Important Question with Answer Economics Class 12th MP BOARD 2026
Question 1 – What is a market economy?
Answer – In a market economy, all economic activities are determined by market conditions.Question
Question 2 – What is called positive economic analysis?
Answer – Under positive economic analysis, we study how various mechanisms work.
Question 3 – What is profit?
Answer: The difference between cost and revenue is called profit.
Question 4 – What is average product?
Answer: Average output is defined as the variable input per unit of output.
That is, APL = TPL / L
Question 5 – What is the maximum fixed price?
Answer: The upper limit of the price of a good or service set by the government is called ceiling price.
Question 6 – What is called ‘invisible hand’?
Answer: Whenever there is a market imbalance, in a perfectly competitive market, an ‘invisible hand’ changes prices to restore equilibrium.
Question 7 – What is the market equilibrium price?
Answer- Market Equilibrium:- The intersection point of market demand, sales and market supply curves is called market equilibrium.
Question 8 – What is called marginal product of labour?
Answer: The additional profit he receives for each additional unit of labor is called the marginal product of the worker.
Or marginal product of labor = marginal revenue x marginal product of labor
Question 9 – What are consumer goods?
Answer: Those goods and services which are consumed at the time they are purchased by the final consumers are called consumption goods.
Question 10 – What are called capital goods?
Answer: Goods that are durable in nature and are used in the production process are called capital goods. Such as tools, equipment, and machines.
Question 11 – What is personal income?
Answer: The portion of national income received by households is expressed as personal income.
or
Personal Income = National Income – Undistributed Profits – Net Interest Payments by Households – Corporate Tax + Government Transfer Payments from Firms to Households.
Question 12 – What is Net National Product?
Answer – When we subtract depreciation from Gross National Product, we obtain a measure of total income, called Net National Product.
Question 13 – What is SLR?
Answer – Commercial banks are required to keep some funds in liquid form in the short term. This is called SLR.
Question 14 – What is high-powered money?
Answer – Currency issued by the central bank can be held by the public or by commercial banks; this is called ‘high-powered money’.
Question 15 – What is consumption function?
Answer – Consumption function explains the relationship between imports and consumption.
or C = ÄŠ + CY
Question 16 – Write the two components of aggregate demand.
Answer – Two components of aggregate demand:
(i) Government consumption
(ii) Private consumption
(iii) Government investment
(iv) Private investment
(Any 2 points)
Question 17 – Write down two reasons for low demand.
Answer- Due to low demand (no 2 points)
(i) Reduction in public expenditure
(ii) Fall in export demand
(iii) Decrease in investment
(iv) Fall in consumption expenditure
Q.18 What is meant by excessive demand?
Answer: If the input employment level is greater than the full employment level, that is, the demand is greater than the output level produced at full employment.
Q19 What is effective demand?
Answer: The point of intersection of aggregate demand and aggregate supply is called effective demand.
Q.20 What is the validity of ceterisparibus?
Answer: Any theoretical practice is a formal orthodoxy.
Question 21 – Write the meaning of demand.
Answer: Demand is the goods that consumers buy from the market by spending their income according to their utility.
Question 22 – Write the meaning of price elasticity of demand.
Answer: The elasticity of demand is the level caused by the change in price. The % change in demand caused by the decrease in price is called the elasticity of demand in economics.
Question 23 – Write down any two means of production.
Answer: There are five means of production.Land, Labour, Capital, Organization, Courage.
(Award marks for writing any two means.)
Question 24 – Write the meaning of the return of the Hasman scale.
Answer: The return of the same scale occurs when the proportional increase in output is less than the proportional increase in all inflows.
Question 25 – Write the meaning of attainment.
Answer: A firm earns wealth by selling the goods it produces in the market.
Question 26 – Write the meaning of general benefit.
Answer: The minimum level of profit that is necessary to keep the firm in business is called normal profit.
Question 27 – Write the meaning of macroeconomics.
Answer: Macroeconomics studies all the economic changes of an economy, developing, developing, capitalist, private.
Question 28 – Explain economic agents l
Answer: These are the individuals and institutions that make economic decisions. They can be consumers, producers, governments, corporations, banks.
Question 29 – Explain consumer goods.
