TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

TN State Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 1.
What do you mean by Social Responsibility?
Answer:
Every businessman earns prosperity from business end should give back the benefit of this prosperity to society. This benefit is moral responsibility of business.

Question 2.
Give the meaning of Social Power.
Answer:
Businessmen have considerable social power. Their decisions and actions affect ; the lives and fortunes of the society. They collectively determine for the nation such important matters as level of employment, j rate of economic progress and distribution of income among various groups.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 3.
What is a free enterprise?
Answer:
A business enterprise which accepts and discharges social obligations enjoys greater freedom. Thus, social responsibilities are essential for avoiding governmental action against business. Such action will reduce the freedom of decision making in business.

Question 4.
Who are called Stakeholders?
Answer:

  • A business organisation is a coalition of several interest groups are called stakeholders.
    eg: Shareholders, customers, employees suppliers etc.
  • Business should therefore work for the interest of all of them rather than for the benefit of shareholders / owners alone.

Question 5.
What is ethical Responsibility?
Answer:
This includes the behaviour of the firm that is expected by society butnot codified in law. For example, respecting the religious sentiments and dignity of people while advertising for a product. There is an element, of voluntary action in performing this responsibility.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 6.
Define the Concept of Social Responsibility?
Answer:
The term social responsibility is defined in various ways. Every businessman earns prosperity from business and should give back the benefit of this prosperity to society. This is voluntary. This benefit is the moral responsibility of business. As this benefit is supposed to be passed on to society, it can be said to be social responsibility of business.

Question 7.
Why you do think Social Responsibility of business is needed?
Answer:

  1. Self-Interest.
  2. Creation of society.
  3. Social power.
  4. Image in the society.
  5. Public Awareness.
  6. Free Enterprise.
  7. Law and Order.
  8. Moral Justification.
  9. Socio-Cultural Norms.
  10. Professionalism.
  11. Trusteeship.

Question 8.
What are the benefits derived by employees of a Socially Responsible business enterprise?
Answer:
Business needs employees or workers to work for it. These employees put their best effort for the benefit of the business. So it is the prime responsibility of every business to take care of the interest of their employees.
If the employees are satisfied and efficient, then the only business can be successful. The responsibilities of business towards its employees include:

  1. Timely and regular payment of wages and salaries.
  2. Proper working conditions and welfare amenities.
  3. Opportunity for better career prospects.
  4. Job security as well as social security like facilities of provident fund, group insurance, pension, retirement benefits, etc.
  5. Better living conditions like housing, transport, canteen, creeches etc.
  6. Timely training and development.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 9.
Enumerate the points relating to why business units are Socially Responsible?
Answer:
Responsibility towards owners: Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to:

  1. Run the business efficiently.
  2. Proper utilisation of capital and other resources.
  3. Growth and appreciation of capital.
  4. Regular and fair return on capital invested.

Question 10.
List the kinds of Social Responsibility.
Answer:

  1. Economic Responsibility.
  2. Legal Responsibility.
  3. Ethical Responsibility.
  4. Discretionary Responsibility.

Question 11.
Explain in detail the concept and need for Social Responsibility?
Answer:
(i) Self-Interest:
A business. unit can sustain in the market for a longer period only by assuming some social obligations. Normally businessmen recognise that they can succeed better by fulfilling the demands and aspirations of society.

(ii) Creation of Society:
Business is a creation of society and uses the resources of society. Therefore, it should fulfil its obligations to society. Businessmen should respond to the demands of society and should utilise the social resources for the benefit of the people at large.

(iii) Social Power:
Businessmen have considerable social power. Their decisions and actions affect the lives and fortunes of the society.

(iv) Image – in the Society:
A business can improve its image in public by assuming social obligations. Good relations with workers, consumers and suppliers help in the success of business. Social obligations improve the confidence and faith of people in a business enterprise
.
(v) Public Awareness:
Now-a-days consumers and workers are well informed about their rights. Consumers expect better quality products at reasonable prices. Similarly, workers desire fair wages and other benefits.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 12.
Illustrate with examples the arguments for Social Responsibility?
Answer:
(i) Protection of Stakeholders Interest:
A business organisation is a coalition of several interest groups or stakeholders. Example – shareholders, customers, employees, suppliers, etc.

(ii) Promotion of Society:
Business is a sub-system of society. It draws support and sustenance from society in the form of inputs. Socially responsible behaviour is essential to sustain this relationship between business and society.

(iii) Assessment of Social Impact:
During the course of its fimctioning, a business enterprise makes several decisions and actions. Its activities exercise a strong influence on the interests and values of society.

(iv) Organised Social Power:
Large corpo-rations have acquired tremendous social power through their multifarious Operations. Social power may be misused in the absence of social responsibility.

(v) Legitimacy:
It is in the enlightened self interest of business to assume social responsibility. Social responsibility legitimises and promotes the economic objectives of business.

(vi) Competence:
Business organisations and their managers have proved their competence and leadership in solving economic problems.

(vii) Professional Conduct:
Professional managers are required to display a keen social sensitivity and serve the society as a whole. Social responsibility is one of the professional demands on managers. They adhere to the code of conduct and ethics applicable to respective area of operation.

(viii) Public Opinion:
Adoption of social responsibility as an objective will help to improve the public opinion of business.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 13.
What are the arguments against Social Responsibility?
Answer:
(i) Lack of Conceptual Clarity:
The concept of Social responsibility is very vague and amenable to different interpretations. There is no consensus on its meaning and scope. In such a situation, it would be futile as well as risky to accept social responsibility.

(ii) Dilution of Economic Goals:
By accepting social responsibility, business will compromise with economic goals.

(iii) Lack of Social Skill:
Business organisations and their managers are not familiar with social affairs.

(iv) Burden on Consumers:
If business deals with social problems, cost of doing business would increase. These costs will be passed on to consumers in the form of higher prices or will have to be borne by owners. This would lead to taxation without representation.

(v) Responsibility without Power:
Business organisations possess only economic power and not social power. It is unjust to impose social responsibilities with social power. If business is allowed to intervene in social affairs it may perpetuate its own value system to the detriment of society.

(vi) Misuse of Responsibilities:
Acceptance of social responsibilities will involve diversion of precious managerial time and talent on social action programmes. It may result in dilution of valuable corporate resources.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 14.
Discuss the different groups benefited out of Social Responsibility of business?
Answer:

TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics 1

(i) Business
(ii) Investors,
(iii) Employees,
(iv) Government,
(v) Competitors,
(vi) Society,
(vii) Customers,
(viii) Suppliers.

(i) Responsibility towards Owners:
Owners are the persons who own the business. They contribute capital and bear the business risks. The primary responsibilities of business towards its owners are to
(a) Run the business efficiently
(b) Proper utilisation of capital and other resources.
(c) Growth and appreciation of capital.
(d) Regular and fair return on capital invested.

(ii) Responsibility towards Investors:
Investors are those who provide finance by way of investment in debentures, bonds, deposits etc. Banks, financial institutions, and investing public are all included in this category. The responsibilities of business towards its investors are:
(a) Ensuring safety of their investment,
(b) Regular payment of interest,
(c) Timely repayment of principal amount.

(iii) Responsibility towards Employees:
Business needs employees or workers to work for it. These employees put their best effort for the benefit of the business. So it is the prime responsibility of every business to take care of the interest of their employees. If the employees are satisfied and efficient, then the only business can be successful. The responsibilities of business towards its employees include:
(a) Timely and regular payment of wages and salaries.
(b) Proper working conditions and welfare amenities,
(c) Opportunity for better career prospects,
(d) Job security as well as social security like facilities of provident fund, group insurance, pension, retirement benefits, etc.
(e) Better living conditions like housing, transport, canteen, creches etc.
(f) Timely training and development.

(iv) Responsibility towards Suppliers:
Suppliers are businessmen who supply raw materials and other items required by manufacturers and traders. Certain suppliers, called distributors, supply finished products to the consumers. The responsibilities of business towards these suppliers are:
(a) Giving regular orders for purchase of goods,
(b) Dealing on fair terms and conditions,
(c) Availing reasonable credit period,
(d) Timely payment of dues.

(v) Responsibility towards Customers:
No business can survive without the support of customers. As a part of the responsibility of business towards them the business should provide the following facilities:
(a) Products and sendees must be able to take care of the needs of the customers,
(b) Products and services must be qualitative,
(c) There must be regularity in supply of goods and services.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 15.
How do you classify Social Responsibility?
Answer:
(i) Economic Responsibility:
A business enterprise is basically an economic entity and, therefore, its primary social responsibility is economic i.e., produce goods and services that society wants and sell them at a profit. There is little discretion in performing this responsibility.

(ii) Legal Responsibility:
Every business has a responsibility to operate within the laws of the land. Since these laws are meant for the good of the society, a law abiding enterprise is a socially responsible enterprise as well.

(iii) Ethical Responsibility:
This includes the behaviour of the firm that is expected by society but not codified in law. For example, respecting the religious sentiments and dignity of people while advertising for a product. There is an element of voluntary action in performing this responsibility.

(iv) Discretionary, Responsibility:
This refers to purely voluntary obligation that an enterprise assumes, for instance, providing charitable contributions to educational institutions or helping the affected people during floods or earthquakes. It is the responsibility of the company management to safeguard the capital investment by avoiding speculative activity and undertaking only healthy business ventures which give good returns on investment,

Question 16.
To identify ethical and unethical practices of business enterprises.
Answer:
(a) Ethical:

  1. Investors: Ensuring safety of their money and timely payment of interest.
  2. Employers: Provision of fair opportunities in promotions and training, good working environment and timely payment of salaries.
  3. Customers: Complete information of the service and product should be made available. Personal information of the customers. Should not be used on personal gain.

(b) Unethical:

  1. Resorting to dishonesty, trickery or deception.
  2. Distortion of facts to mislead or confuse.
  3. People emotionally by exploiting their vulnerabilities.
  4. Greed to a mass excessive profit.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 17.
To understand the level of discharging Socially Responsibility practises of business units.
Answer:
Business is an economic activity. It is argued by the opponents of social responsibility that basic function of a business enterprise is to look into economic viability of its operations. It is the government to look after interests of the society. The prime responsibility of assuming social responsibility should therefore be of the government and not of the business enterprises.

Question 18.
To analysis the impact of Social Responsibility Of Small, Medium and Large scale enterprises in the Society.
Answer:

  1. Respect for the employers right.
  2. Ensuring operationaEsafety and security at the work place.
  3. Occupational health.
  4. Good governance and good practices.
  5. Compliance to the laws.

Question 19.
To clearly distinguish the benefits derived by different stakeholders while* discharging of Social Responsibility of business units.
Answer:
CSR should not be taken to include steps taken as a result of legal obligations to prevent or mitigate harm. Ih that regard a growing number of theorists are now suggesting that companies have a fundamental existential obligation to adequately plan for and manage sustainability issues in order to avoid breaches of directors duties as a result of a failure to mitigate risk in this area.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 20.
To evaluate the impact of social responsibility on profitability of business unit.
Answer:
There is an impressive history associated with the evolution of the concept and definition of corporate social responsibility. In this article the author traces the evolution to the CSR construct beginning in the 1950’s which marks the modem area of CSR.

Question 21.
To predict methods by which social responsibility can be discharged.
Answer:
We use data from different sources to analyze whether actual environmental outcomes such as emissions and environmental fines can be explained by lagged environmental ratings.

Question 22.
To depict through pictures, the stakeholders position in a company taking socially responsible activities.
Answer:
In order to completely understand the context of corporate social responsibility you must first understand the role stakeholders for an organization. The next section will describe the role of stakeholders. Two types of primary stakeholders and secondary stakeholders.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Choose the Correct Answer:

Question 1.
Which type of Responsibility gives the benefit to the Society out of its profits earned?
(a) Legal
(b) Ethical
(c) Moral
(d) Economic
Answer:
(c) Moral

Question 2.
The Stakeholders of Socially Responsible j business units are except:
(a) shareholders
(b) employees
(c) government
(d) company
Answer:
(d) company

Question 3.
Assuming Social Responsibility of business helps the enterprise in:
(a) increase profit
(b) decrease profit
(c) sustainability
(d) equilibrium
Answer:
(c) sustainability

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Question 4.
Socially Responsible business provides goods at:
(a) high price
(b) low price
(c) reasonable price
(d) moderate price
Answer:
(c) reasonable price

Question 5.
Social Responsibility towards employees represents the following except:
(a) reasonable remuneration
(b) proper facilities
(c) Social security
(d) exploitation
Answer:
(d) exploitation

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

Samacheer Kalvi 11th Commerce Notes Chapter 17 Social Responsibility of Business and Business Ethics

→ A business entity carries out economic activities on a regular basis to earn profit. These entities spend money on different aspects of business which do not give them profit directly. For example businessmen take the responsibility of maintaining and developing gardens and parks on streets and squares in cities.

