Can Bhatia Medical Stores do this? Give reason in support of your answer. Also, explain who is a consumer as per Consumer Protection Act, 1986.
Ans. ‘Bhatia Medical Stores’ cannot file a complaint against the manufacturer in the consumer court because Bhatia Medical Stores is not a consumer in this case. He is not a user but has obtained medicine for resale purpose/commercial purpose.

Meaning of Consumer as per Consumer Protection Act, 1986   Anita can file a complaint against the seller of the book in the District Forum. District Forum is established by the State Government in each district. In District Forum, only such complaints can be filed in which the value of goods or services and the compensation claimed is not more than Rs 20 lakhs.
Consumer as per CPA, 1986   Under the Consumer Protection Act, 1986, the term ‘consumer’ has been defined as any person who buys goods or hires or avail any service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. It also includes any user of such goods with the approval of the buyer or any beneficiary of services when such goods or services are availed of with the approval of the person concerned but does not include a person who avails such services for any commercial purpose

8.Explain the following as ways and means of consumer protection
(i)Consumer awareness
(ii)Government
Ans. (i) Consumer awareness A well informed consumer will safeguard himself from unfair trade practices. A consumer should be well informed about his rights, duties and reliefs available to him. Only then, he would be in a position to raise his voice against unfair trade practices and safeguard his interests. In addition to this, an understanding of his responsibilities would also enable a consumer to safeguard his interest.
(ii) Government The government can protect the interest of the consumers by enacting various legislations. CPA is one of them which provides 3-tier system of redressal to the aggrieved consumers. The legal framework in India encompasses various legislations which provide protection to consumers.

9.Reena purchased one litre of pure desi ghee from a shopkeeper. After using it, she had a doubt that it is adulterated. She sent it for a laboratory test which confirmed that the ghee is adulterated. State any six reliefs available to Reena, if she complains and the consumer court is satisfied about the genuineness of the complaint.
Ans. Reliefs available to Reena are:
(i) To replace the adulterated ghee.
(ii) To refund the price paid for the product.
(iii) To pay a reasonable amount of compensation for any loss or injury/sickness suffered by her due to the negligence of the manufacturer.
(iv) To pay punitive damages in appropriate circumstances.
(v)To withdraw the adulterated ghee from sale.
(vi)To cease manufacture of adulterated ghee.

10.Prakhar purchased an ISI mark electric iron from Bharat Electricals. While using,he found that it was not working properly. He approached the seller and complained for the same. The seller satisfies Prakhar by saying that he will ask the manufacturer to replace this iron. The manufacturer refused to replace and Bharat Electricals decided to file a complaint in the consumer court. Can Bharat Electricals do this. Why? Also explain who is a consumer as per Consumer Protection Act, 1986.
Ans. Bharat Electricals cannot file a complaint. This is because Bharat Electricals is not a consumer as per Consumer Protection Act, 1986 because they bought the goods for resale or for commercial purpose. Under the Consumer Protection Act, a consumer is defined as:
(i) A person who buys goods for consideration which has been paid promised, or partly paid and partly promised or under any scheme of deferred payment. It includes any user of such goods, when such use is made with the approval of the buyer but does not include a person who obtains goods for resale or any commercial purpose.
(ii) Any person who hires or avails any service for consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. It includes any beneficiary of services when such services are availed of with the approval of the person concerned but does not include a person who avails of such services for any commercial purpose.

In This Post we are  providing Chapter- 11 MARKETING MANAGEMENT NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON MARKETING MANAGEMENT

1.Distinguish between selling concept and marketing concept of marketing
management philosophies on the basis of main focus.
Ans. (i) Selling concept Firms believe that aggressive selling and promotional efforts will convince a customer to buy a product.
(ii) Marketing concept Customers’ needs and customers’ satisfaction is the key to success of an enterprises.

2.What is meant by selling concept of marketing?
Ans. Firms believe that aggressive selling and promotional efforts will convince a customer to buy a product.