Answer: Consumer goods are food items purchased by consumers which are essential for survival. Clothes, books, copies, medicines, entertainment etc.
Question 30 – Explain capital goods.
Answer: Cars, ACs, computers and other durable goods are called capital goods.
MP BOARD 2026 Economics CLASS12th Self Test ( Objective Types )
Question 31 – Write the meaning of currency demand.
Answer: Money is demanded for all sources of economy from ordinary subsistence. Bank deposits, cash taxes and all other economic activities determine the demand for money.
Question 32 – Write the meaning of currency fulfillment.
Answer: Supply of currency refers to the supply of cash, bank deposits, credit facilities, intermediation between spare funds etc. in circulation from the economy.
Question 33 – Explain demonetisation.
Answer: To prevent corruption, black money, terrorism and counterfeit currency in the economy, 2 governments either ban notes or replace them or replace them with online and A.T.M. etc. Like 500, 1000 instead of 2000 notes which now he also stopped.
Question 34 – Explain the purpose of betting.
Answer: When the government introduces futures or credit cards by making single crore bonds of land, precious metals, bonds, currency, it is called speculative purpose. Commercial speculation also affects the cash form of currency.
Q.35 What is aggregate demand?
Answer: The demand found in the economy is called aggregate demand. Changes in consumption and investment have a favorable effect on aggregate demand and is related to the price of a commodity.
Q36 – What is holistic fulfillment?
Answer: All the supply found in the market The market tables of all the consumers together determine the aggregate supply.The aggregate supply is affected by the rate of investment, savings and interest.
Question 37 – Write the meaning of Marginal Savings Propensity (MPS).
Ans- It is the change in savings as a result of per unit change in income.It is denoted by S and is equal to 1-C.It implies S+C=I
Question 38 – Write the meaning of average consumption trend.
Answer: It is consumption per unit.That is, C/Y depends on the income of the individual.Purchasing power is determined by opinion.All of these have an impact on the economy.
Question 39 – Write the meaning of government budget.
Answer: The statement of estimated receipts and expenditure of the Government, also called the ‘Annual Financial Statement’, is called the Budget. It is the constitutional duty of the Government to present it in Parliament.
Question 40 – Write the meaning of revenue expenditure.
Answer: Revenue expenditure is the expenditure incurred by the Central Government for purposes other than the creation of physical or financial assets. It relates to the general functions of government departments and various services, loan interest payment, grants.
Question 41 – Write the difference between installed objects and complementary objects.
Answer- Difference between substitutes and complementary objects-
(i) Substituted goods are goods which are used in place of each other to serve the same purpose.such as tea-coffee, sugar-jaggery.
(ii) Supplementary materials are used along with other materials such as tea and sugar, pens and ink.
Question 42 – Write down any 3 factors that affect the demand for a commodity.
Answer: Factors affecting demand for a commodity (brief explanation of any three points)
(i) Price of commodity
(ii) ConsumerIncome
(iii) Prices of substituted goods
(iv) Expectation of future price increases
(v) Interestandfashion
(vi) Population
Question 43 – The short run marginal cost schedule of a firm is given in the table below.The total fixed cost of the firm is Rs.100.For the total variable cost, total cost and short run average cost schedule of the firm.
answer – Please write your own answers. (They will be uploaded to the site as soon as they become available.)
Question 44 – Write 3 relationships between total utility and marginal utility.
Answer: Relationship between total utility and marginal utility
(i) When total utility increases at a decreasing rate, marginal utility decreases.
(ii) When total utility reaches maximum (constant), marginal utility is zero.
(iii) When total utility decreases, marginal utility becomes negative.
Question 45 – Briefly explain perfectly elastic demand and perfectly elastic demand.
Answer: Perfectly elastic demand – Perfectly elastic demand means that there is no proportional change in the price of the commodity at all or there is a subtle change, while the proportional change in the quantity demanded is very large.
Perfectly Inelastic Demand – Perfectly inelastic demand means that the proportional change in the quantity demanded is zero or small, while the proportional change in the price of the commodity is very large.
Question 46 – Write down the three conditions of profit maximization.
Answer: The conditions for maximizing profit are:
(i) Price p. be equal to marginal cost.