→ Some businessmen engage themselves in research for improving the quality of products, some provide housing transport education and health to their families. In some places businessmen provide free medical facility to poor patients.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 17 Social Responsibility of Business and Business Ethics

→ Sometimes they also sponsor games and sports at national as well as international level. Social responsibility of business broadly divided into four categories. Which are as follows. i.e.,
(i) Economic Responsibility,
(ii) Ethical responsibility,
(iii) Legal responsibility,
(iv) Discretionary responsibility.

→ Responsibility of business towards different interest groups,
(i) Business,
(ii) Investors,
(iii) Employees,
(iv) Government,
(v) Competitors,
(vi) Society,
(vii) Customer,
(viii) Suppliers.

TN Board 11th Commerce Important Questions

TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

TN State Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 1.
Who is a Franchisee?
Answer:
The individual who acquires the right to operate the business or use the trademark of the seller is known as the franchisee.

Question 2.
State two disadvantages of franchising?
Answer:
(i) Franchising fees:
The initial franchising fee and the subsequent renewal fee can be very high.

(ii) Fixed royalty payment:
The franchisee has to make payment of royalty to the franchiser on a regular basis.
This considerably reduce the income of the franchisee.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 3.
Who is a factor?
Answer:
Firms sell goods on cash and credit basis. When goods are sold on credit basis, bills are drawn on the buyer by the seller. In case of small and medium business.

Question 4.
Define outsourcing.
Answer:
Recently a new type of business in service sector has become popular in the world. It is called the Business Process Outsourcing (BPO). BPO refers to outsourcing the work which is routine in nature, to an outside agency. This practice was initiated in United States of America in few companies.

Question 5.
What is need for outsourcing?
Answer:

  • Focussing on core activities.
  • Operational efficiency through outsourcing .
  • Improved customer satisfaction.
  • Increasing profit.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 6.
State the importance Of BPO.
Answer:

  1. To focus on key function.
  2. Benefit of specialization / efficiency.
  3. Cost cutting.
  4. Economic growth and development.
  5. Increasing profit.
  6. Catering to the dynamic demand.

Question 7.
What are the benefits of KPO?
Answer:

  1. Usage of best skills.
  2. Ultimate use of knowledge.
  3. Finding solution to complex problem.
  4. Reduction of expenditure.
  5. Special focus on principal functions.
  6. Outsources reduces risk.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 8.
Define Logistics.
Answer:
Logistics can be viewed as a logical extension of transportation and related areas to achieve an efficient and effective goods distribution system.

Question 9.
What is the need for logistics?
Answer:

  1. Logistics implies that a integrated view of member of different activities and functions may be required.
  2. All firms are viewed as a collection of primary and secondary activities.

Question 10.
Write about the importance of Logistics.
Answer:
Logistics management is also important for creating visibility into a company’s supply chain. Logistics managers can use this information for process optimisation and avoiding potential disruptions.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 11.
What are the types of Logistics Applications?
Answer:
The Logistrics Management can be classified on the basis of applications from various dimensions in the process of examining and evaluating alternatives.
They are:

  • Decision-wise.
  • Actor-wise.
  • Inbound logistics and outbound logistics.

Question 12.
What do you mean by e.-commerce?
Answer:
e- commerce or Electronic Commerce is the buying and selling of goods and services through electronic networks like internet.

Question 13.
What are the type of franchising?
Answer:
(i) Product / trade name franchising:
In this type, the franchisee exclusively deals with a manufacturer’s product. Examples include Kidzee, French Loaf outlets, Bharat Petroleum bunks,Patanjali products, etc.

(ii) Business format franchising:
When a franchiser awards rights covering all business aspects as a complete business package to the franchisee it is called as business format franchising, eg: McDonald’s, Pizza Hut. KFC, Hot > breads, Titan, Color plus, Zodiac, Lakme beauty parlour.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 14.
List the steps in factoring process.
Answer:
(i) The firm enters into a factoring arrangement with a factor, which is generally a financial institution, for invoice purchasing.
(ii) Whenever goods are sold on credit basis, an invoice is raised and a copy of the same is sent to the factor.
(iii) The debt amount due to the firm is transferred to the factor through assignment and the same is intimated to the customer.
(iv) On the due date, the amount is collected by the factor from the customer.
(v) After retaining the service fees, the remaining amount is sent to the firm by the factor.

TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India 1

Question 15.
Describe the benefits of Logistics.
Answer:
Generally a good transportation, storage, handling and information infrastructure helps in efficient logistics management. In India most of the transportation happens through road and rail. Pipeline and Water transport are to be fully utilized further. Air transportation is used for high value commodities. In transportation infrastructure the following framework can be used to identify the problem areas like Right of way, Vehicle, Motive power, Terminals, Operations/systems.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 16.
Explain the points of differences between Logistics and Supply Chain Management.
Answer:

Logistics

 Supply chain management
Logistics Management deals with the efficient management of a static gap between demand and supply. Supply Chain Management tries to identify the dynamic nature of the value creation itself such as responsiveness, quality and design.
Logistics management focuses on cost minimisation. Supply chain management focuses only profit maximisation.
Logistics management activity is supply driven. Supply chain management is more demand driven.

whereas Hence, it aims for an effective management response over the longer run. SCM focuses on profit maximization rather than cost minimization. LM activity is supply driven and SCM is more demand driven.

Question 17.
What is the impact of e-commerce on buyers?
Answer:

  1. Buyers could have a global access to information about variety of products and services available in the market.
  2. They could buy the products/services round the clock from anywhere in world.
  3. The prices of products bought through e-commerce tend to be relatively lower than those purchased physically in the conventional shops due to offers, discount etc.
  4. Electronic and software products could be downloaded immediately after purchase through e-commerce mode.
  5. Customers could participate in e auction which is one of the facets of e-commerce and get contract in a free and fair manner.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 18.
Enumerate the characteristics of franchising.
Answer:
Characteristics of franchising:

  1. Franchise relationship is based on an agreement which lays down terms and conditions of this relationship.
  2. The term of franchise may be for 5 years or more. The franchise agreement may be renewed with the mutual consent of the parties.
  3. The franchisee gives an undertaking not to carry any other competing business during the term of the franchise; and the franchiser gives an undertaking not to terminate the franchise agreement before its expiry except under situations which may justify the termination of the franchise agreement.
  4. The franchisee agrees to pay specified royalty to the franchiser, as per terms of the franchise agreement.
  5. Franchise means selling the same product and maintaining a similar type of shop decor (i.e. style of interior decoration) for which franchiser provides assistance to franchisee in organising, merchandising and management. The franchiser virtually sets up the business for the franchisee.

Question 19.
Elucidate the features of factoring.
Answer:
Features of Factoring:

(i) Maintenance of book-debts:
A factor takes the responsibility of maintaining the accounts of debtors of a business institution.

(ii) Credit coverage:
The factor accepts the risk burden of loss of bad debts leaving the seller to concentrate on his core business.

(iii) Cash advances:
Around eighty percent of the total amount of accounts receivables is paid as advance cash to the client.

(iv) Collection service:
Issuing reminders, receiving part payments, collection of cheques form part of the factoring service.

(v) Advice to clients:
From the past history of debtors, the factor is able to provide advices regarding the credit worthiness of customers, perception of customers about the products of the client, etc.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 20.
Describe the benefits of Outsourcing.
Answer:
(i) Focusing on Core Activities:
Companies can focus on their core competence, a few areas where the company has distinct capability. The rest of the activities (non core) can be outsource to outside agencies.

(ii) To Fill up Economic Development:
Outsourcing stimulates entrepreneurship, encourages employment opportunities,. expands exports, enables tremendous growth of the economy.

(iii) Encourages Employment Opportunities:
Companies that are outsourcing their non core activities provide chances for other small business units to take up the activities. This paves way for more job opportunities and new employment avenues.

(iv) Reduction in Investment:
Companies through outsourcing avails the services of outsiders which in turn reduces the investment requirements. The amount so available can.be utilized productively and this increases the profits.

(v) Quest for Excellence:
Outsourcing enables the firms to pursue excellence in two ways namely excelling themselves inthe activities they do and excel outsiders by extending their capabilities through contracting out.

Question 21.
Explain the points of differences between BPO and KPO.
Answer:

BPO

 KPO
BPO means getting contractual services of external companies or group of companies to complete special work or process of a company.  KPO refer to outsourcing of Knowledge based Process. It means obtaining high end knowledge work from outside the organization in order to run the business successfully and in cost effective manner.
For example call centres, data entry etc. This reduces the expenditure by using cheap labour available in developing countries like India, China etc.  In short KPO firms get knowledge related, information related, work done from outside firm and it involves high value work carried highly skilled staff.
To focus on key function.  Usage of best skills.
Benefit of specialization / efficiency.  Ultimate use of knowledge.
Cost cutting.  Finding solution to complex problem.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 22.
Write a note on e-commerce models.
Answer:
(i) Business to Customers (B2C):
This is fastest growing segment in e-commerce spare. Under this model, business concern sells directly to consumers.

(ii) Business to Business (B2B):
Under the model, business concerns transact with one another through internet. For instance, Snapdeal, Flipkart, Alibaba, Indamart, Trade India. Com etc.

(iii) Consumer to Consumer (C2C):
Under this model, customers sell directly to other customers through online classified advertisement or through auction or through mobile or through market places. Example. Indian ventures in C2C are Kraftly App (buying and selling anythings) which deals in hand made products of a wide range once again store.com is a Website that buys pre-owned women’s fashion products. Other players are quirkr,01x, ebay etc.

(iv) Customer to Business (C2B):
This model is reverse to auction model. Products like automobile, electronic items furniture and similar product are traded by customer through websites.
eg: Naukri.com and Monster.com are examples of Indian companies operating in this domain.

(v) Business to Government (B2G):
This model envisages selling products and servicesby business consumerto Government organization For instance TCS operates the passport application process for the Government of India as part offline process.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 23.
You are a small scale manufacturer of ignition coils for automobiles, located near Ranipet. Explain how will you avail of financial credits through factoring if you get orders from
a. Ford India, Chennai
b. Maruti Suzuki, Gucgaon
c. Kun Hyundai, Seoul.
Answer:
Mainly used in advertising industry, construction, house hold appliances industry, electrical industry, furniture industry and transportation.

Question 24.
Identify methods of moving goods.
Answer:
In contrast of pull and push methods. Push method is a system that is used in traditional production when work or output finished it is pushed to the station. While pull method is pulling output from the proceeding station as it needed.

Question 25.
Draft ways and means of overcoming the problems in Logistics.
Answer:
International organisations have a key role to play in meeting this challenge, including by rapidly but accurately assessing the extent of available host nation support in order to plan for the delivery of the necessary additional logistic support from other sources.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 26.
Project the future of Logistics Management in India.
Answer:
Logistics management functions that are apart of ERP systems are usually integrated with other business function in the system. Like sales finance procurement and human resources. More specialized and warehouse management.

Choose the Correct Answer:

Question 1.
A continuing relationship which provides a licence privileges to do business and provides training, merchandising for a consideration is called:
(a) franchising
(b) factoring
(c) supply chain management
(d) exchange
Answer:
(a) franchising

Question 2.
A condition where a factor agrees to provide complete set of services like financing, debt collection, consultancy is called:
(a) maturity factoring
(b) national factoring
(c) full service factoring
(d) recourse factoring
Answer:
(c) full service factoring

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 3.
Buying and selling of goods through electronic network is known as:
(a) e-commerce
(b) internet
(c) website
(d) trade
Answer:
(a) e-commerce

Question 4.
An organization carrying out activities to move goods from producer to consumer is:
(a) transport
(b) logistics
(c) channels
(d) marketing
Answer:
(a) transport

Question 5.
The role of government in logistics management is through:
(a) legislations
(b) governance
(c) transport
(d) distribution
Answer:
(d) distribution

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 6.
The main benefit of Logistics is:
(a) productivity
(b) cost minimisation
(c) profitability
(d) storage
Answer:
(b) cost minimisation

Question 7.
What aims for an effective management response over the longer run?
(a) Logistics
(b) Supply Chain Management
(c) Demand
(d) Supply
Answer:
(a) Logistics

Question 8.
The model that identifies alternatives, criteria for decision making and analyse alternatives to arrive at the best choice is:
(a) routing model
(b) scheduling model
(c) inventory model
(d) alternative Analysis
Answer:
(b) scheduling model

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 9.
A company under outsourcing transfers activities which are:
(a) core
(b) non-core
(c) business
(d) non business
Answer:
(b) non-core

Question 10.
Business units can reduce expenditure by outsourcing front office work like:
(a) paper work
(b) file work
(c) billing
(d) manufacturing
Answer:
(b) file work

Question 11.
The main benefit of outsourcing is:
(a) productivity
(b) cost reduction
(c) skill
(d) units
Answer:
(b) cost reduction

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Question 12.
Outsourcing job is given to developing countries specifically for:
(a) cheap labour
(b) land
(c) capital
(d) factors
Answer:
(a) cheap labour

Question 13.
Outsourcing is carried out for the benefit of:
(a) global village
(b) transport
(c) factory
(d) time and money
Answer:
(d) time and money

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 16 Emerging Service Business in India

Samacheer Kalvi 11th Commerce Notes Chapter 16 Emerging Service Business in India

→ Franchising is used by Business for marketing and distributing products and services. Franchiser means the owner of the Business who provides the Business.