Ans. The marketing management philosophy referred here is ‘Marketing concept’. This concept emphasis that in the long-run, profits can be maximised by identifying and satisfying the needs of present and potential customers. Therefore, customer satisfaction becomes the focal point of all business decisions.

3.Nisha, a school bag manufacturer, decided to improve the product for profit maximisation and thus, added a water bottle holder to the existing design.
(i)Identify the marketing management philosophy adopted by Nisha.
(ii)Explain this philosophy on the basis of (a) Main focus and (b) Means and ends
Ans. (i) Product concept or philosophy Firms which follow the product concept, propose that the way to realise business goals is by making high quality products. These firms manufacture the products of superior quality. Nisha is trying to bring improvement in quality, by corporating a new feature, i.e. adding a water bottle holder in the bag.
(ii) (a) Main focus The main focus of this concept is to improve the quality of products. The marketers now believed that potential exchange would be realised when the products are of high quality. Thus, the firm now focused on making superior products and improving them overtime.
(b) Means Product improvement.
Ends Profit through improvement in product quality.

4.Mansi, a shoe manufacturer for school students, decided to maximise her profit by producing and distributing at large scale and thereby reducing the Average Cost of production.
(i)Identify the marketing management philosophy adopted by Mansi.
(ii) Explain this philosophy or concept on the basis of
(a) Main focus              (b) Means and ends
Ans. (i) Production concept or philosophy.
(ii) (a) Main focus Main focus of this concept is to maximise the quantity of product.
(b) Means Availability and affordability of product.
Ends Earning profits through large scale production and distribution.

5.Explain market planning, product designing and development as functions of marketing. .
or
Explain any three functions of marketing.
or
Explain any two functions of marketing.
or
Explain the following functions of marketing.
(i)Marketing planning (ii)Product designing and  development
or
Explain the following functions of marketing
(i)Gathering and analysing market information
(ii) Customer support services.  
Ans. The main functions of marketing are as follows:
(i) Gathering and analysing market information A marketer has to gather information about the market. Gathering and analysing market information helps in identifying the needs of the customers. It forms the basis for product development. It also helps in identifying the opportunities, threats, strengths and weaknesses of the organisation.
(ii) Market planning The marketer develops appropriate marketing plans to capture or enhance the existing market share. It provides the guidelines to achieve the marketing objectives, e.g. a marketer of colour TVs, having 2% of current market share in the country, aims at enhancing his market share *0 20% in the next three years.
(iii) Product designing and development Product designing and development is concerned with anticipating customers’ needs, developing new products and improving the existing products so as to meet the expectations of customers, e.g. when we plan to buy any product say a motorbike, we not only see its features like cost, mileage, etc but also the design, shape, style, etc.
(iv) Customer support services Customer is the king of modern market. So customer satisfaction is the main motto of every business firm. Hence, a very important function of marketing management relates to developing customer support services such as after sale services, handling customer complaints, procuring credit services, maintenance services, technical services, and consumer information, etc. All these services aim at providing maximum satisfaction to the customers which is the key to success in modern days.

6.What is meant by production concept of marketing?
Ans. Production concept is based on the belief that profits could be maximised by producing at large scale, thereby reducing the Average Cost of production. A large number of firms believe that it is easy to exchange the products if they were widely available at an affordable price. Thus, availability and affordability were considered the key to success.

7.What is meant by selling concept of marketing?
Ans. Firms believe that aggressive selling and promotional efforts will convince a customer to buy a product. It was assumed that the customers will not buy enough, unless they are adequately convinced and motivated to do so.

Therefore, aggressive selling and promotional efforts are made to persuade the customers. The use of promotional techniques such as advertising, personal selling and sales promotion were considered essential for selling of products.

8.What is meant by product concept of marketing?
Ans. Consumers prefer products with superior quality, performance and features. The companies who believe in the philosophy of product concept are of the opinion that if the quality of goods or services is of good standard, the customers can easily be attracted towards it. The basis of this thinking is that the customers get attracted towards the products of good quality. On the basis of this philosophy, companies direct their marketing efforts to increase the quality and features of their product.

