NIOS Economics 214 Solved Paper’ April 2014, NIOS Secondary Solved Papers

NIOS Economics 214 Solved Paper’ April 2014

NIOS Secondary Solved Papers

1. Which of the following is a normative statement?

(A) Indian Economy is a mixed economy.

(B) The number of poor people in India is very large.

(C) Poor people are facing difficulty due to rise in price of essential commodities.

(D) Government should give more importance to education.

2. Freedom of enterprise is the feature of:

(A) Capitalist economy.

(B) Social economy.

(C) Mixed economy.

(D) None of the above.

3. Reduction in inequality is the feature of :

(A) Capitalist economy.

(B) Social economy.

(C) Mixed economy.

(D) None of the above.

4. In a co-operative society the minimum number of shareholders is :

(A) 50.                  

(B) 40.                  

(C) 10.                  

(D) 60.

5. A production unit owned by a single individual is known as:

(A) Sole proprietorship.

(B) A partnership.

(C) A Government production unit.

(D) None of the above.

6. Token price is the price fixed by the government which is:

(A) Charged from rich persons.

(B) Higher than per unit cost of production.

(C) Equal to the per unit cost of production.

(D) Must below the per unit cost of production.

7. Which one of the following is a variable?

(A) Beauty.        

(B) Honesty.

(C) Height.

(D) Intelligence.              

8. Typhoid is the harmful effect of

(A) Air pollution.

(B) Water pollution.

(C) Noise pollution.

(D) None of the above.

9. What is the Indian philosophy of wants?                         2

Ans. As we all know our wants are unlimited but our resources to satisfy these wants are limited. Hence if we keep our wants as unlimited and growing, we will not be able to satisfy all of them with our limited resources.

10. Scarcity and Choice go together. Explain.                      2

Ans. Scarcity of resources having alternative uses compels every individual and society to make choices in the use of resources in order to obtain maximum satisfaction. Clearly choice arises because of scarcity. Thus scarcity and choice go together.

11. Define production function.                                                2

Ans. Production function tells us the technical relationship between inputs and output of a firm. It tells us the maximum quantity of output that can be produced with the help of given quantities of inputs.

12. How is capital intensive technology different from labour intensive technology?                    2

Ans. When we make more use of labour and less use of capital per unit of output in the production of our commodity that is called labour intensive technology. Whereas, when we make more use of capital and less use of labour per unit output in the production of our commodity that is called capital intensive technology of production.

13. What is meant by equilibrium price?                            2

Ans. Equilibrium literally means a state of balance form where there is no tendency to change. In other words equilibrium is a situation where the forces determining equilibrium are in balance or are equal to each other.

14. What is meant by market?                                2

Ans. “Market refers to the arrangement in a given area whereby buyers and sellers come in contact with each other directly or indirectly, to buy or sells goods.”

15. Why is there a need for money?                       2

Ans. As human civilization progressed, people realized that there has to be some common medium of exchange which can be easily carried, stored, and used to express value of a good. So money came into being. Hence the need for money arose due to the failure of barter system.

16. State any two advantages of international trade.                      2

Ans. Two advantages of international trade are

1) Trade encourages production of new goods and services. Though trade sellers and buyers interact with each other. So sellers know the choice and preferences of the buyers and accordingly provide the goods and services for consumption.

2) People of different countries meet and interact through trade. Accordingly people of one country can know the culture, tradition, language etc. of another country.

17. Give any two examples of economic relationship between India and other countries.           2

Ans. Two examples of Economic relationship can be given as follow:

a) Selling of goods and services by the domestic citizens to citizens in a foreign country. This is called exports.

b) Buying of goods and services by domestic citizens from the foreign countries. This is called imports.

18. Explain any one responsibility of consumers.                      2

Ans. Buying Quality Certified Products:- There are lot of products which are certified by recognised agencies as safe to consume and good in quality. For example the Indian Standard Institute (ISI) conducts quality testing of many consumer goods. If it found proper the product is labelled with ISI mark on it. For many food products the quality assurance is certified by seal called AGMARK. Consumers should choose products with ISI mark and AGMARK.

19. How will you distinguish goods from services? Give four points of distinction.           4

Ans. Differences between goods and services:-


(1) Goods are tangible in nature i.e. they can be seen and touched.

(2) There is a time gap between production and consumption of goods as they are produced first and consumed later.

(3) They can be stored and utilized when required.

(4)They can be transferred from one place to another.


(1) Services are non-tangible in nature i.e. they can neither be seen nor be touched.

(2) There is no time gap between the production and consumption of services. That is why they are produced and consumed simultaneously.

(3) Services cannot be stored.

(4)Transfer of service is not possible.



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NIOS Secondary and Senior Secondary Solved Question Papers

20. How are production, consumption and capital formation inter-related?                4

Ans. The three activities, production, consumption and capital formation are inter-related. An increase in the production of goods and services increases the level of consumption and capital formation. Increase in consumption is an indicator of rising standard of living of people and increase in capital formation is very important as the growth of the country depends on it. More consumption is possible if there is more production and more production is possible if there is more capital formation. Thus, the three economic activities have their impact on one-another to take the economy forward to the path of development.