→ Franchisee:
The individual who acquires the right to operate the business or use the trademark of the seller is known as the franchisee.

→ Factoring:
Firms sell goods on cash and credit basis. When goods are sold on credit basis bills are drawn on the buyer by the seller in case of small and medium business a considerable part of their working capital is tied down in bills receivables.

→ Logistics:
Logistics can be viewed as a logical extension of transportation and related areas to achieve an efficient and effective goods distribution system.

→ Outsourcing:
Recently a new type of business in service. Sector has become popular in the world. It is called the Business process outsourcing (BPO). BPO refers to outsourcing the work which is routine in nature, to an outside agency. This practice was initiated in united states of America in few companies.

TN Board 11th Commerce Important Questions

TN Board 11th Commerce Important Questions Chapter 15 Insurance

TN State Board 11th Commerce Important Questions Chapter 15 Insurance

Question 1.
List any five important type of policies.
Answer:

  1. Whole life policy.
  2. Endowment life assurance policy.
  3. Joint life policy (JLP).
  4. Annuity Policy.
  5. Children’s Endowment policy.
  6. Fire Insurance.
  7. Marine Insurance.
  8. Health Insurance.
  9. General Insurance.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 2.
What is health insurance?
Answer:

  1. In 1980’s most of the hospitals in India were government owned and treatment was free of cost. At the same time Insurance companies introduced ‘Mediclaim policy’ Health Insurance is taken as safeguard against rising medical costs.
  2. Disability resulting from illness or accident may be peril to family because it not only cuts off income but also creates large medical expenses.

Question 3.
Define Insurance.
Answer:
“Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risk that attacks to individuals”.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 4.
Give the meaning of crop insurance.
Answer:
This policy is to provide financial support to farmers in case of a crop failure due to drought or flood. It generally covers all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses etc.

Question 5.
Write a note on IRDAI.
Answer:
IRDAI – Insurance Regulatory Development and Authority of India is the statutory, independent and apex body that governs, regulates and Supervises the Insurance Industry in India. It was constituted in the year 2000 by Parliament of India Act called IRDAI-Act, 1999. Presently IRDAI headquarters is in Hyderabad.

Organisational Setup of IRDAI: IRDAI is a ten member body consists of:

  1. One Chairman ( For 5 years & Maximum age -60 years).
  2. Five whole-time Members (Not 5 years and Maximum Age- 62).
  3. Four part-time Members (Not more than 5 years).
  4. The chairman and members of IRDA are appointed by the Government of India.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 6.
Explain the various types of Insurance.
Answer:
Life Insurance:
Life Insurance maybe defined as a contract in which the insurance company called insurer undertakes to insure the life of a person called assured in exchange of a sum of money called premium which may be paid in one lump sum or monthly, quarterly, half yearly or yearly and promises to pay a certain sum of money either on the death of the assured or on expiry of certain period.

Non- Life Insurance:
It refers as the insurance not related to human but related to properties.

Fire Insurance:
Fire insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to make good any loss or damage caused by a fire during a specified period upto the amount specified in the policy.

A claim for loss by fire must satisfy the following two conditions:
(i) There must be actual loss; and
(ii) Fire must be accidental and non-intentional.

Marine Insurance:
Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. The insured pays the premium in consideration of the insurer’s (underwriter’s) guarantee to make good the losses arising from marine perils or perils of the sea.
Marine perils can be Collision of ship with the rock, fire, ship attacked by the enemies, etc.

Health Insurance:
In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 7.
Explain the principles of insurance.
Answer:
(i) Utmost Good Faith:
According to this principle, both insurer and insured should enter into contract in good faith. Insured should provide all the information that impacts the subject matter. Insurer should provide all the details regarding insurance contract.

(ii) Insurable Interest:
The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract, eg: A businessman has insurable interest in his stock of goods.

(iii) Indemnity:
Indemnity means security or compensation against loss or damages. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss. This principle ensures that the insured does not make any profit out of the insurance. This principle of indemnity is applicable to property insurance alone.

eg: A businessman gets his stock of goods insured for ₹ 5,00,000. If the goods are destroyed by the fire, the insurance company will be liable to pay compensation for the loss caused to the insured. However, maximum compensation shall be ₹ 5,00,000 even if loss is more than this. “The principle of indemnity is not applicable to life insurance because one cannot estimate the loss due to the death of a person”.

(iv) Causa Proxima:
The word ‘Causaproxima’ means ‘nearest cause’. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct. The direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.

(v) Contribution:
The same subject matter may be insured with more than one insurer then it is known as ‘Double Insurance’. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.

eg: A businessman gets his factory insured against fire for ₹ 10,00,000 with insurer A and ₹ 5,00,000 with insurer B. Due to fire, a loss of ₹ 1,50,000 occurred. Then, insurers A and B will contribute the loss in the ratio of 2 : 1. A will pay ₹ 1,00,000 and B will pay ? 50,000.

(vi) Subrogation:
Subrogation means ‘stepping the shoes on others’. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.

eg: Mr. B gets his motor car insured. Some of its parts got damaged at a road accident. He gets the insurance claim and gets the damaged parts replaced with new ones. In this case the damaged parts will be taken by the insurance company. The insured has no right over the damaged parts since they had already got compensation for the damaged parts.

(vii) Mitigation:
In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 8.
Discuss the causes of risk.
Answer:
Causes of Business Risks :
Business risks arise due to. a variety of causes, which are classified as follows:

(i) Natural Causes:
Human beings have little control over natural calamities like flood, earthquake, lightning, heavy rains, famine, etc. These result in heavy loss of life, property, and income in business.

(ii) Human Causes:
Human causes include such unexpected events like dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.

(iii) Economic Causes:
These include uncertainties relating to demand for goods, competition, price, collection of dues from customers, change of technology or method of production, etc. Financial problems like rise in interest rate for borrowing, levy of higher taxes, etc., also come under this type of causes as they result in higher unexpected cost of operation of business.

(iv) Other Causes:
These are unforeseen events like political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates, etc. which lead to the possibility of business risks.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Question 9.

(a) Sanjana insured her factory for ₹ 5 Lakh against fire. Due to fire she suffered a loss of ₹ 2 lakh. How much amount she can recover from the insurance company? Why?
Answer:
(i) Sanjana insured her factory value worth ₹ 5 lakhs against fire.
(ii) She suffered loss of ₹ 2 lakhs. She can get ₹ 2,00,000 only from insurance company.
(iii) If the loss due to fire exceeds ₹ 5,00,000 she cannot get actual loss on compensation (subject to average clause). She will get only ₹ 2,00,000.

(b) A factory owner gets his stock of goods insured, but he hides the fact the electricity board has issued him a statutory warning letter to get his factory’s wiring changed. Later on, the factory catches fire due to short circuit of wiring. Can he claim compensation?
Answer:
No, he cannot claim compensation. Because already electricity board has issued him a statutory warning letter to get his factory’s wiring changed. Due to inadequate wiring the factory catches fire so he cannot get compensation.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Choose the Correct Answer:

Question 1.
The basic principle of insurance is:
(a) insurable interest
(b) co-operation
(c) subrogation
(d) proximate causa
Answer:
(a) insurable interest

Question 2.
__________ is not a type of general insurance.
(a) Marine Insurance
(b) Life Insurance
(c) Fidelity Insurance
(d) Fire Insurance
Answer:
(b) Life Insurance

Question 3.
Which of the following is not a function of insuranfce?
(a) Lending Funds
(b) Risk sharing
(c) Capital formation
(d) Protection of life
Answer:
(d) Protection of life

Question 4.
Which of the following in not applicable in insurance contract?
(a) Unilateral contract
(b) Conditional contract
(c) Indemnity contract
(d) Inter-personal contract
Answer:
(c) Indemnity contract

Question 5.
Which one of the following is a type of marine insurance?
(a) Money back
(b) Mediclaim
(c) Hull insurance
(d) Cargo insurance
Answer:
(d) Cargo insurance

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 15 Insurance

Samacheer Kalvi 11th Commerce Notes Chapter 15 Insurance

→ The life of every human being is exposed to many risks in the day to day life. Many people are affected by diseases: many meet accidents: These risks sometimes amount to death. In the same way business concerns also face with many uncertainties due to fire, flood, earthquake, disappearance of market due to change of fashions and tastes etc. so, any business is exposed to a lot of risks.

→ There is no business without involving risks. Giying protection against various kinds of risks is an important aspect in business activities. Insurance provides the protection against risks involved uncertainties in business as well as life. Insurance is nothing but socialization of risks. Insurance companies indemnify the loss of the insured.

→ A family generally depends on the income brought in by the bread winner. But when a death suddenly occurs, the family may be left in very different situation. Uncertainty is inherent in human life. Insurance substitutes this uncertainty by providing financial compensation.

TN Board 11th Commerce Important Questions

TN Board 11th Commerce Important Questions Chapter 14 Transportation

TN State Board 11th Commerce Important Questions Chapter 14 Transportation

Question 1.
Define transport.
Answer:
According to K.K. Sexena, “the transport system acts with reference to the area it serves in the same way as a candle does in a darkroom”.

Question 2.
State any two services rendered by transport.
Answer:

  1. It increases the efficiency of production.
  2. It stimulates wants by increasing quantity and variety of consumer goods.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Question 3.
Write any two advantages of water transport.
Answer:

  1. It is considered as the cheapest mode of transport among the other modes of transport.
  2. It is very much suitable to heavy loads.
  3. It is eminently suitable for the carriage of fragile goods like glassware, earth ware etc., without causing damage.

Question 4.
What is bill of lading?
Answer:
Bill of Lading is a document containing the terms and conditions of the contract of carriage. It is issued by the shipping company and signed by the captain of the ship. It acknowledges the receipt of the goods described in it on board the ship.

Question 5.
What is charter party?
Answer:
When goods are to be consigned in large quantity, it is advantageous to hire the whole – or substantial part of the ship. The document through which this contract is made is known as ‘Charter Party’ may also be known as ‘Voyage Charter’ or ‘Time Charter’.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Question 6.
Explain different types of transport.
Answer:
Surface Transport:
Transport of people and goods by land vehicles is known as Surface transport. It is also called as ‘Land Transport’.

(i)Pack Animals:
Animals like horse, mule, donkey camel, and elephant etc., are used for carrying small loads in backward areas, hilly tracks, forest regions and deserts known as pack animals.

(ii)Bullock Carts:
It constitutes the predominant form of rural road transport in India for goods traffic and to some extent for passengers’ traffic. It links up the villages with the nearby markets and railway stations.

(iii) Road Transport:
Road Transport is one of the most promising and potent means suitable for short and medium distances.

(iv) Motor Lorries and Buses:
From the dawn of civilization, people have been endeavoring to form roads and use wheeled vehicles to facilitate transport of men and materials. The credit of revolutionizing the road transport and introducing the elements of speed and greater carrying capacity into the system goes to motor lorries and buses.

(v) Tramways:
It made their appearance in the 19th century as a form of transport suitable for big cities. Tramways were initially horse drawn later steam-powered and now electrically operated. Its carrying capacity is large.

(vi) Railway Transport:
The invention of steam engine by James Watt, revolutionized the mode of transport all over the world. Railway, as a mode of transport is the most organized transport undertaking all over the world. Recent trends in Rail Transport. Metro Rail, Mono Rail, Bullet Transport.

(vii) Water Transport:
“Water is a free gift of nature’ Human civilization through gradual application of science and technology, h ave utilized water resources for economic, political and military activities. Remarkable. advancements are taking place in water transport due to considerable improvement in the construction* design motive power, speed and safety of ships and boats. Water transports are of two types:
(i) Inland waterways,
(ii) Ocean waterways.

(viii) Air Transport:
Air transport is the fastest and the costliest mode of transport. Commercial air transport is now one of the most prominent modes of overseas transport.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Question 7.
Discuss the advantages of transport.
Answer:
Advantages of Railways:

  • Railways are well suited for carrying heavy and bulky goods over long distances.
  • It can provide long distance travel throughout the day and night with unbroken services.
  • It can provide better production and safety to the goods than motor transport. The goods generally carried in closed wagons are not exposed to sun, rain etc.

Advantages of inland waterways:

  • It is considered as the cheapest mode of transport among the other modes of transport.
  • It carries goods smoothly due to the absence of shaking and jolting during transit. It is eminently suitable for the carriage of fragile goods like glassware, earth ware etc., without causing damage.
  • Initial investment on river services as well as expenditure on their maintenance is much lesser as compared to road and rail transport.