7.Define marketing and state any three functions of marketing.
or
What is meant by marketing? State any three functions of marketing.
Ans. Marketing is the sum total of all those activities which move goods and services from the producers to the consumers.
According to Philip Kotler, ‘Marketing is that social process by which individual and groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others’.
The three main functions of marketing are :
(i) Marketing planning  The marketer develops appropriate marketing plans to capture or enhance the existing market share. It provides the guidelines to achieve the marketing objectives, e.g. a marketer of colour TVs, having 2% of current market share in the country, aims at enhancing his market share *0 20% in the next three years.
(ii) Production designing and development  Product designing and development is concerned with anticipating customers’ needs, developing new products and improving the existing products so as to meet the expectations of customers, e.g. when we plan to buy any product say a motorbike, we not only see its features like cost, mileage, etc but also the design, shape, style, etc.
(iii) Pricing of products It refers to the amount of money which the customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. The demand for a product or service is related to its price. Generally, lower the price, higher would be the demand for the product and vice-versa.

8.Define marketing management. State any three objectives of marketing
management.
Ans. According to Philip Kotler, ‘Marketing management is an art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer values of management’. It refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers of products and services.
The three main objectives of marketing management are as follows:
(i) Creation of demand The marketing manager always tries to create the demand not by unfair means but by analysing the needs and wants of the customers and then producing the products, which satisfies the customer’s need.
(ii) Market share Every business firm wants to capture a larger share of the market. Therefore, marketing techniques adopted by marketing manager help to get a big share in the market.
(iii) Goodwill and reputation Marketing management helps a firm in building the image for its products through advertising high quality, caring for customer satisfaction, after sale service, smooth supply, etc.

9.’Bending the customer according to the product’ and ‘development of the product according to customer needs’ are two important concepts of marketing management’. Identify the concepts and differentiate between the two. 
or
‘Find wants and fill them ‘and’ create products and sell them’ are the two important concepts of marketing. Identify and differentiate between these two concepts.
Ans. ‘Bending the customer according to the product’ refers to ‘selling concept’ and ‘developing the product according to the customer needs’ refers to ‘marketing concept’ of marketing management.

10.Explain the following functions of marketing
(i)Gathering and analysing market information
(ii)Product designing and development
(iii)Market planning
(iv) Customer support services.
Ans. The main functions of marketing are as follows:
(i) Gathering and analysing market information A marketer has to gather information about the market. Gathering and analysing market information helps in identifying the needs of the customers. It forms the basis for product development. It also helps in identifying the opportunities, threats, strengths and weaknesses of the organisation.
(ii) Market planning The marketer develops appropriate marketing plans to capture or enhance the existing market share. It provides the guidelines to achieve the marketing objectives, e.g. a marketer of colour TVs, having 2% of current market share in the country, aims at enhancing his market share *0 20% in the next three years.
(iii) Product designing and development Product designing and development is concerned with anticipating customers’ needs, developing new products and improving the existing products so as to meet the expectations of customers, e.g. when we plan to buy any product say a motorbike, we not only see its features like cost, mileage, etc but also the design, shape, style, etc.
(iv) Customer support services Customer is the king of modern market. So customer satisfaction is the main motto of every business firm. Hence, a very important function of marketing management relates to developing customer support services such as after sale services, handling customer complaints, procuring credit services, maintenance services, technical services, and consumer information, etc. All these services aim at providing maximum satisfaction to the customers which is the key to success in modern days.

