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ICSE Board Exam 2006 : Economic Applications

5 pages, 39 questions, 20 questions with responses, 27 total responses,

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Indian Certificate of Secondary Education (ICSE), New Delhi

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ECONOMIC APPLICATIONS - 2006 (Two Hours) Answers to this Paper must be written on the paper provided separately. You will not be allowed to write during the first 15 minutes. This time is to be spent in reading the question paper. The time given at the head of this Paper is the time allowed for writing the answers. Attempt all questions from Part I and any four questions from Part II. The intended marks for questions or parts of questions are given in brackets [ ]. PART- I (40 Marks) Attempt all questions from this Part. Question 1 (a)What are inferior goods? Give an example. [2] (b) Draw diagram showing: (i) A perfectly elastic demand curve. [1] (b) Draw diagram showing: (ii) Elasticity of demand less than one. [1] (c) Substitute products A and B are produced by different firms. Give a reason why a change in the price of product A will bring about a change in quantity demand for product B. [2] (d) Given below are four statements. Indicate for each whether it reflects an increase or decrease in: Demand; quantity demanded; supply; quantity supplied. (i) Air Deccan reduces its average plane fare by 30% in order to attract more passengers. [1/2] (d) (ii) The Government grants export subsidy to producers of oranges in Nagpur to increase the sale of oranges abroad. [1/2] (d) (iii) Wheat farmers decide to withhold wheat as the market price is low. [1/2] (d) (iv) OPEC decides to increase the international oil price. [1/2] (e) Shyam, Sita, Renu, Ahmed and John are five consumers of apples. Their demand for apples is given below. Derive the market demand schedule for apples. [2] Quantity Demanded (Apples) in kg. Price per kg. S hyam S ita Renu Ahmed John (In Rs.) 25.00 16 15 12 14 18 30.00 12 11 10 8 15 35.00 10 9 8 6 12 40.00 8 6 4 2 8 Question 2 (a) In January 2002, the price of gold nearly tripled. Yet, as the price of gold rose, its sale too increased. Does this mean that the demand curve for gold is upward sloping? Justify your answer. [2] (b) An entrepreneur can use either capital or labour in the production process. Out of the options A, B, C and D given below, which two would the entrepreneur choose if he had to replace labour with capital? Justify your answer. [2] Options Price of Capital Price of Labour A Constant Falling B Falling Rising C Rising Constant D Falling Falling (c) Differentiate between wealth and capital. Which of the two has a direct impact on the economy? Justify your answer. [2] (d) M ention any two risks undertaken by an entrepreneur. [2] (e) How can the State help in generating income in the economy? [2] Question 3 (a) How has money promoted division of labour? [2] (b) Give two examples of monopolist markets in India. [2] (c) State two ways by which the government can help in creating better terms and conditions of work in different sectors of the economy. [2] (d) Why is land considered a passive and an indestructible factor of production? [2] (e) M ention two factors affecting the price elasticity of demand. [2] Question 4 (a) Give any two important functions of the Reserve Bank of India. [2] (b) What is meant by wage-price spiral? [2] (c) Define monetary policy. [2] (d) Why is Advertising and Market Research an important component of the monopolistically competitive market? [2] (e) State any two factors affecting the type of market for a commodity. [2] Part - II (60 Marks) Attempt any four questions from this Part. Question 5 (a) What are income elastic and income inelastic goods? On a straight line demand curve show how the elasticity of demand varies at different points. [7] (b) Explain the Law of Supply with the help of a diagram. Discuss any two exceptions t o the law of supply. [8] Question 6 (a) Business Process Outsourcing (BPO) is bringing in attractive jobs to the educated urban youth in India. Though highly remunerative, these jobs involve long and inconvenient working hours. (i) What is the impact of BPO on the supply of labour? [3 1/2] (a) (ii) Explain five other factors besides monetary reward that affect the supply of labour in an economy. [3 1/2] (b) Explain four advantages and four disadvantages of specialization of labour. [8] Question 7 [7] (a) Read the extract given below and answer the question that follow: The Times of India, 28th August 2004, New Delhi. The Union Government is unlikely to hike price of petrol and diesel at the next revision due on August 31st despite the surge in crude oil price. "At a time when inflation is creeping up to 8%, a responsible Government has to give priority to holding the price stable," the Petroleum M inister said on Friday. (i) Define creeping inflation. (ii) What is the impact of inflation on the low income groups, businessmen and debtors? (b) Discuss any four reasons why public expenditure has increased in India over the recent years. [8] Question 8 (a) Define a monopoly. Explain the main characteristics of a monopoly firm. [7] (b) Compare monopolistic competition and perfect competition on the basis of any four characteristics. [8] Question 9 (a) Define Fiscal Policy. Explain the instruments of fiscal policy used by the Government to control inflation. [7] (b) Discuss any four problems faced by public sector enterprises and suggest the remedies [8] t o overcome these problems. Question l0 [7] (a) Read the extract given below and answer the questions that follow: Economic Times, Bangalore, September 6, 2004. Sensing that the interest rates could go up, depositors prefer to invest their money in demand deposits rather than lock them up into long term fixed deposits at prevailing rates of interest. According to the Reserve Bank of India reports, demand deposits with the scheduled banks have risen considerably from July 23 to August 20, 2004. (i) What are demand deposits? (ii) Explain how the Reserve Bank of India controls inflation t hrough the bank rate policy, open market operations and regulation of cash reserve ratio. (b) Define money. Describe how money has removed the defects of the barter system. [8]

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Additional Info : Solved ICSE Board exam paper study guide - ICSE 2006 : ECONOMIC APPLICATIONS - I.C.S.E. Free Online Question Paper
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