Advantages of Air Transport:

  • It provides a regular, convenient, efficient and quick service.
  • Perishable goods like fruits, vegetables, egg, meat, etc., can be transported quickly.
  • It does not require huge investment for construction and maintenance of track like railways.
  • They provide comfortable services for passengers and safety for their goods.

Land Transport: Advantage (Pack Animals)

  • Pack Animals cheap means of transport.
  • Low cost of maintenance.

Bullock carts:

  • It is suitable for rural roads.
  • The cart .is locally made with local materials.

Motor trucks:

  • It can reach the interior and remote villages.
  • It is very well suited for short distance traffic.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Question 8.
Geographical separation between producer and consumer – Comment. Importing Crude oil from foreign country to Petroleum refineries – transporting through Truck tankers or Pipelines – Suggest with reason.
Answer:
Goods are produced at a few places but are required for use at different places. Geographical distance separate producers and consumers. This difficulty is removed by transport, eg: Knitwear products of Tirupur are sold throughout the world, Nellore rice is widely consumed in Chennai and other places with the help of various means of transport.

Import crude oil from foreign countries to petroleum refineries transporting through truck tankers is good. These tankers are specially designed for to carry crude oil, petrol and petroleum products, but pipelines sometimes suggested it is good because lesser cost.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Choose the Correct Answer:

Question 1.
Transport removes the hindrance of:
(a) time
(b) place
(c) person
(d) knowledge
Answer:
(b) place

Question 2.
Air consignment note is prepared in ______ forms.
(a) one
(b) two
(c) three
(d) four
Answer:
(c) three

Question 3.
_______ is a document acknowledging the receipt of goods by a carrier.
(a) Waybill
(b) Consignment note
(c) Charter
(d) Bill of lading
Answer:
(a) Waybill

Question 4.
Which is the fastest means of transport?
(a) Rail
(b) Road
(c) Sea
(d) Air
Answer:
(d) Air

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 14 Transportation

Samacheer Kalvi 11th Commerce Notes Chapter 14 Transportation

→ Movement of men and materials from one place to another is very indispensable carrying for out economic activities. Transport refers to such movement of men and materials from place to place transport enables the transfer of goods and services from the places of their origin to the places of their demand.

→ Thus transport helps the transformation of the structure of the economy. An economy which remained essentially rural in character gets quickly transformed an urban or semi urban economy thanks to better transport facilities.

→ The maximization of human satisfaction and economic welfare are the cordinal objectives of a modem welfare state. It is therefore essential that the scarce resources, which have alternate uses, must flow uninterruptedly and continuously transport eliminates the barriers among different countries, different places and region.

TN Board 11th Commerce Important Questions

TN Board 11th Commerce Important Questions and Answers

TN 11th Commerce Important Questions State Board English Medium 2021-2022.

TN State Board 11th Commerce Important Questions and Answers

Unit 1 Fundamentals of Business

Unit 2 Forms of Business Organisation

Unit 3 Service Business – I

Unit 4 Service Business – II

Unit 5 Service Business – II

Unit 6 Business Finance

Unit 7 Trade

Unit 8 International Business

Unit 9 The Indian Contract Act

Unit 10 Direct and Indirect Taxes

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

TN State Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 1.
What is Statistics?
Answer:

  1. Statistics as a science of estimates and probabilities – Boddington.
  2. Statistics may be defined as the collection, organisation, presentation, analysis and interpretation of numerical data – Croxton and Cowden.

Question 2.
What are the kinds of Statistics?
Answer:
There are two major types of statistics named as

  1. Descriptive statistics and
  2. Inferential statistics.

Question 3.
What do you mean by Inferential Statistics?
Answer:
The branch of statistics concerned with using sample data to make an inference about a population of data is called inferential statistics.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 4.
What are the kinds of data?
Answer:
In statistics, data are classified into two broad categories. They are

  1. Quantitative data and
  2. Qualitative data.

Question 5.
Define Correlation.
Answer:
Correlation is a statistical device that helps to analyse the covariation of two or more variables. Sir Francis Galton is responsible for the calculation of correlation coefficient.

Question 6.
Define Regression.
Answer:
Regression is the study of the relationship between the variables. The literal meaning of the word “regression” is “stepping back towards the average”.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 7.
What is Econometrics?
Answer:
Econometrics may be considered as the integration of economics, statistics and mathematics. Econometrics means economic measurement. Econometrics deals with the measurement of economic relationship.

Question 8.
What are the functions of Statistics?
Answer:

  1. Statistics presents the facts in a definite form
  2. It implies mass of figures
  3. It facilitates comparison
  4. It helps in formulating and testing
  5. It helps in prediction
  6. It helps in the formulation of suitable policies.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 9.
Find the Standard Deviation of the following data: 14,22,9,15,20,17,12,11.
Answer:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 1

Question 10.
State and explain the different kinds of Correlation.
Answer:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 2

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 11.
Mention the uses of Regression Analysis.
Answer:
The regression equation is used to estimate the value of Y corresponding to the known value of X. The line describing this tendency to regress or going back is called by Gabon as “Regression line”.

Question 12.
Specify the objectives of econometrics.
Answer:

  1. It helps to explain the behaviour of a forth coming period that is forecasting economic phenomena.
  2. It helps to prove the odd and established relationship among the variables or between the variables.
  3. It helps to establish the new theories and new relationships.
  4. It helps to test the hypotheses and estimation of the parameter.

Question 13.
Differentiate the economic model with econometric model.
Answer:

Economic model

 Econometric model
It is a local representation of knowledge.  It is an integration at dependent variable with explanatory variables to analyse the particular economic activity.
It is used for formulating the economic process at work.  It is used activity to a particular situation.
It is based on Economic laws and theory.  This is based on econometric investigation.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 14.
Discuss the important statistical organizations (offices) in India.
Answer:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 3

Question 15.
Elucidate the nature and scope of Statistics.
Answer:
Statistics is both as a science as well as an art in nature.
Scope: statistics are applied in every sphere of human activity.

(i) Statistics and economics:
It is useful in solving many economical problems.
Eg: Fluctuations in wages, prices, production and distribution of income.

(ii) Statistics and firms: It is used to confirm specifications of the product.

(iii) Statistics and commerce:
It is life blood of commerce.
Eg: Market survey to forecast future.

(iv Statistics and education:
It is useful to formulate policies to start new course according a changing environment.

(v) Statistics and planning:
Indispensable in planning. It is the statistical techniques are used for processing analysing and interpreting data both at Central and State Government.

(vi) Statistics and medicine:
Statistical tools are widely used in medicine.
Eg: To test the efficiency of a new drug. (T – Test)

(vii) Statistics and modern applications:
Especially in the field of computer and information technology, statistics is used.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 16.
Calculate the Karl Pearson Correlation Co-efficient for the following data.

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 4

Answer:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 5

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 6

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 17.
Find the regression equation for Y on X on Y for the following data:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 7

Answer:

TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics 8

Question 18.
Describe the application of Econometrics in Economics.
Answer:
Econometrics means economic measurements. Econometrics deals with the measurement of economic relationship.
Objectives of econometrics:
The general objectives of econometrics is to give empirical content to economic theory.
(a) Econometrics is applied in statistics and it is economic statistics
(b) Economics + Maths = Mathematical Economics
(i) Econometrics helps to explain the behaviour of a forthcoming period that is forecasting economic phenomena.
(ii) It helps to improve the old and established relationships among the variables or between the variables.
(iii) It helps to establish new theories and new relationships in economics.
(iv) Econometrics helps to test the hypotheses and estimation parameter. So econometrics as a combination of maths and statistics, applied in various fields of economics.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Multiple Choice Questions:

Question 1.
The word ‘statistics’ is used as:
(a) Singular
(b) Plural
(c) Singular and Plural
(d) None of above
Answer:
(c) Singular and Plural

Question 2.
Who stated that statistics as a science of estimates and probabilities?
(a) Horace Secrist
(b) R.A Fisher
(c) Ya-Lun-Chou
(d) Boddington
Answer:
(d) Boddington

Question 3.
Sources of secondary data are:
(a) Published sources
(b) Unpublished sources
(c) Neither published nor unpublished sources.
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 4.
The data collected by questionnaires are:
(a) Primary data
(b) Secondary data
(c) Published data
(d) Grouped data
Answer:
(a) Primary data

Question 5.
A measure of the strength of the linear relationship that exists between two variables is called:
(a) Slope
(b) Intercept
(c) Correlation coefficient
(d) Regression equation
Answer:
(c) Correlation coefficient

Question 6.
If both variables X and Y increase or decrease simultaneously, then the coefficient of correlation will be:
(a) Positive
(b) Negative
(c) Zero
(d) One
Answer:
(a) Positive

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 7.
If the points on the scatter diagram indicate that as one variable increases the other variable tends to decrease the value of r will be:
(a) Perfect positive
(b) Perfect negative
(c) Negative
(d) Zero
Answer:
(c) Negative

Question 8.
The value of the coefficient of correlation r lies between:
(a) 0 and 1
(b) 1 and 0
(c) -1 and +1
(d) -0.5 and +0.5
Answer:
(c) -1 and +1

Question 9.
The term regression was used by:
(a) Newton
(b) Pearson
(c) Spearman
(d) Galton
Answer:
(d) Galton

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 10.
The purpose of simple linear regression analysis is to:
(a) Predict one variable from another variable.
(b) Replace points on a scatter diagram by a straight-line.
(c) Measure the degree to which two variables are linearly associated.
(d) Obtain the expected value of the independent random variable for a given value of the dependent variable.
Answer:
(a) Predict one variable from another variable.

Question 11.
A process by which we estimate the value of dependent variable on the basis of one or more independent variables is called:
(a) Correlation
(b) Regression
(c) Residual
(d) Slope
Answer:
(b) Regression

Question 12.
If Y = 2 – 0.2X, then the value of Y intercept is equal to:
(a) -0.2
(b) 2
(c) 0.2X
(d) All of the above
Answer:
(b) 2

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 13.
In the regression equation Y = β<sub>0</sub> + β<sub>1</sub>, then Y is called:
(a) Independent variable
(b) Dependent variable
(c) Continuous variable
(d) None of the above
Answer:
(b) Dependent variable

Question 14.
In the regression equation X = β<sub>0</sub> + β<sub>1</sub>, then X is called:
(a) Independent variable
(b) Dependent variable
(c) Continuous variable
(d) None of the above
Answer:
(a) Independent variable

Question 15.
Econometrics is the integration of:
(a) Economics and Statistics
(b) Economics and Mathematics
(c) Economics, Mathematics and Statistics
(d) None of the above
Answer:
(c) Economics, Mathematics and Statistics

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 16.
Econometric is the word coined by:
(a) Francis Galton
(b) RagnarFrish
(c) Karl Pearson
(d) Spearsman
Answer:
(b) RagnarFrish

Question 17.
The raw materials of Econometrics are:
(a) Data
(b) Goods
(c) Statistics
(d) Mathematics
Answer:
(a) Data

Question 18.
The term Uiin regression equation is:
(a) Residuals
(b) Standard error
(c) Stochastic error term
(d) None
Answer:
(c) Stochastic error term

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Question 19.
The term Uiis introduced for the representation of:
(a) Omitted Variable
(b) Standard error
(c) Bias
(d) Discrete Variable
Answer:
(a) Omitted Variable

Question 20.
Econometrics is the amalgamation of:
(a) 3 subjects
(b) 4 subjects
(c) 2 subjects
(d) 5 subjects
Answer:
(a) 3 subjects

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

Samacheer Kalvi 12th Economics Notes Chapter 12 Introduction to Statistical Methods and Econometrics

→ Data: information about facts or numbers.

→ Standard deviation: The measures of central tendency serve to locate the centre of the distribution.

→ Mean: Central value is called a measure of central tendency or an average or a measure of locations.

→ Correlation: A statistical device that helps to analyse the covariation of two or more variables.

→ Regression: (Stepping back towards the average). It is the study of the relationship between the variables.

→ Econometrics: Integration of Economics, Statistics and Mathematics.

→ Statistics: Statistics is a grammar of science.

→ Econometrics:
“Econometrics may be defined as the social science in which the tools of economic theory, mathematics and statistical inference are applied to the analysis of economic phenomena” – Arthur S. Goldberger.

→ “Econometrics, as a result of certain outlook on the role of economics, consists of application of mathematical statistics to economic data to lend empirical support to the models constructed by mathematical economics and to obtain numerical results” – Gerhard Tinbergen.

→ Mean \(\begin{aligned}
\bar{X} &=\frac{X_{1}+X_{2}+X_{3}+X_{4}+\ldots .+X_{n}}{n} \\
&=\frac{1}{n} \sum_{i=1}^{n} X_{i}
\end{aligned}\)

→ Average Mean = \(\\bar{X}=\frac{X_{1}+X_{2}+X_{3}+\ldots X_{N}}{N}=\frac{\Sigma X}{N}\)

→ ΣX – Sum of all observations and
N – Total number of observations

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 12 Introduction to Statistical Methods and Econometrics

→ Arithmetic Mean – Assumed Mean Method
\(\overline{\mathrm{X}}=\mathrm{A}+\frac{\Sigma f d}{\Sigma f}\)

→ Standard Deviation.