In This Post we are  providing Chapter- 6 STAFFING NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON STAFFING

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1) “Staffing makes for higher performance by putting right person on the right job”. Is this statement true or false?
Ans. True
2)“There is no need of human resource planning as so many people are available in the market these days.” Do you agree with this statement? Give reasons.
Ans. No, I don’t agree with this statement. There is a great need of man power planning due to the following reasons. :
1. Organisation needs man power planning: To meet the demands of changing job requirements due to change of technology.
2. Man power requires forecasting: Provides a basis of recruitment, transfer and
training employees.
3) Human resource management is a part of staffing. Do you agree?
Ans. No.
4) “The present day human resource management is a broader concept.” Explain
Ans. The present day human resource management includes the following activities:
a. Helps the organization to achieve its goals
b .Employees the skills and knowledge of employees efficiently and effectively.
C .Enhance job satisfaction.
d. Maintain high morale and good human relations within the organization.

5) State the meaning of placement as a staffing function.
Ans. Placement: Once the job offer has been accepted by the selected candidate he placed on this new job. Proper placement of an employee reduces absenteeism Placement therefore refers to placing the right person on the right job.
6) Describe briefly the steps involved in the process of staffing.
Ans. Man power Planning: The organization estimate the total man power requirement by considering all the departments of the organization. Recruitment: The second step after man power planning is recruitment and selection. Recruitment aims at attracting job applicants preposition in the organization. Selection: Selection consists of making choice among applicants. Placement and Orientation: It refers to placing the right person on the right job.
Induction: it is concerned with the process of introduction of a new employee to the
organization. Training and development: It is more accurately considered as a process of skill formation and behavioral change. Performance appraisal Promotion and career planning
Compensation
7) ‘Internal sources of recruitment are better than external sources of recruitment.’ Do you agree with this statement? Give any two reasons in support of your answer.
Ans. Yes, I agree with this statement.
Advantages: 1. It will assist in developing high moral of employees.
2. The candidates already working in the organization can be evaluated more economically as the expenditure is relatively less.

8) What is meant by ‘Selection’? Explain any five steps involved in the process of
selection of employees.
Ans. Selection is the process of carefully screening the candidates who offer themselves for
appointment so as to choose the most appropriate person for the job.
Steps : 1. The preliminary screening : A brief screening interview is conducted as the first
step in the selection process.
2. Selection test: Each candidate appears for employment test.
3. Employment Interview: Interview is a phase of testing on the basis of face to face
interaction between the interviewer and the applicant.
4. Reference and background checking: Gather more information about the candidates from indirect personal sources.
5. Selection decision: After candidates process the tests and interview final decision for
selection is made after considering the view of concerned manager.
6. Medical Test: The selection process is not complete without the medical test.
7. Job offer: Letter of appointment mentioning the date by which a candidate has to report on duty is handed over to the appointee.
8. Contract of employment: It includes various details such as pay, allowances, work rules etc.
9) Distinguish between training and development.
Ans. A)

Training	Development
It is used to add skills abilities of the workers	Development involves improving the capacities and capability of the managerial personnel.
The term training is generally used to impart specific skills among operative workers	It is associated with the over all growth of the executives.
it is to enable the employee to do the job better	It is to enable the overall growth of the Employee.
It is a job oriented process	It is a carrier oriented process.

10) State the benefits of employee’s training.( 4M)
Ans. Benefits to the organization
a) Economic operations: Trained personal will make economic and efficient use of resources.
b) Increases productivity; It improves the quality and quantity of the production
Benefits to the employees:
a) Acquisition of new skills: A trained employee acquires new skills.
b) Higher Earnings: Trained employees can perform better and there by earn more.
superiors at the actual work place.

In This Post we are  providing Chapter- 7 DIRECTING NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON DIRECTING

1. Explain in one sentence how directing initiates action in management.

Ans. Directing initiates action by ordering employees to attain the desired goal of an organisation.

2. What is meant by directing?
Ans. Directing is the process of instructing, guiding and inspiring people in the organisation to achieve its objectives.

3. Give any two elements of directing.
Ans. (i) Supervision
(ii) leadership.

4. State the element of directing which helps in implementing the principle of scalar chain.
Ans. Communication helps in implementing the principle of scalar chain.

5. State any one characteristic of directing.
Ans. Directing helps to initiate action by the people in the organisation towards attainment of desired objectives.

