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GSEB · Class 12 · FLAGSHIP
GSEB Class 12 Economics Board Booster — ₹199
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CBSE Class 12 Economics Board Booster — ₹199
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CBSE · Class 11 · FOUNDATION
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GSEB Class 12 Economics Board Booster
Inflation: connect prices to purchasing power
The same basket of household goods costs ₹1,000 in one period and ₹1,100 in the next. Calculate the percentage rise in its cost. If the household budget stays unchanged, what happens to purchasing power?
Show worked answer and common mistake
Percentage rise = ((1,100 − 1,000) ÷ 1,000) × 100 = 10%. With an unchanged budget, the household can buy less of the same goods. This illustrates reduced purchasing power; one basket alone does not establish the economy’s official inflation rate.
Common mistake: A rise in one item’s price is not sufficient to define general inflation.
Disguised unemployment: use the output clue
Six family members work on a farm. Two move to another occupation, but farm output remains unchanged. Identify the unemployment illustrated and explain the clue.
Show worked answer and common mistake
Disguised unemployment is illustrated: some workers are engaged in work but are not adding to output. The unchanged output after two leave indicates that these two workers were surplus to the farm’s current productive requirement.
Common mistake: The workers appeared employed. The key clue is unchanged output, not simply working on a farm.
CBSE Class 12 Economics Board Booster
National income: make both adjustments
GDP at market price is ₹1,800 crore, depreciation is ₹100 crore and net indirect taxes are ₹150 crore. Calculate NDP at factor cost.
Show worked answer and common mistake
NDP at factor cost = GDP at market price − depreciation − net indirect taxes = 1,800 − 100 − 150 = ₹1,550 crore. Subtracting depreciation moves from gross to net; subtracting net indirect taxes moves from market price to factor cost.
Common mistake: The result is domestic income. Do not label it national income without the net factor income from abroad adjustment.
Multiplier: show the assumption and working
In a simple two-sector model with spare capacity, MPC is 0.75. Autonomous investment increases by ₹50 crore. Find the investment multiplier and the equilibrium increase in income.
Show worked answer and common mistake
Multiplier k = 1 ÷ (1 − MPC) = 1 ÷ 0.25 = 4. Increase in income = k × increase in investment = 4 × 50 = ₹200 crore, under the stated model assumptions.
Common mistake: Use 1 − MPC in the denominator. The multiplier is 4, not 0.25.
CBSE Class 11 Microeconomics Foundation Pack
Demand: separate movement from shift
The price of a normal good falls while income, tastes and prices of related goods remain unchanged. What happens to quantity demanded and why?
Show worked answer and common mistake
Quantity demanded increases because the good becomes cheaper, creating an extension of demand along the same demand curve. The demand curve itself does not shift because the other determinants are unchanged.
Common mistake: A price change causes movement along the curve; do not call it an increase in demand unless a non-price determinant changes.
Elasticity: read the percentage response
Price falls by 10% and quantity demanded rises by 20%. Find the magnitude of price elasticity of demand using the percentage method.
Show worked answer and common mistake
Magnitude of elasticity = percentage change in quantity demanded ÷ percentage change in price = 20 ÷ 10 = 2. Demand is elastic because the magnitude is greater than 1.
Common mistake: For classification, use the magnitude. Do not report −2 as though the negative sign changes the elastic/inelastic category.
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