→ Individual series Standard deviation σ = \(\sqrt{\frac{\Sigma(\mathrm{X}-\overline{\mathrm{X}})^{2}}{n}}\)

→ Assumed Mean σ = \(\sqrt{\frac{\sum d^{2}}{n}}-\left(\frac{\Sigma d^{2}}{n}\right)\)

→ Karl Pearson’s Coefficient of Correlation r = \(\frac{\mathrm{N} \Sigma \mathrm{XY}-(\Sigma \mathrm{X})(\Sigma \mathrm{Y})}{\sqrt{\mathrm{N} \Sigma \mathrm{X}^{2}-(\Sigma \mathrm{X})^{2}} \sqrt{\mathrm{N} \Sigma \mathrm{Y}^{2}-(\Sigma \mathrm{Y})^{2}}}\)

→ Direct Method (r) = \(\frac{\Sigma X Y}{\sqrt{\Sigma X^{2} \Sigma Y^{2}}}\)

→ Assumed Mean (r) = \(\frac{\mathrm{N} \Sigma d x d y-(\Sigma d x)(\Sigma d y)}{\sqrt{\mathrm{N} \Sigma d x^{2}-(\Sigma d x)^{2}} \sqrt{\mathrm{N} \Sigma d y^{2}-(\Sigma d y)^{2}}}\)

→ Regression Equation X on Y
\((\mathrm{X}-\overline{\mathrm{X}})=r \times \frac{\sigma x}{\sigma y} \times(\mathrm{Y}-\overline{\mathrm{Y}})\)

→ Regression Equation Y on X
\((\mathrm{Y}-\overline{\mathrm{Y}})=r \times \frac{\sigma y}{\sigma x} \times(\mathrm{X}-\overline{\mathrm{X}})\)

TN Board 12th Economics Important Questions

TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

TN State Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 1.
Define economic development.
Answer:
Michael P. Todaro, “Development must, therefore, be conceived as a multidimensional process involving major changes in social structures, popular attitudes and national institutions as well as the acceleration of growth, the reduction of inequality and the eradication of absolute poverty.

Question 2.
Mention the indicators of development.
Answer:

  1. GDP – Gross Domestic Product
  2. Gross National Product (GNP)
  3. GND per capita
  4. The Human Development Index.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 3.
Distinguish between economic growth and development.
Answer:

Economic Growth

 Economic Development
Deals with the problems of Developed countries.  Deals with the problems of UDCs.
Change is gradual and steady.  Change is discontinuous and spontaneous.
Means more output.  Means not only more output but also its composition.
Concerns Quantitative aspects i.e., increase in per capita income.  Quantitative as well as Qualitative.
Narrow  Wider concept Development = Growth + Change

Question 4.
What is GNP?
Answer:
Gross National Product is the total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens, (including income of those located abroad) minus income of non residents located in that country.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 5.
Define economic planning.
Answer:
Economic Planning is “collective control or suppression of private activities of production and exchange ”. – Robbins

“Economic Planning in the widest sense is the deliberate direction by, persons in-charge of large resources of economic activity towards chosen ends – Dalton.

Question 6.
What are the social indicators of economic development?
Answer:
Social indicators: It is referred to as basic and collective needs of the people. The direct provision of basic needs such as health, education etc check social backwardness.

Question 7.
Write a short note on NITI Aayog.
Answer:
National Institution for transforming India was formed in 1st January 2015 by union Cabinet Resolution. It is the policy of Government of India. It has replaced the Planning Commission from 13 August 2014.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 8.
Elucidate major causes of vicious circle of poverty with diagram.
Answer:
There are circular relationship known as vicious circle of poverty on Low production, Low investment, Low conception.
Example, A poor man may not have enough to eat, being underfed his health is lost and so his working capacity is low. It operates both on demand and supply side – the cause and the effect is the same.(vicious)

TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning 1

Question 9.
What are the non-economic factors determining development?
Answer:

  1. Human Resource
  2. Technical Know-how
  3. Political Freedom
  4. Social Organization
  5. Corruption free administration
  6. Desire for Development
  7. Moral, ethical and social values
  8. Casino Capitalism
  9. Patrimonial Capitalism

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning 

Question 10.
How would you break the vicious circle of poverty?
Answer:
Vicious circle is associated with low rate of saving and investment on supply side. In underdeveloped country, the rate of investment and capital formation can be stepped up without reduction in consumption. For this the marginal rate of savings is to be greater than aggregate of saving.

To break this, the strategy of balanced growth was suggested by Nurkse. Simultaneously investment in large number of industries create mutual demand. Through the strategy of balanced growth, vicious circle of poverty operating on demand side of capital formation can be broken.

Question 11.
Trace the evolution of economic planning in India.
Answer:

  1. Sir M. Vishveshwarya (1934) – He made foundation for economic planning in India in 1934. It was 10 year plan.
  2. Jawaharlal Nehru (1938) – He set up “National planning commission” and there was changes in political era.
  3. Bombay plan (1940) – Formed by 8 leading industrialist, 15 year investment plan.
  4. S.N.Agarwal (1944) – He gave ‘Gandhian Plan” focusing on agriculture and rural area.
  5. M.N.Roy(1945)- ‘People’s Plan’ aiming at mechanization of agriculture.
  6. J.P.Narayanan – ‘Sarvodhaya Plan’ with the idea of Vinobabhave.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 12.
Describe the case for planning.
Answer:
The Economic planning is justified on the following grounds.

  1. To accelerate and strengthen market mechanism.
  2. To remove unemployment.
  3. To achieve balanced development.

Question 13.
Distinguish between functional and structural planning.
Answer:
Functional planning:
It refers to that planning which seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.

Structural planning:
It refers to a good deal of changes in the socio economic frame work of the country. This type of planning is adopted mostly in under developed countries.

Question 14.
What are the functions of NITI Aayog?
Answer:

  1. Co-operative and Competitive Federalism.
  2. Shared National Agenda
  3. Decentralized Planning
  4. Vision and Scenario Planning
  5. Network of Expertise
  6. Harmonization
  7. Conflict Resolution
  8. Co-ordinating Interface with the World
  9. Internal Consultancy
  10. Capacity Building
  11. Monitoring and Evaluation

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 15.
Discuss the economic determinants of economic development.
Answer:
Economic Factors:
(i) Natural Resources:
The existence of natural resources in abundance is essential for development. But India with larger resources is poor.

(ii) Capital formation:
It is the net addition to the existing stock of capital goods. Capital formation helps to increase productivity of labour and there by production and income.

(iii) Size of market:
It stimulate production, increase employment and increase National per capita income.

(iv) Structural change:
Change in occupational structure of the economy. If the economy is agricultural predominant, then it remains backward.

(v) Financial system:
Efficient and organized Banking System in the country.

(vi) Marketable surplus:
Total amount of output cultivated above consumption of their own. This can be sold in the market for earning income.

(vii) Foreign trade:
When the country has huge FOREX then it is developed.

(viii) Economic System:
Free market system (Laissez faire policy) enjoy between growth rate.

Question 16.
Describe different types of Planning.
Answer:

TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning 2

There are different types of planning which differ in ideology and the procedure.
(i) Democratic Vs totalitarian:
Democratic – Planning within democracy
Totalitarian – There is control of Central Government

(ii) Centralized Vs Decentralized:
Centralized – It is by Central planning Authority
Decentralized – Planning by local organization

(iii) Planning by direction Vs Inducement:
Planning by direction – There is central authority which plans.
Inducement – People are induced to act under certain way.

(iv) Indicative Vs Imperative:
Indicative – The outline of the plan is prepared by the Government and executed by private in mixed economy.
Imperative – The government policies and procedures are rigid.
Eg: China, Russia.

(v) Short medium long: Term

TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning 3

(vi) Financial Vs Physical:
Financial – Resources are allocated as money.
Physical – Human resource.

(vii) Functional Vs Structural:
Functional – To remove economic difficulty.
Structural – socio economic frame work.

(viii) Comprehensive Vs Partial:
Comprehensive – General planning,
Partial planning – It is to consider only few important sector.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 17.
Bring out the arguments against planning.
Answer:
The failure of market mechanism is the cause for economic planning. The argument against planning are
(i) Loss of Freedom:
The absence of freedom in decision making act as an obstacle for economic growth under planning, the crucial decisions are made by the Central Planning Authority.

(ii) Elimination of Initiating:
Under centralized planning, there will be no incentive for initiatives and innovations. The absence of private ownership discourages the entrepreneur from taking bold decisions. The red-tapism is also prevalent in the economy.

(iii) High Cost Management:
Cost management of economic affairs outweighs the benefits of planning. As Lewis says, “The better we try to plan, the more planners we need”.

(iv) Difficulty in advance calculations:
The producers and consumers adjust their supply and demand based on price changes. There is no such mechanism in a planned economy. The arguments against planning are concerned with centralized and totalitarian planning.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Multiple Choice Questions:

Question 1.
“Redistribution with Growth” became popular slogan under which approach?
(a) Traditional approach
(b) New welfare oriented approach
(c) Industrial approach
(d) None of the above
Answer:
(b) New welfare oriented approach

Question 2.
Which is not the feature of econofnic growth?
(a) Concerned with developed nations
(b) Gradual change
(c) Concerned with quantitative aspect
(d) Wider concept
Answer:
(d) Wider concept

Question 3.
Which among the following is a characteristic of underdevelopment?
(a) Vicious circle of poverty
(b) Rising mass consumption
(c) Growth of Industries
(d) High rate of urbanization
Answer:
(a) Vicious circle of poverty

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 4.
The non-economic determinant of economic development:
(a) Natural resources
(b) Human resource
(c) Capital formation
(d) Foreign trade
Answer:
(b) Human resource

Question 5.
Economic growth measures the:
(a) Growth of productivity
(b) Increase in nominal income
(c) Increase in output
(d) None of the above
Answer:
(c) Increase in output

Question 6.
The supply side vicious circle of poverty suggests that poor nations remain poor because:
(a) Saving remains low
(b) Investment remains low
(c) There is a lack of effective government
(d) (a) and (b) above
Answer:
(d) (a) and (b) above

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 7.
Which of the following plan has focused on the agriculture and rural economy?
(a) People’s Plan
(b) Bombay Plan
(c) Gandhian Plan
(d) Vishveshwarya Plan
Answer:
(c) Gandhian Plan

Question 8.
Arrange following plans in correct chronological order.
(a) People’s Plan
(b) Bombay Plan
(c) Jawaharlal Nehru Plan
(d) Vishveshwarya Plan
Answer choices
(a) (i) (ii) (iii) (iv)
(b) (iv) (iii) (ii) (i)
(c) (i) (ii) (iv) (iii)
(d) (ii) (i) (iv) (iii)
Answer:
(b) (iv) (iii) (ii) (i)

Question 9.
M.N. Roy was associated with:
(a) Congress Plan
(b) People’s Plan
(c) Bombay Plan
(d) None of the above
Answer:
(b) People’s Plan

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 10.
Which of the following country adopts indicative planning?
(a) France
(b) Germany
(c) Italy
(d) Russia
Answer:
(b) Germany

Question 11.
Short-term plan is also known as:
(a) Controlling Plans
(b) De-Controlling Plans
(c) Rolling Plans
(d) De-rolling Plans
Answer:
(a) Controlling Plans

Question 12.
Long-term plan is also known as:
(a) Progressive Plans
(b) Non-Progressive Plans
(c) Perspective Plans
(d) Non-Perspective Plans
Answer:
(c) Perspective Plans

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 13.
The basic philosophy behind long-term planning is to bring _________ changes in the economy.
(a) Financial
(b) Agricultural
(c) Industrial
(d) Structural
Answer:
(c) Industrial

Question 14.
Sarvodaya Plan was advocated by:
(a) Mahatma Gandhi
(b) J.P. Narayan
(c) S. N. Agarwal
(d) M.N. Roy
Answer:
(b) J.P. Narayan

Question 15.
Planning Commission was set up in the year:
(a) 1950
(b) 1951
(c) 1947
(d) 1948
Answer:
(a) 1950

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 16.
Who wrote the book ‘The Road to Serfdom’?
(a) Friedrich Hayek
(b) H.R. Hicks
(c) David Ricardo
(d) Thomas Robert Malthus
Answer:
(a) Friedrich Hayek

Question 17.
Perspective plan is also known as:
(a) Short-term plan
(b) Medium-term plan
(c) Long-term plan
(d) None of the above
Answer:
(c) Long-term plan

Question 18.
NITI Aayog is formed through:
(a) Presidential Ordinance
(b) Allocation of business rules by President of India
(c) Cabinet resolution
(d) None of the above
Answer:
(c) Cabinet resolution

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Question 19.
Expansion of NITI Aayog?
(a) National Institute to Transform India
(b) National Institute for Transforming India
(c) National Institution to Transform India
(d) National Institution for Transforming India
Answer:
(d) National Institution for Transforming India

Question 20.
The Chair Person of NITI Aayog is:
(a) Prime Minister
(b) President
(c) Vice – President
(d) Finance Minister
Answer:
(a) Prime Minister

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

Samacheer Kalvi 12th Economics Notes Chapter 11 Economics of Development and Planning

→ Political freedom: The process of development is linked with political freedom.