6. How directing helps in efficient and effective functioning of the organisation? Explain by giving any three points.
Ans. Directing helps in efficient and effective functioning of management because:
(i) It integrates employees Directing integrates employees’ efforts in the organisation in such a way that every individual’s efforts contributes to the welfare of the organisation. Thus, it ensures that employees work efficiently for the attainment of goals.                                                         

 (ii) It improves efficiency Directing guides employees to fully realise their potentials and capabilities. Through this function, managers utilise the potential of employees and persuade them to work with the best of their ability and contribute their maximum efforts towards the achievement of organisational objectives.
(iii) It facilitates change Business environment is changing very frequently, but the people generally have a tendency to resist change. In this context, directing helps manager to persuade his subordinates to carry out changes from time to time to cope with changes in the environment as the changes are necessary to adapt and it is the need of modern business

7. Explain the meaning and any three characteristics of directing.

Ans. Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation through effective communication, so that their efforts result in achievement of organisational objectives.
Characteristics of directing are as follows:
(i) Initiating process It involves giving orders and instructions to the employees and thereby decisions are converted into actions.
(ii) Pervasive function The directing function is performed by all managers at all levels to achieve the organisational goals.
(iii) A continuous process It is an activity that takes place throughout the life of an organisation, irrespective of people occupying managerial position

8. Directing is the heart of the management process. Do you agree? Give any four reasons in support of your answer.

Ans. Yes, I do agree with this statement. Directing may be regarded as the heart of the management process; Its importance may be explained under the following points
(i) Initiates action Directing helps to initiate action by people in the organisation towards attainment of desired objectives, e.g. if a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help workers to achieve work targets given to them.
(ii) Integrates employees’ efforts Directing integrates employees’ efforts in the organisation in such a way that every individual effort contributes to the attainment of organisational objectives. Thus, it ensures that the individuals work for organisational goals.
(iii)Improves efficiency Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work up to their potential.
(iv)Brings balance and stability in the organisation Effective directing helps to bring stability and balance in the organisation since, it fosters cooperation and commitment among the people and helps to achieve balance among various group activities and the departments.

9. Directing is not required at all in management of organisation. Do you agree? Give two reasons in support of your answer.
Ans. No, I do not agree with the above statement. Directing is required in organisation as it initiates the action of people towards attainment of desired goals.
Reasons
(i) Initiates action Directing helps to initiate action by people in the organisation towards attainment of desired objectives, e.g. if a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help workers to achieve work targets given to them.
(ii) Integrates employees’ efforts Directing integrates employees’ efforts in the organisation in such a way that every individual effort contributes to the attainment of organisational objectives. Thus, it ensures that the individuals work for organisational goals.
(iii)Improves efficiency Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work up to their potential.
(iv)Brings balance and stability in the organisation Effective directing helps to bring stability and balance in the organisation since, it fosters cooperation and commitment among the people and helps to achieve balance among various group activities and the departments.

10. Explain how directing helps in effective and efficient functioning of the organisation.
or
What is meant by directing as a function of management? Describe any four points of its importance.     
or
‘Every action in the organisation is initiated through directing’. Explain any four points of importance of directing in the light of this statement.
Ans. Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation through effective communication so that their efforts result in achievement of organisational objectives. The scope of directing is very wide. It consists of all those activities by which a manager influences the behaviour of his subordinates to secure desired performance from them.
According to William Newman, ‘Directing deals with the steps, a manager takes to get subordinates and others to carry out plans’.
Importance of directing 
Its importance may be explained under the following points
(i) Initiates action Directing helps to initiate action by people in the organisation towards attainment of desired objectives, e.g. if a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help workers to achieve work targets given to them.
(ii) Integrates employees’ efforts Directing integrates employees’ efforts in the organisation in such a way that every individual effort contributes to the attainment of organisational objectives. Thus, it ensures that the individuals work for organisational goals.
(iii)Improves efficiency Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work up to their potential.
(iv)Brings balance and stability in the organisation Effective directing helps to bring stability and balance in the organisation since, it fosters cooperation and commitment among the people and helps to achieve balance among various group activities and the departments.