21. Give a brief description of a company or corporation.                  4

Ans. Company or corporation:- It is a production unit owned by a large number of persons. The sum invested in the company is divided into shares. The buyers of these shares are called shareholders. They are all the owners of the company. In private company the minimum number of share holders is 2 and the maximum number is 50. But in public company minimum number is seven but there is no maximum limit. These shareholders select some persons for the management of the company who are called directors of the company. These companies are established under Companies Act 1956. The profit of the company is distributed among the shareholders according to the share held by them. Tata iron steel company, Reliance industries limited, Bajaj limited, Lipton India limited are some of the examples of a company.

22. Explain the law of supply with the help of a supply schedule.                    4

Ans. Law of supply expresses a relationship between the supply and price of a product. It states a direct relationship between the price of a product and its supply, while other factors are kept constant.

Supply schedule shows a tabular representation of law of supply. It presents the different quantities of a product that a seller is willing to sell at different quantities of a product that a seller is willing to sell at different price levels of that product.

A supply schedule can be of two types, which are as follows:

Individual supply schedule:

Price of milk (per litter in Rs)

Quantity supplied (1000 per day in litters)









 Market supply schedule:

Price of Product X
(per unit in Rs)

Individual supply (per



Market supply (per


























 23. Mention the functions of money. Describe any one of them.                     4

Ans. Functions of money are:

1. Medium of Exchange

2. Measure of Value

3. Store of Value

4. Making Payments in Future

1. Medium of Exchange:- The primary function of money is that it acts as a medium of exchange. This means that people can buy or sell goods and services with the help of money. Money is received by the seller who sells the good. Money is paid by the buyer who buys the good from the seller.

24. What is saving? How is saving useful?                   4

Ans. Saving is the amount of income which is carried forward to future after meeting the current expenditure on goods and services and other things. This means that saving is the surplus of income over consumption. We can write that,

Saving = Income – Consumption

Suppose Mr. X saved Rs. 5000 last year. This implies that, in the beginning of the current year he starts with an extra Rs. 5000. So his income will increase by at least Rs. 5000 this year, provided his income and expenditure do not change. This means that, saving increases the future income of the person. And this saving is also helpful for Mr. X if he fall ill.

25. Explain the following features of data:                     4

(1) Statistics are aggregate of facts.

(2) Data are affected to a marked extent by multiplicity of causes.

Ans.:- Features of Data:-

(1) Statistics are the aggregate of facts:- A single fact cannot be considered as statistics or data. For example, the marks secured by  a student of class X in mathematics are 95. This is given as single information which is simply a fact and not the data. However, the marks secured by all the students of class X of a school, either section wise or in total can be considered data, because it becomes an aggregate of facts.

(2) Data are affected to a marked extent by multiplicity of causes:-  Data are not influenced by a single factor but are influenced by many factors. For example, rise in prices of commodities may have been due to several causes like, reduction in supply, increase in demand, rise in taxes, rise in wages etc.

26. Explain in any two ways the importance of data in economics.                       4

Ans. Some specific areas of economics where the use of data is very important are as follows:

1. In economic planning:- The data of the previous years are generally used to prepare future plan. For example, it we have to plan expenditure to be incurred on primary education for a year, data regarding number of students who were enrolled up to class fifth in previous years and the expenditure incurred during those years is important to look at. Forecasting is done on the basis of economic planning.

2. To determine national income:- In order to know the state of our economy it is important to know the national income besides various other things. But national income can be determined by using certain methods which require quantitative information on various things such as wages and salaries received by workers, rent received for use of land and building, interest received for use of funds and profit earned by the entrepreneurs in the economy in the given ear.

27. Explain any two steps taken by the government for achieving higher economic growth.             4

Ans. Steps taken by the government for achieving higher economic growth are

1) India has been encouraging establishment of small scale, large scale and heavy industries since the second plan onwards i.e. form 1956. These industries produce goods for the use of people, machines and equipments needed to build infrastructure and help service sector o expand. Industries provide lots of jobs and higher wages.

2) The government has been encouraging the use of better inputs in the form of better seeds, fertilizers etc. to improve food grain production.

28. State any two rights of consumers and explain any one of them.                            4

Ans. Two rights of consumers are (1) Right to Information (2) Rights to Choose

Rights of Information:- The right states that sellers and producers should always provide consumers with enough and appropriate information regarding the price, weight, company brand, manufacturing & expiry dates, quality identification marks, ingredients, contact links of the company and so on, to make intelligent and informed product choices. 

29. Specify major natural sources of air pollution.                       4

Ans. Major natural sources of air pollution include:

(a) Dust from natural sources, usually barren land.

(b) Methane, emitted by the digestion of food by animals, for example cattle.

(c) Smoke, particulate matter and carbon monoxide from wildfires.

(d) Volcanic activity, which produce sulphur, chlorine, and ash particulates.