→ Crony capitalism: People do not participate in the process of development.

→ Long Term plan: Plan period for a time period of 10 years.

→ Decentralized Planning: To restructure the planning process.

→ Marketable Surplus: Refers to the total amount of farm output cultivated by farmers over and above their family consumption needs.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 11 Economics of Development and Planning

→ Economic development:
“Development must, therefore, be conceived as a multidimensional process involving major changes in social structures, popular attitudes and national institutions as well as the acceleration of growth, the reduction of inequality and the eradication ofabsolute poverty. – Michael P. Todaro.

→ Non – Economic factors:
“Economic Development has much to do with human endowments, social attitudes, political conditions and historical accidents. Capital is a necessary but not a sufficient condition of progress ”. – Ragnar Nurkse.

→ Vicious circle of poverty:
Nurkse explains the idea in these words: “It implies a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor country in a state of poverty.

→ Planning:
Economic Planning is “collective control or suppression of private activities of production and exchange -Robbins

“Economic Planning in the widest sense is the deliberate direction by persons in-charge of large resources of economic activity towards chosen ends”. -Dalton

TN Board 12th Economics Important Questions

TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

TN State Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 1.
Define public finance.
Answer:
“Public finance is one of those subjects that lie on the border line between Economics and Politics. It is concerned with income and expenditure of public authorities and with the adjustment of one to the other”. – Huge Dalton “Public finance is an investigation into the nature and principles of the state revenue and expenditure”. – Adam Smith

Question 2.
What is public revenue?
Answer:
It is the methods of raising public revenue such as tax and non tax, the principles of taxation rates of taxation, shifting of taxes etc.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 3.
Differentiate tax and fee.
Answer:
Tax is a compulsory payment by the citizens and fees are another important source of revenue for the Government.

Question 4.
Write a short note on zero based budget.
Answer:
It involves fresh evaluation of expenditure in the Government budget, assuming it as a new item or every year is considered as a new year. The budget is done fresh. It starts from zero. The Indian Government presented Zero Based Budgeting (ZBB)first in 1987 – 88.

Question 5.
Give two examples for direct tax.
Answer:
The Tax levied on person’s income and wealth and it is paid directly to the Government.
Eg: Income tax and Wealth tax.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 6.
What are the components of GST?
Answer:
The components are of three types. They are COST, SGST and IGST.

Question 7.
What do you mean by public debt?
Answer:
Money or credit owned by the Government to domestic or foreign lenders.

Question 8.
Describe Canons of Taxation.
Answer:
According to Adam Smith, there are four canons or maxims of taxation.
(i) Canon of ability:
Tax should be imported based on people’s ability.

(ii) Canon of certainty:
The Government should ensure that there is no uncertainty regarding the rate of tax or the time of payment.

(iii) Canon of convenience:
The method of tax collection and the timing of tax payment should suit the convenience of the people, so the tax can be paid without any difficulty.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 9.
Mention any three similarities between public finance and private finance.
Answer:
(i) Rationality:
Maximisation of welfare and least cost factor.

(ii) Limit to borrowing:
Both have to apply restrain with regard to borrowing. The Government also cannot live beyond its means.

(iii) Resource utilisation:
Both have limited resources. So they have to use it at maximum.

(iv) Administration:
The effectiveness of measures of both Government and private depends on administrative machinery. If it is insufficient and corrupt, it will result in wastages and losses.

Question 10.
What are the functions of a modern state?
Answer:
The modern state is a welfare state and not just police state. The state assumes greater rules by creating economic and social overheads, ensuring stability both internally and externally.

TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics 1

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 11.
State any three characteristics of taxation.
Answer:

  1. A tax is a compulsory payment made to the Government. People can’t refuse to pay the tax.
  2. The tax payer cannot claim any specific benefit against die payment of tax.
  3. Every tax involves some sacrifice or part of the tax payer.
  4. A tax is not levied as a fine or penalty for breaking law.

Question 12.
Point out any three differences between direct tax and indirect tax.
Answer:

Direct tax

 Indirect tax
Tax levied on person’s income and wealth and it is paid directly to the Government.  A tax charged on a person who purchases the goods and services and it is paid indirectly to the Government.
Ultimate burden of tax payment.  Ultimate burden of tax payment: purchaser.
Responsibility to pay tax.

Eg: Income tax

When you earn income, you are responsible for tax payment, and you also have the burden.

  Responsibility to pay tax: Shopkeeper.

Eg: GST

When you buy stuff, the shopkeer is responsible for tax payment, but he can collect it from you.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 13.
What is primary deficit?
Answer:
Primary Deficit:
It shows the real burden of the Government and does not include the interest burden on loans taken in the past. Thus primary deficit reflects borrowing requirement of the Government exclusive of Interest payments.
Primary Deficit (PD)= Fiscal Deficit (FD) – Interest Payment (IP).

Question 14.
Mention any three methods of redemption of public debt.
Answer:
The process of repaying public debt is called as redemption.
(i) Sinking fund:
According to this, the Government will credit a fixed amount of money to this fund and when it matures, it is paid along with the interest.

(ii) Conversion:
Old loan is converted into a new one and the interest is reduced.

(iii) Budgetary surplus:
Whenever there is surplus budget, it can be utilised to pay the debt.

Question 15.
Explain the scope of public finance.
Answer:
It is a study of the financial aspects of Government.
(i) Public revenue:
It deals with methods of raising public revenue such as tax and non tax.

(ii) Public expenditure:
It studies about fundamental principles that governs the Government expenditure and control it.

(iii) Public debt:
It is the method of raising loans from internal and external sources.

(iv) Financial administration:
It deals with the study of the different aspects of public budget. Budget is the annual master financial plan of the Government.

(v) Fiscal policy:
Taxes, subsidies, public debt and public expenditure are the instruments of fiscal policy.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 16.
Bring out the merits of indirect taxes over direct taxes.Answer:
(i) Wider coverage:
All the consumers have to pay indirect taxes. Indirect people cover more people than direct taxes.

(ii) Equitable:
The indirect tax satisfies the canon of equity when higher tax is imposed on luxuries used by rich people.

(iii) Economical:
The cost of collecting taxes is less because it is collected by the producers.

(iv) Checks harmful consumption:
The Government imposes indirect taxes on harmful commodities. They are known as sin taxes.

(v) Convenient:
Indirect taxes are levied on commodities and services and they don’t feel the burden of paying the tax.

Question 17.
Explain the methods of debt redemption.
Answer:
The process of repaying a public debt is called redemption.
(i) Sinking fund:
According to this the Government will credit a fixed amount of money to this fund and when it matures, it is paid along with the interest.

(ii) Conversion:
Old loan is converted into a new one and the interest is reduced.

(iii) Budgetary surplus:
Whenever there is surplus budget, it can be utilised to pay the debt.

(iv) Terminal annuity:
Government will pay of the public debt in equal annual instalments.

(v) Repudiation:
Government will get rid of the burden of payment of a loan during crisis.

(vi) Reduction in the rate of interest:
Compulsory reduction in the rate of interest during crisis.

(vii) Capital levy:
When the Government imposes levy on the capital assets owned by an individual, it is called as capital levy. Especially war time debt obligation.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 18.
State and explain instruments of fiscal policy.
Answer:
Fiscal policy:
It is an instrument of macro economic policy of the modem Government. It is implemented through fiscal tools, fiscal levers.
Instruments are:
(i) Taxation:
Taxes transfer income from the people to the Government, an increase in tax reduces disposable income. So the taxation should be raised to control inflation. During depression, taxes are to be reduced.

(ii) Public expenditure:
It increases wages and salaries of the employees and thereby the aggregate demand for goods and services. So public expenditure is raised to fight recursion and reduced to control inflation.

(iii) Public debt:
When Government borrows by floating a loan, there is transfer of funds from the public to the Government. At that time of interest payment and repayment of public debt, funds are transferred from Government to public.

Question 19.
Explain the principles of federal finance.
Answer:
Federal finance refers to the system of assigning the source of revenue to the Central as well as State Government for the efficient discharge of their respective functions. The principles are:

(i) Principle of independence:
The Government should have separate sources of revenue, authority to levy taxes to borrow money and to meet the expenditure.

(ii) Principle of equity:
The resources has to be distributed among the states to earn their revenue.

(iii) Principle of uniformity:
In the federal system, each state should contribute equal tax payments for federal finance. But this principle cannot be followed because the taxable capacity of each unit is not of the same.

(iv) Principle of adequacy of resource:
Resources should be adequate to execute its function. The resources should be elastic in order to meet the growing needs and unforeseen expenditure like war etc.

(v) Principle of fiscal access:
Government will make possibility for the central and state Government to develop new source of revenue with in their prescribed fields to meet the growing financial needs.

(vi) Principle of integration and coordination:
There should be perfect coordination among different layers of financial system of the country. Then only the federal system will survive. This should be done in such a way to promote the overall economic development of the country.

(vii) Principle of efficiency:
The financial system should be well organised and efficiently administered. There should be no scope for fraud. No one should be taxed more than once in a year. Double taxation should be avoided.

(viii) Principle of administrative economy:
Each Government should be accountable to its own legislature for its financial decisions, that is the Central to the Parliament and the State to the assembly.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 20.
Describe the various types of deficit in budget.
Answer:
Deficit budget is one where the estimated Government expenditure is more than expected revenue budget deficit is of four types.
(i) Revenue budget:
Excess of Government revenue expenditures over revenue receipts. Revenue deficit is the Government is living beyond its means to conduct day to day operations.
Revenue deficit RD = Total Revenue Expenditure (RE) – Total Revenue Receipts (RR) (when RE – RR >0)

(ii) Budget deficit:
Budget deficit is the difference between total receipts and total expenditure.
Budget Deficit = Total Expenditure – Total Revenue

(Hi) Fiscal deficit:
Fiscal deficit = Budget deficit + Government market
borrowings and liabilities.

(iv) Primary deficit:
It shows the real burden of the Government and it does . not include the interest burden on loans taken in the part.
Primary Deficit (PD) = Fiscal Deficit (FD) – Investment Payment (IP).

Question 21.
What are the reasons for the recent growth in public expenditure?
Answer:
In welfare state, the Government has to perform several functions, activities like social, economic etc., Activities are the cause for increase in public expenditure.
(i) Population growth:
The growth in population needs investment in all areas especially youth education require more investments and for old people transfer payments

(ii) Defence expenditure:
Increase in defence expenditure specially during planning period. Its increasing due to modernisation of defence equipment.

(iii) Government subsidies:
The Government has been providing subsidies on a number, of items such as food, fertilisers etc., Because of the massive amount of subsidies, the public expenditure has increased.

(iv) Debt servicing:
The Government has been borrowing heavily. As a result it has to make huge repayment towards debt servicing.

(v) Development projects: The Government has been undertaking various development projects which involve huge investment.

(vi) Urbanisation:
Now the urban population has increased to about 43%. It requires heavy expenditure on law and order education and civic amenities.