In This Post we are  providing Chapter- 8 CONTROLLING NCERT MOST IMPORTANT QUESTIONS for Class 12 BUSSINESS STUDIES which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON CONTROLLING

 Question 1

Why is controlling considered to be a backward looking?
Ans. Controlling involves evaluation of past activities to find out deviations from standards so it is a backward looking function.

Question 2.
Mention the important features of the control function of management.
Answer:
Characteristics of Control: The Control function of management has the following features:
1. Controlling is a continuous Process: It involves continuous measurement and review of actual performance and results in corrective action based on this review. It may lead to changes in planning, staffing, organizing, etc.

2. Controlling is looking Back: Control leads to the appraisal of past activities. Thus, it is looking back. The shortcomings in the performance of various individuals and departments are revealed by the control process. This is known as feedback information. It will help in knowing the reasons for poor performance. Corrective action can be initiated on the basis of feedback information.

3. Control is forward-looking: Control is said to be forward-looking. It is related to the future as the past cannot be controlled. It is usually preventive as the preserve of the control system leads to minimizing wastages, losses, and deviations from standards. It should be noted that control does not curtail the rights of individuals. It simply keeps a check on the Performance of individuals.

4. Control is Action-Oriented: Control implies taking corrective measures, whenever required. Action is the essence of control. The purpose of control is achieved only when corrective action is taken on the basis of feedback information. If the control does not lead to any action, then a manager can’t ensure actual performance as per standards. A good system of control facilities timely action so that there is minimum wastage of resources, time, and energy.

5. Control is a Pervasive function: It is a basic function of every manger irrespective of his level of authority. It is a follow-up action to the other function of management. Every manager is responsible for controlling the activities of those working under him and taking necessary action whenever necessary.

Question 3.
Explain the term Management by Exception.
Answer:
Management by exception: Effective control can be achieved if critical or key points are identified and close attention is directed to adjustment at these points. This is known as ‘control by exception’. According to this principle, only significant deviations from the standards require management’s attention as they constitute exceptions. An attempt to go through all deviations tends to increase the workload of the Manager and decrease attention on important problems.

For instance, if postal expenses mqt&ase by twenty percent, the deviation is too insignificant to require managerial attention. On the other hand, if labor costs rise by twenty percent, they should receive immediate managerial attention.

The Principle of Management by exception implies that minor deviations from the standards may be ignored or given less attention. This would conserve managerial time, effort, and energy which could be utilized on important matters. But whenever deviations from standards are higher than the accepted level, management must take corrective measures to deal with the situation.

Question 4.
Explain in brief the term Responsibility Accounting.
Answer:
Responsibility Accounting is a system of control where responsibility is assigned for the control of costs. The persons are made responsible for the control of costs. Proper authority is given to the persons so that they are able to keep up their performance. In case the performance is not according to the predetermined standards then the persons who are assigned this duty will be personally responsible for it.

In responsibility accounting, the emphasis is on men rather than on systems e.g. if Mr. A, the manager of a department, prepares the cost budget of his department then he will be made responsible for keeping the budget under control. A will be supplied with full information of cost incurred by this department. In case the cost incurred is more than the budgeted costs, then A will try to find out reasons and take necessary corrective measures. A will be personally responsible for the performance of his department.

Question 5.
Explain in brief the term Zero base budgeting.
Answer:
Zero Based Budgeting Whenever a budget is prepared, past records and experience are taken into consideration. The new budget is prepared on the basis of budgets of the previous period. This method is known as ‘Based Budgeting’. On the contrary, the concept of zero-base budgeting considers the future not a mere projection of the past. As the environment is changing fast, the need to forecast systematically future events arise. For the growth and survival of any business organization, these changes need to be adopted.

Zero-base budgeting is the latest technique and it is meant for a particular period of time. It doesn’t prepare an altogether new budget. Normally, the previous year’s performance is taken as a base for the current year’s budget in budgeting techniques. But in zero-base budgeting, every year is taken as a new year, and the previous year is not taken as a base.