(ii) 10 is not equal to marginal cost depreciation.
(iii) In order for the firm to continue producing, in the short run, the price must exceed the average variable cost (P> AVC) In the long run, the price must exceed the average cost (PAC).
Q.47 What is the role of the Reserve Bank of India as the ‘ultimate lender’?
Answer: The Reserve Bank of India is the only institution that can issue currency. When commercial banks need more funds to create more credit, they go to the market or the central bank to obtain these funds. The RBI, in its role of being ready to provide funds to banks at all times, is called the lender of last refuge.
Question 48 – Write down three policy tools for controlling money supply.
Answer: Three policy tools for controlling money supply:
(i) Bank rate
(ii) Open market activities
(iii) CRR and SLR
(iv) Agreement with RBI, Commercial Banks
(v) Moral pressure
Q49 What is marginal production possibility?
Answer: As individuals lack resources, overall3 The resources of an economy are also always limited to meet the needs of the individuals living there.Scarce resources have alternative uses Marginal production possibilities are the decisions to be made about how much of each resource to produce and for producing different goods and services.
Q.50 What do you mean by positive economic analysis?
Answer: Under positive economic analysis, we study how different modes of action work. Positive economic analysis is not about presenting solutions to the central problems of the economy.
Question 51 – Explain market equilibrium.
Answer: In a perfectly competitive market, equilibrium is defined as a situation where the plans of all consumers and firms converge and the market is empty.
Question 52 – Write 4 differences between total variable cost and total fixed cost.
answer – Please write your own answers. (They will be uploaded to the site as soon as they become available.)
Question 53 – How is price determined in a perfectly competitive market when there is a constant number of firms? Explain.
Answer: When the number of firms is constant, the equilibrium price and quantity are determined at the point of intersection of the market demand and market supply curves.Each firm uses labor up to the point where the marginal supply product of labor equals the wage rate.
Q.54 What is “effective demand”?
Answer: To determine the level of final good in the economy, all demand in the short run is assumed to be perfectly elastic at the price of a3 fixed final good and at a fixed interest rate and all supply at that price.
Question 55 – Explain the ‘paradox of frugality’
Answer: If everyone in the economy increases the ratio of their income to saving, the total value of saving in the economy will not increase.This will either decrease or leave unchanged saving.This result is called the paradox of frugality.
Question 56 – Why is the open economy autonomous expenditure expenditure multiplier smaller than the closed economy multiplier?
Answer: In an open economy, the autonomous expenditure multiplier is smaller than the closed economy multiplier because a portion of domestic demand is for foreign goods.
Question 57 – Write down any three points of determination of exchange rate.
Answer: The exchange rate, by the way, is determined by the forces of market demand and supply.It has three points.
(1) Speculative market
(2) InterestRates
(3) IncomeandExchangeRate
Question 58 – Consider the demand for a commodity. At a price of ₹5, the demand is for 15 units. Suppose the price of the commodity increases to ₹7. Calculate the price elasticity.
Answer: Solution
Given:
P1 = 5/- Q1 = 15 units
P2 = 5/- P2 = 12 units
Calculate price elasticity = ?
According to the question –
Price elasticity of demand – (per change in demand for the good)/(per change in the price of the good)
eD =(∆Q/Q1 x 100)/(∆P/p1 x 100) ■(∆Q=Q2-Q1@∆P=P2-P1)
=((Q2-Q1)/Q1 x100)/((P2-P1)/P1 x100)
=((12-15)/15)/((7-5)/5)
=(-3/15)/(2/5)
=(-3)/15×5/2
= -1/2
eD= -0.5
Question 59 – Give a brief diagrammatic explanation of demand’s law.
answer – Please write your own answers. (They will be uploaded to the site as soon as they become available.)
Question 60 – Write the two times and two defects of the fixed exchange rate in brief l
Answer: Properties of constant exchange rate:
(i) Reliability
(ii) Encouragement of foreign capital
(iii) Sustainability
(iv) Foreign exchange reserves are not required
Faults :-
(v) Exchange rate stabilitydifficult
(vi) Restrictions on independent capital
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MP BOARD 2026 Economics CLASS12th Self Test ( Objective Types )