(vii) Industrialisation:
Setting up of basic and heavy industries involve huge capital and long gestation period. Under planned economy, such industries and started by Government and the UDC need a strong infrastructure like transport, communication, power etc., so there is increase in public expenditure.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Multiple Choice Questions:

Question 1.
The-modern state is:
(a) Laissez-faire state
(b) Aristocratic state
(c) Welfare state
(d) Police state
Answer:
(c) Welfare state

Question 2.
One of the following is NOT a feature of private finance:
(a) Balancing of income and expenditure
(b) Secrecy
(c) Saving some part of income
(d) Publicity
Answer:
(d) Publicity

Question 3.
The tax possesses the following characteristics:
(a) Compulsory
(b) No quid pro quo
(c) Failure to pay is offence
(d) All the above
Answer:
(d) All the above

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 4.
Which of the following canons of taxation was not listed by Adam Smith?
(a) Canon of equality
(b) Canon of certainty
(c) Canon of convenience
(d) Canon of simplicity
Answer:
(d) Canon of simplicity

Question 5.
Consider the following statements and identify the correct ones.
(i) Central Government does not have exclusive power to impose tax which is not mentioned in state or concurrent list.
(ii) The Constitution also provides for transferring certain tax revenues from un|on list to states.
(a) (i) only
(b) (ii) only
(c) both a & b
(d) none
Answer:
(b) (ii) only

Question 6.
GST is equivalence of:
(a) Sales tax
(b) Corporation tax
(c) Income tax
(d) Local tax
Answer:
(a) Sales tax

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 7.
The direct tax has the following merits except:
(a) equity
(b) convenient
(c) certainty
(d) civic consciousness
Answer:
(b) convenient

Question 8.
Which of the following is a direct tax?
(a) Excise duty
(b) Income tax
(c) Customs duty
(d) Service tax
Answer:
(b) Income tax

Question 9.
Which of the following is not a tax under Union list?
(a) Personal Income Tax
(b) Corporation Tax
(c) Agricultural Income Tax
(d) Excise duty
Answer:
(c) Agricultural Income Tax

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 10.
“Revenue Receipts” of the Government do not include:
(a) Interest
(b) Profits and dividents
(c) Recoveries and loans
(d) Rent from property
Answer:
(d) Rent from property

Question 11.
The difference between revenue expenditure and revenue receipts is:
(a) Revenue deficit
(b) Fiscal deficit
(c) Budget deficit
(d) Primary deficit
Answer:
(a) Revenue deficit

Question 12.
The difference between total expenditure and total receipts including loans and other liabilities is called:
(a) Fiscal deficit
(b) Budget deficit
(c) Primary deficit
(d) Revenue deficit
Answer:
(a) Fiscal deficit

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 13.
The primary purpose of deficit financing is:
(a) Economic development
(b) Economic stability
(c) Economic equality
(d) Employment generation
Answer:
(a) Economic development

Question 14.
Deficit budget means:
(a) An excess of Government’s revenue over expenditure
(b) An excess of Government’s current expenditure over its current revenue
(c) An excess of Government’s total expenditure over its total revenue
(d) None of above
Answer:
(c) An excess of Government’s total expenditure over its total revenue

Question 15.
Methods of repayment of public debt is:
(a) Conversion
(b) Sinking fund
(c) Funded debt
(d) All these
Answer:
(d) All these

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 16.
Conversion of public debt means exchange of:
(a) new bonds for the old ones
(b) low interest bonds for higher interest bonds
(c) long term bonds for short term bonds
(d) all the above
Answer:
(b) low interest bonds for higher interest bonds

Question 17.
The word budget has been derived from the French word “bougette” which means:
(a) A small bag
(b) An empty box
(c) A box with papers
(d) None of the above
Answer:
(a) A small bag

Question 18.
Which one of the following deficits does not consider borrowing as a receipt?
(a) Revenue deficit
(b) Budgetary deficit
(c) Fiscal deficit
(d) Primary deficit
Answer:
(c) Fiscal deficit

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Question 19.
Finance Commission determines:
(a) The finances of Government of India
(b) The resources transfer to the States
(c) The resources transfer to the various departments
(d) None of the above
Answer:
(b) The resources transfer to the States

Question 20.
Consider the following statements and identify the right ones.
(i) The Finance Commission is appointed by the President.
(ii) The tenure of Finance commission is five years.
(a) (i) only
(b) (ii) only
(c) both (a) & (b)
(d) none
Answer:
(c) both (a) & (b)

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

Samacheer Kalvi 12th Economics Notes Chapter 9 Fiscal Economics

→ Public finance: Study of the financial aspects of government.

→ Public expenditure: The income of the government from all sources.

→ Tax: Compulsory payment by the citizens to the government.

→ Redemption: The process of repaying public debt.

→ Public debt: Loan taken by the Government from the citizens within the country.

→ Public revenue: The income of all the Government from all sources.

→ Budget: Annual financial statement of income and expenditure of the Government.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

→ Vote on account: The budget can be presented in the middle of the year. (When election are due or any political situation). This is also called as lame duck budget.

→ Zero based budget: Fresh evaluation of expenditure in Government budget. Canon of taxation: Qualities which a good tax should possess.

→ Public finance:
• “Public finance is one of those subjects that lie on the border line between Economics and Politics. It is concerned with income and expenditure ofpublic authorities and with the adjustment of one to the other” – Hugh Dalton.
• “Public finance is an investigation into the nature and principles of the state revenue and expenditure’” – Adam smith.

→ Public revenue:
• “A Tax is a compulsory payment made by a person or a firm to a Government without reference to any benefit the payer may derive from the Government” – Anatol murad.
‘ • “A Tax is a compulsory contribution imposed by public authority, irrespective of the exact amount of service rendered to the tax payer in return and not imposed as a penalty for any legal offence” – Dalton.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 9 Fiscal Economics

→ Public debt:
• “The debt is the form of promises by the Treasury to pay to the holders of these promises a principal sum and in most instances interest on the principal. Borrowing is resorted to in order to provide funds for financing a current deficit” – Philip E.Taylor.
• “The receipt from the sale of financial instruments by the Government to individuals or firms in the private sector, to induce the private sector to release manpower and real resources and to finance the purchase of these resources or to make welfare payments or subsidies” – Carl S.Shoup.

→ Budget:
• Reney Stoum – “It is a document containing a preliminary approved plan of public revenue and expenditure”.
• Bastabale – “ The budget has come to mean the financial arrangements of a given period, with the usual implication that they have been submitted to the legislature for approval’.

→ Public expenditure:
Public expenditure can be defined as, “The expenditure incurred by public authorities like central, state and local Governments to satisfy the collective social wants of the people is known as public expenditure

→ Definition of Fiscal policy:
“The term fiscal policy refers to a policy under which the Government uses its expenditure and revenue programmes to produce desirable effects and avoid undesirable effects on the national income, production and employment” – Arthur Smithies “By fiscal policy is meant the use of public finance or expenditure, taxes, borrowing and financial administration to Jurther our national economic objectives” – Buehler.

TN Board 12th Economics Important Questions

TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

TN State Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 1.
Write the meaning of Special Drawing rights.
Answer:
It is also called as Paper Gold. They are a form of international reserves created by the IMF in 1969 to solve the problem of International Liquidity.

Question 2.
Mention any two objectives of ASEAN.
Answer:

  1. Accelerate Economic growth, social progress and cultural development in the region.
  2.  To serve as a centre of information and as ASEAN link with other International Organization.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 3.
Point out any two ways in which IBRD lends to member countries.
Answer:
IBRD leads to member countries

  1. It advances loans to its member
  2. Loans out of its own fund.
  3. Loans out of borrowed capital.

Question 4.
Define Common Market.
Answer:
A group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members.
Eg: European Common Market (ECM)

Question 5.
What is Free trade area?
Answer:
It is the region encompassing a trade bloc whose member countries have signed a Free Trade Agreement (FTA). They involve Co-operation between atleast two countries to reduce Trade barriers.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 6.
When and where was SAARC Secretariat established?
Answer:
The SAARC Secretariat was established in Kathmandu (Nepal) on 16th January 1987.

Question 7.
Specify any two affiliates of World Bank Group.
Answer:
Affiliates of World Bank Group

  • IDA – International Development Association
  • IFC – International Finance Corporation.

Question 8.
Mention the various forms of economic integration.
Answer:
Trade blocks create business opportunities in order to avoid unnecessary competition among them. It is for their mutual benefits economic integrations takes the form of Free Trade Area is the region a trade block whose member countries have signed a FTA.

Trade areas with no tariff among members and with a common external tariff. An economic union is composed of a common market with a customs union.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 9.
What are trade blocks?
Answer:
Trade Blocks:
Trade Blocks cover different kinds of arrangements between or among countries for mutual benefits.

Question 10.
Mention any three lending programmes of IMF.
Answer:
(i) Basic credit facility:
The IMF provides financial assistance to its member nations to overcome their temporary difficulties relating to BOP.

(ii) Extended Fund Facility: IMF: P
rovides additional borrowing facility up to 140% of the members quota over and above the basic credit facility.

(iii) Compensatory Financing Facility:
To provide additional financial assistance to the member countries, primary producing countries.

(iv) Buffer stock facility:
This was to help primary goods (Food grains) producers to establish themselves.

(v) Supplementary Financing Facility:
The IMF makes temporary arrangements, to provide supplementary financial assistance to member countries facing payment problem.

(vi) Structural adjustment facility:
Additional Balance of Payments assistance on concessional terms to the poorer member countries.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 11.
What is Multilateral Agreement?
Answer:
It is an International agreements involving three or more pacifies
Eg: GATT, GATS is the first multilateral set of rules covering trade in services like Banking, Insurance etc.

MFN:
Most Favoured Nation status to all other countries, without any discrimination. Transparency should be maintained by publishing all relevant laws and regulations over services.

Question 12.
Write the Agenda of BRICS Summit, 2018.
Answer:
South Africa hosted the 10th BRICS summit in July 2018. The agenda for BRICS summit is inclusive Growth, Global Governance, shared prosperity and International peace and security.

Question 13.
State briefly the functions of SAARC.
Answer:

  1. Maintain co-operation in the region.
  2. Preventing common problems associated with the member nations.
  3. Ensuring strong relationships among the member nations.
  4. Removal of poverty through various package of programmes.
  5. Prevention of terrorism in the region.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 14.
List out the achievements of ASEAN.
Answer:

  1. It facilitates free movements of goods and services with in ASEAN by creating single regional market.
  2. It provides free access to the marketers of one to all other members.
  3. It improves business competitive between business competitiveness between business from different countries.
  4. It paves way for market and investment opportunities for the member nations.
  5. It fosters co-operations to industry and trade.

Question 15.
Explain the objectives of IMF.
Answer:

  1. To promote international monetary co-operation among the member nations.
  2. To facilitate faster and balanced growth of International trade
  3. To ensure exchange rate stability by curbing competitive exchange depreciations.
  4. To eliminate or reduce exchange controls imposed by member nations.
  5. To establish multilateral trade and payment system in respect of current transactions instead of bilateral trade agreements.
  6. To promote the flow of capital from developed to developing nations.
  7. To solve the problem of International liquidity.

Question 16.
Bring out the functions of World Bank.
Answer:
The World Bank performs the major role of providing loans for development works to member countries, especially to under developed countries.
The world bank provides long-term loans for various development projects.
(i) Investment for productive purpose:
It performs the functions of assisting in the reconstruction and development of territories of member nations

(ii) Balanced growth of international trade:
Maintaining equilibrium in BOP of member nations by encouraging international investment.

(iii) Provision of loans and guarantees:
Providing guarantees of loans to execute important projects.

(iv) Promotion of Foreign private investment:
It means that guarantees on loans and other investment made by private investors.

(v) Technical services :
It facilitates different kinds of technical services to the member countries through staff college and experts.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 17.
Discuss the role of WTO in India’s socio economic development.
Answer:
India is the founding member of WTO. India id benefited from WTO.
By reducing Tariff rates on raw materials, components and capital goods, it was able to import more for meeting her developmental requirements. So India’s imports go on increasing. India gets market access in several countries without any bilateral trade agreements. Advanced technology has been obtained at cheaper cost.

Question 18.
Write a note on (a) SAARC (b) BRICS
Answer:
(a) SAARC:
It was established on 8 December 1985 for promotions of Economic and Social progress with in the South Asia region. The SAARC secretariat was established in Kathmandu (Nepal) on 16 January 1987. It was started to promote welfare of the people, to accelerate economic growth, to contribute and strengthen co-operation among themselves, removal of poverty, ensuring relationship among the member nations.

(b) BRICS:
The association of five major emerging National economics like Brazil, Russia, India, China and South Africa. BRICS from 2009 these nations have met annually for formal summit. South Africa hosted the 10th BRICS summit in July 2018. It included Growth, Trade issues, Global Governance, Shared prosperity, international peace and security. First BRICS summit was held at Moscow and South Africa hosted the tenth conference at Johensberg in July 2018. India had an opportunity to host 4th and 8th summits in 2009 and 2016 respectively.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Multiple Choice Questions:

Question 1.
International Monetary Fund was an outcome of:
(a) Pandung Conference
(b) Dunkel Draft
(c) Bretton Woods Conference
(d) Doha Conference
Answer:
(c) Bretton Woods Conference

Question 2.
International Monetary Fund is having its headquarters at:
(a) Washington D.C.
(b) New York
(c) Vienna
(d) Geneva
Answer:
(a) Washington D.C.