Zero is taken as a base and all budget proposals are considered in the light of present conditions. In zero-based budgeting, the amount to be spent on various activities will depend upon justification given by the manager.

Hence, zero-based budgeting provides flexibility and freedom in allocating the resources and the chances of repletion of weaknesses of the previous year are reduced.

Question 6.
Explain the Modern technique of control by the management information system (MIS) a computer-based technique.
Answer:
Management information system: A management information system (MIS) is a computer-based information system that provides information and support for effective managerial decision-making. A decision-maker requires up to date, accurate and timely information. MIS provides the required information to the managers by systematically Processing massive data generated in an organization. Thus, MIS is an important communication tool for managers.

MIS also serves as an important control technique. It provides data and information to the managers at the right time so that appropriate corrective action may be taken in case of deviations from standards.

MIS offers the following advantages to Managers:

1. It facilitates the collection, management, and dissemination of information at different levels of Management and across different departments of the Organisation.
2. It supports planning, decision making, and controlling at all levels.
3. It improves the quality of information with which a manager works.
4. It ensures cost-effectiveness in managing information.
5. It reduces information overload on the managers as only relevant information is provided to them.

Question 7.
Distinguish between Planning and Control.
Answer:
A comparison of Planning and Control:

Planning	Control
1. Planning emphasizes more on non-personal, abstract long-range problems.	1. Control emphasizes more and long-range problems.
2. Planning is based on estimates	2. Control is based on estimates.
3. Planning is done by top-level executives.	3. Control is done by top-level executives.
4. Under Planning, the evaluation of results is very difficult.	4. Under Control, the evaluation of results is very difficult.
5. Determination of results takes a very long time.	5. Determination of results takes a very long time.

Question 8.
What are the advantages of Management audit?
Answer:
The main advantages of Management audit are as follows.

1. It helps to locate present and potential deficiencies in the performance of management functions.
2. It helps to Improve the Control system to an Organisation by continuously monitoring the performance of Management.
3. It Improves Coordination in the functioning of various departments so that they work together effectively towards the achievement of organizational objectives.
4. It ensures updating of existing managerial .policies and strategies in the light of environmental changes.

Conducting a management audit may sometimes pose a problem as there are no standard techniques of management audit. Also, management audit is not compulsory under any law. Enlightened managers, however, understand its usefulness in improving the overall performance of the organization.

Question 9.
Explain the essential features of a sound control system. (Imp. Q)
Answer:
Essential features of a sound control system:
A good control system has the following essential features:
1. Clear out objectives: Before Planning a control system, it is essential to know clearly the objectives it will tend to achieve. The standards of performance should be based on these objectives. Thus, the control system should be directed towards the detection of early deviations from the standards to permit effective corrective action. If the standards are arbitrary or subjective in nature, they will not be able to measure deviations properly. Thus, the purpose of control will be lost.

2. Suitability: Control techniques should be appropriately designed to suit the nature of the activities being controlled. This means that different types of activities need different types of control techniques. The control technique should be tailored to reflect the performance of all types of operations, say, production or sales.

It is also essential that the overall control system should be appropriate for the organization. A control system that is good for a small organization may be inadequate for a big organization.

3. Simplicity: A good system of control should be simple and easy to understand. The employees must know what is expected of them and how their performance will be evaluated. If the employees don’t understand the standards of performance properly, the actual performance might turn out to be very poor.

4. Economy: The system of control must be worth its costs. It must justify the expenses involved. A control system is justifiable if the savings anticipated from it exceed the costs of its working. Small enterprises cannot afford elaborate control systems which are very costly. As far as possible, unnecessary paperwork and reports should be avoided

5. Flexibility: A good control system must keep pace with the continuously changing environment. It must be responsive to changing conditions. It should be adaptable to new developments such as the introduction of new methods, materials, and changes in the requirements of the customers. If there is a change in any plan, the control system should be capable of absorbing such change.