30. How is noise pollution harmful for health? Explain.                           4

Ans. Noise pollution in the form of unwanted sound can damage physiological and psychological health. Noise pollution can cause annoyance and aggression, hypertension, high stress levels, hearing loss, sleep disturbances, and other harmful effects. Chronic exposure to noise may cause noise-induced hearing loss. People exposed to significant occupational noise demonstrate significantly reduced hearing sensitivity compared to non-exposed people. High and moderately-high noise levels can contribute to cardiovascular effects, a rise in blood pressure, and an increase in stress thus affecting the physical and mental health of people.

31. What is the effect of the following  on demand for a commodity?                      6

(1) Price of the commodity

(2) Price of substitute goods

(3) Income of the consumer

Ans. The effect of the following on demand for a commodity:-

(1) Price of the commodity:- When we visit a market to buy a commodity, we go to a seller of that commodity and ask for its price first. It we think that the price is reasonable, we buy the required quantity of the commodity. On the other hand, if the price is higher in our opinion, we may not buy or buy less quantity of it. Generally we are willing to buy more quantity of a commodity at a lower price and less of it at a higher price.

(2) Price of substitute goods:- Substitute goods are those goods which can easily be used in place of each other. Example of substitute goods are coke and pepsi, tea and coffee etc. If price of coffee increases, people will demand more of tea and thus demand for tea will increase. If price of coffee falls, people will demand more of coffee and thus demand for tea will fall. So, the demand for a commodity is directly related to the price of its substitute goods.

(3) Income of the consumer:- The demand for a commodity also depends on the income of the buyer. When our income increases, we are likely to spend more on purchase of some goods such as fruits, full cream milk, butter etc. Such goods are normal goods. Normal goods are those goods whose demand increases with the increase in income. So, the demand for normal goods in directly related to the income of the buyer.

32. What are poverty alleviation programmes? Explain any two of them.                 6

Ans. Poverty alleviation programmes are:

1) The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

2) Swarnjayanti Gram Swarozgar Yojana (SGSY).

3) Swarna Jayanti Sahari Rozgar Yojna (SJSRY).

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS):-  MGNREGS aims at providing at list one hundred days of guaranteed wage employment in a year to rural population. The nature of work is unskilled manual work. The scheme was launched in 2006 in 200 districts of India. Then it was notified for the entire country in 2008. Any adult member of a family living in rural area can do manual labour on daily wage basis for 100 days in a year. In 2010, upto the month of December about 4.1 crores households were benefited under this scheme. In 2010-11 the government had allocated Rs. 40,100 crores to run this scheme.

Swarna Jayanti Sahari Rozgar Yojna (SJSRY):- SJSRY is meant for providing employment to poor families living in urban areas of the country. It was first launched in 1997. Then many new initiatives were introduced in 2009 which include the following:

1) Programmes to generate self employment.

2) Programmes for urban women.

3) Training for urban poor.

4) Community development programme.

5) Wage employment programme.

The government has allocated about Rs. 590 crores for SJSRY for the year 2010-11. A total of more than 6 lacs 50 thousand families in urban areas have been benefited under this scheme by December 2010.

33. What were the notable economic features of India after the end of British rule? Explain any two of them.                   6

Ans. At the end of British period two notable economic features were:

a) Decline of handicrafts industry.

b) Production of Cash crops.

c) Famines and food shortage.

d) Rise of intermediaries in agriculture.

a) Decline of Handicraft Industry:- Before the British came to India, Emperors and kings were ruling this land. They promoted the interest of local artisans, carpenters, artists, weavers etc. who were e very good at making beautiful paintings, decorating walls, designing textiles and Jewellery, tailoring, making furniture, toys and idols of stones and metals etc.  These people were using their labour and local skills to create these things. A lot of concentration and long time was required to create such things. But when the British came they defeated the Kings and took over their kingdoms. Towns were destroyed and with this the handicraft industry was also faced closure.

b) Famines and Shortage of Food:- The worst part of British rule in India had been the frequent occurrences of famines. Famine is a situation wherein many people do not get food to eat and die from hunger and diseases. Famine occurred nearly 33 times during whole British period. The most devastating famine was the Bengal famine of 1943, just four years before independence. More than 1.5 million people died at this time due to lack of food.

 34. Explain the role and importance of primary sector in respect of the following:

1) Providing food to millions

2) Providing raw material to industries.

Ans.: The role and importance of primary sector in respect of the following:

1)  Providing Food to Millions:- Food is the most basic requirement of life. Without agriculture food production and supply would be non-existent. India’s food requirement is not only very high but also increasing every year because of increase in its population. The total food grain production of India in 2008-9 was around 234 million tonnes. This includes wheat, rice and pulses.

2) Providing raw material to industries:- Industries such as sugar, jute, cotton textiles, vanaspati etc. get their raw materials from agriculture. Do you know how paper is made? It requires a special type of grass, bamboo etc. without agriculture paper production is not possible. Look at the food items such as pickles, fruit jam, juice, biscuits, bread, semi-prepared food etc. food processing industry is operating because of agriculture only.


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