6. Forward-looking: The system of control should be forward-looking in the sense that it should detect and report deviations promptly. Timeless is the essence of control. Ideally, deviations should be anticipated and preventive action should be taken. More realistically information on deviations should be monitored and feedback to the system immediately so that corrections are effected with minimum cost and inconvenience.

7. Suggesting Corrective Action: Merely pointing out deviations is not sufficient in a good control system. It must lead to taking corrective action to achieve the desired objectives. It may result in taking suitable action against the employees, giving them training, ensuring effective supervision, improving communication, revising standards, etc.

8. Concentration on exceptions: This is also known as ‘Control significant deviations from standards require management’s attention as they constitute exceptions. An attempt.to go through all deviation tends to increase unnecessary efforts and to decrease attention on important problems.

9. Strategic Point Control: Small deviations in certain cases may have greater significance than larger ones in other cases, for example, deviation of ten percent in budgeted labor cost may be more troublesome to a manager than a deviation of twenty-five percent in budgeted postal charges. The Principle of strategic point control states that effective control can be achieved if critical, key, or strategic points can be identified and close attention directed to adjustment at those points. In fact, strategic point control is an extension of control by exception.

Question 10.
Explain the relationship of the controlling the function of management with other functions of management.
Answer:
Relationship of control with other Function of Management: We know that control is the last function of management because its need arises only after performing the functioning of planning, organizing, and directing. But being the last function does not lower down its importance as compared to other functions. Control is very must linked to other functions of management. In fact, the success of all other functions depends upon effective control,

The relation of Control with other managerial functions is explained below:
1. Relationship of Control with Planning: There is a close relationship between the Control and Planning functions of Management. Planning is the basis of Control, The control process involves determining the standards, comparison of the deviations, and taking corrective action to remove such deviations. In this process, planning provides such standards against which the progress of the actual performance is compared.

Thus where there is no plan there can be no basis for control. HG Hick has rightly said that “Planning is clearly a prerequisite for controlling. It is utterly foolish to think that controlling could be accomplished without planning there is no predetermined understanding of the desired performance.

On the other hand, plans will also prove mere imaginations in the absence of control. Because in such a case there will be no one to check whether or not everything is being done according to plans. Also in the absence of control, there will be no corrective action to direct the actual progress towards the accomplishment of plans.

Thus planning is meaningless without control, and control is aimless without planning.

2. Relationship of control with the organization: Control can be meaningful only when the person responsible for deviations is identified and is held responsible. This is possible only because of the organization because it is only in an organization that the authority and responsibility of each one are defined. In the absence of organization, neither the person responsible for committing the mistakes will be identified nor any action can be taken against him. Hence, the same mistakes will be repeated time and again. As such, effective organization is essential for effective control.

Similarly, Organisation is also dependent upon control because organizing is to assign work to individuals and give them authority and fix responsibility in case of mistakes. Since fixing of responsibility’ is possible only through Control, therefore effective control is essential for effective organization.

3. Relationship of control with Direction: Direction removes the difficulties in the way of various functions even before they are reviewed in order to control their progress. Direction makes the employee more capable and enthusiastic towards their work and provides them with adequate guidance training and supervision. Thus direction and control are interlinked with each other.

4. Relationship of control with other functions of Management: Control has deep relations with other functions of management as well. Communication helps in comparison of actual results with the standards by providing timely information of actual results with the standards by providing timely information of actual progress. Decision-making helps in determining the way to remove the deviations and the type of corrective actions to be undertaken.

Motivation helps in encouraging people to work towards the achievement of organizational objectives. Under control performance of each person is evaluated and efficient persons are motivated by providing them financial and non-financial incentives whereas inefficient employees are provided training to remove their deficiencies. Thus, it is clear that all the functions of management are inter-linked.

The relationship of various managerial functions is depicted through the following diagram:

From the above diagram, it is clear that the relationship between control and other managerial function is so deep that it is impossible to think of them separately. Every function affects the control and gets affected by it.