Question 3.
IBRD is otherwise called:
(a) IMF
(b) World Bank
(c) ASEAN
(d) International Finance Corporation
Answer:
(b) World Bank

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 4.
The other name for Special Drawing Rights is:
(a) Paper gold
(b) Quotas
(c) Voluntary Export Restrictions
(D) None of these
Answer:
(a) Paper gold

Question 5.
The organization which provides long term loan is:
(a) World Bank
(b) International Monetary Fund
(c) World Trade Organisation
(d) BRICS
Answer:
(a) World Bank

Question 6.
Which of the following countries is not a member of SAARC?
(a) Sri Lanka
(b) Japan
(c) Bangladesh
(d) Afghanistan
Answer:
(b) Japan

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 7.
International Development Association is an affiliate of:
(a) IMF
(b) World Bank
(c) SAARC
(d) ASEAN
Answer:
(b) World Bank

Question 8.
______ relates to patents, copyrights, trade secrets, etc.,
(a) TRIPs
(b) TRIMs
(c) GATS
(d) NAMA
Answer:
(a) TRIPs

Question 9.
The first ministerial meeting of WTO was held at:
(a) Singapore
(b) Geneva
(c) Seattle
(d) Doha
Answer:
(a) Singapore

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 10.
ASEAN meetings are held once in every years.
(a) 2
(b) 3
(c) 4
(d) 5
Answer:
(b) 3

Question 11.
Which of the following ¡s not the member of SAARC?
(a) Pakistan
(b) Sri Lanka
(c) Bhutan
(d) China
Answer:
(d) China

Question 12.
SAARC meets once in ______ years.
(a) 2
(b) 3
(c) 4
(d) 5
Answer:
(a) 2

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 13.
The headquarters of ASEAN is:
(a) Jakarta
(b) New Delhi
(c) Colombo
(d) Tokyo
Answer:
(a) Jakarta

Question 14.
The term BRIC was coined in:
(a) 2001
(b) 2005
(c) 2008
(d) 2010
Answer:
(a) 2001

Question 15.
ASEAN was created in:
(a) 1965
(b) 1967
(c) 1972
(d) 1997
Answer:
(b) 1967

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 16.
The Tenth BRICS Summit was held
(a) Beijing
(b) Moscow
(c) Johannesberg
(d) Brasilia
Answer:
(c) Johannesberg

Question 17.
New Development Bank is associated with:
(a) BRICS
(b) WTO
(c) SAARC
(d) ASEAN
Answer:
(a) BRICS

Question 18.
Which of the following does not come under ‘Six dialogue partners’ of ASEAN?
(a) China
(b) Japan
(c) India
(d) North Korea
Answer:
(d) North Korea

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Question 19.
SAARC Agricultural Information Centre (SAIC)works as a central information institution for agriculture related resources was founded on:
(a) 1985
(b) 1988
(c) 1992
(d) 1998
Answer:
(b) 198

Question 20.
BENELUX is a form of:
(a) Free trade area
(b) Economic Union
(c) Common market
(d) Customs union
Answer:
(d) Customs union

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

Samacheer Kalvi 12th Economics Notes Chapter 8 International Economic Organisations

→ Paper Gold: A form of international reserves created by IMF.

→ Buffer Stock: Help primary goods for stabilization of primary products.

→ Multi Fibre Agreement: It governs the world trade in Textiles and Garments since 1974.

→ IMF – International Monetary Fund

→ ITO – International Trade Organisation

→ GATT – General Agreement on Tariff and Trade

→ WTO – World Trade Organisation

→ SDR – Special Drawing Rights

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

→ SAF – Structural Adjustment Facility

→ ESAF – Enhanced Structural Adjustment Facility

→ IBRD – International Bank for Reconstruction and Development or World (Bank)

→ IDA – International Development Association

→ IFC – International Finance Corporation

→ MIGA – Multilateral Investment Guarantee Agency

→ ICSID – International Centre for settlement of Investment Dispute

→ TRIP – Trade Related Intellectual Property Rights

→ TRN – Trade Related Investment Measures

→ GATS – General Agreement on Trade in Services

→ MFA – Multi Fibre Agreement

→ AOA – Agreement on Agriculture

→ SAARC – South Asian Association for Regional Co-operation

→ SAIC – SAARC – Agriculture Information Centre

→ SADF – SAARC – South Asian Development Funds

→ ASEAN – Association of South East Asian Nations

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 8 International Economic Organisations

→ BRICS – Acronym for five major emerging economies (Brazil, Russia, India, China and South Africa)

→ NDB – New Development Bank

→ FTA – Free Trade Agreement

→ ECM – European Common Market.

TN Board 12th Economics Important Questions

TN Board 12th Economics Important Questions Chapter 7 International Economics

TN State Board 12th Economics Important Questions Chapter 7 International Economics

Question 1.
What is International Economics?
Answer:
International economics is that branch of economics which is concerned with the exchange of goods and services between two or more countries.

Question 2.
Define international trade.
Answer:
International trade refers to trade or exchange of goods and services between two or more countries. It is trade across political boundaries.

Question 3.
State any two merits of trade.
Answer:

  • Trade is one of the powerful force of economic integration.
  • It brings Foreign exchange to our country.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 4.
What is the main difference between Adam Smith and Ricardo with regard to the emergence of foreign trade?
Answer:

Adam Smith

 David Ricardo
According to Smith, International trade was absolute cost advantage.  According to Ricardo, a country can gain from trade when it produces at relatively lower costs.

Question 5.
Define Terms of Trade.
Answer:
The gains from international trade depend upon the terms of trade which refers to the ratio of export prices to import prices.

Question 6.
What do you mean by balance of payments?
Answer:
BOP is a systematic record of a country’s economic and financial transactions with the rest of the word over a period of time.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 7.
What is meant by Exchange Rate?
Answer:
It is the price paid in the home currency for a unit of foreign currency that is the rate at which one currency is exchanged for another country.

Question 8.
Describe the subject matter of International Economics.Answer:
It is classified into:

  1. Pure theory of trade – This explains the causes for foreign trade, volume of trade, balance of trade and payments.
  2. Policy issues – This covers the policy issues like method of regulating trade use of taxation, foreign aid, FDI and disequilibrium in the balance of payments.
  3. International Cartels and trade Bloes – It deals with the economic integration in the form of custom unions, monetary unions and the operation of MNCs.
  4. International financial and trade regulatory institutions – Financial institutions like IMF, IBRD, WTO etc are also part of International economics.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 9.
Compare the Classical Theory of international trade with Modern Theory of International trade.
Answer:

Classical theory

 Modern theory
It explains the international trade on the basis of value of labour.  It explains the international trade on the basis of value of general theory.
Factor is labour is presented.  Factor is labour and capital (multi factor) is presented.
Comparative cost differences in efficiency of the worker is attributed.  Comparative cost difference in factor endowment is attributed.

Question 10.
Explain the Net Barter Terms of Trade and Gross Barter Terms of Trade.
Answer:

Net Barter Terms of Trade

 Gross Barter Terms of Trade
It is the ratio between the prices of exports and of imports.  It is an improvement over the net terms of trade.
This is used to measure the gain from international trade.  It is an index of relationship between total physical quantity of imports and the total physical quantity of exports.
It is named by Viner as the “commodity terms of trade”.  If for a given quantity of exports, more quantity of import can be consumed by a country, then one can say that terms of trade are favourable.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 11.
Distinguish between Balance of Trade and Balance of Payments.
Answer:

Balance of Trade

 Balance of Payments
BOT refers to total value of country’s exports of commodities and total value of imports of commodities.  BOP is a systematic record of a country’s economic and financial transactions with the rest of the world over a period of time.
Only export and import of commodities are included in the statement of balance of trade of a country.  When a payment is received from a foreign country, it is a debit transaction.
Movements of goods are also known as Visible trade.  When a payment is made to a foreign country, it is a debit transaction.

Question 12.
What are import quotas?
Answer:
Import quota is a quantitative limit fixed on the import of some type of good. This may be set in terms of value or physical units. This is imposed to conserve foreign exchange or to protect domestic consumption.
Import Control:
Imports may be controlled by,
(i) Imposing or enhancing import duties.
(ii) Restricting imports through import quotas.
(iii) Licensing and even prohibiting altogether the import of certain non¬essential items. But this would encburaee smugeling.
By cutting market supply the price of the imported product is likely to rule and black market may develop.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 13.
Write a brief note on flexible exchange rate.
Answer:
Flexible exchange rate is also known as floating exchanging rate. Under this system, exchange rates are freely determined in an open market by market forces of demand and supply. Market prices vary every day.

Question 14.
State the objectives of Foreign Direct Investment.
Answer:

  1. Sales expansion
  2. Acquisition of resources
  3. Diversification
  4. Minimization of competitive risk.

Question 15.
Discuss the differences between Internal Trade and International Trade.
Answer:

Internal Trade

 International Trade
Trade takes place between different individuals and firms within the same nation.  Trade takes place between different individuals and firms in different countries.
Labour and capital move freely from one region to another.  Labour and capital do not move easily from one nation to another.
There will be free flow of goods and services since there are no restrictions.  Goods and services do not easily move from one country to another since there are a number of restrictions like tariff and quota.
There is only one common currency.  There are different currencies.
The physical and geographical conditions of a country are more or less similar.  There are differences in physical and geographical conditions of the two countries.
Trade and financial regulations are more or less the same.  Trade and financial regulations such as interest rate, trade laws differ between countries.
There is no difference in political affiliations, customs and habits of the people and government policies.  Differences are pronounced in political affiliations, habits and customs of the people and government policies.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 16.
Explain briefly the Comparative Cost Theory.
Answer:
Comparative cost theory was formulated by David Ricardo and it was refined by J.S.Mill. According to Ricardo, the basis of trade is the comparative cost difference. A country can gain from trade when it produces at relatively lower cost.

Even when a country enjoys absolute advantage in both goods, the country would specialize in production and export of those goods which are more advantageous. But even when there is absolute disadvantage, the country would specialize in production and export of the commodity in which it is less disadvantages.

Assumptions:

  1. There are only two nations and two commodities.
  2. Element of cost of production is labour.
  3. All labourer have equal efficiency.
  4. Labour is perfectly mobile within the country but’ perfectly immobile between countries.
  5. Production is subject to the law of constant returns.
  6. Foreign trade is free from all barriers.
  7. No change in technology.
  8. No transport cost.
  9. Perfect competition.
  10. Full employment.
  11. No government intervention.

Illustrations:
Ricardo’s theory of comparative cost is explained with Hypothetical example with production cost of cloth and wheat in America and India.

TN Board 12th Economics Important Questions Chapter 7 International Economics 1

Explanation:
From diagram, we know that India has an absolute advantage in production of both cloth and wheat. But India should concentrate on production of wheat in which there is comparative cost advantage. (80/120<90/100). For America cost advantage is less in cloth production. But America will produce cloth and exchange for wheat.

With trade, India can get I unit of cloth and I unit of wheat by using 160 labour units. But without trade, India will have to use 170 units of labour. Likewise with trade America uses 200 units of labour but without trade. It has to use 220> units of labour for getting 1 unit of cloth and 1 unit of wheat.

Criticism:

  • Labour cost is small portion of the total cost.
  • Labourers in different countries are not equal in efficiency.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 17.
Discuss tine Modern Theory of international Trade.
Answer:
This was developed by Eli Heckscher and Bertil Ohlin which is based on Ricardian Theory. This theory says that the basis for international trade is factor endowment, so it is called as “Factor endowment Theory”.

Theory – Modem theory explains and attributes international differences in comparative cost to
(i) Difference in endowments of factor of production between countries.
(ii) Difference in the factor of proportions required in production.

Assumptions:

  1. There are 2 countries and 2 commodities and 2 factors.
  2. Countries differ in factor endowments
  3. Commodities are categorized in terms of factors intensity
  4. Countries use same production technology.
  5. Countries have identical demand conditions

TN Board 12th Economics Important Questions Chapter 7 International Economics 2

Explanation:
According to Heckscher a capital abundant country will export the capital intensive goods and labour – abundant country will export labour – intensive goods.

Illustrations:

TN Board 12th Economics Important Questions Chapter 7 International Economics 3

In the above example, even though India has more capital in absolute terms, America is more richly endowed with capital because the ratio of capital in India is 0.8 which is less than that in America where it is 1.25.

TN Board 12th Economics Important Questions Chapter 7 International Economics 4

Limitations:
(i) Factor endowment of a country may change over time.
(ii) The efficiency of the same factor may differ in the two cormtries.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 18.
Explain the types of Terms of Trade given by Viner.
Answer:
Viner has devised another concept called
(a) “The single factor terms of trade” and
(b) ‘Double factoral terms of trade”

(i) Single factoral terms of trade – It is an improvement upon the commodity terms of trade. It represents the ratio of export – price index to the import price index adjusted for changes in the productivity of a country’s factors in the production of exports
Tf = (Px/ Pm)Fx
Tf – single factoral terms of trade index
Fx – Productivity in exports.
(ii) Double factoral terms of trade – This is the another index constructed by Viner.

Tff = (Px /Pm) (Fx / Fm)

Which takes into account the productivity in country’s exports as well as the productivity of Foreign factors. So Fm represents import index.

Question 19.
Bring out the components of balance of payments account.
Answer:
The credit and debit items are shown vertically in the BOP account of a country. Horizontally, they are divided into three categories
(i) The current account:
It includes all international trade transactions of goods and services, international services transactions.

(ii) The capital account:
Financial transactions consisting of direct investment and purchases of interest bearing financial instruments, non – interest bearing demand deposits and gold fall under the capital account.

(iii) The official settlements account or official reserve assets account:
The official reserve assets of a country include its gold stock, holdings of its convertible foreign currencies and Special Drawing Rights (SDRs) and its net position in the international monetary fund IMF.

Balance Of Payment (BOP)
Account chart:
Credit (Receipts) – Debit (Payments) = Balance [Deficit (-), Surplus (+)]
Deficit if Debit > Credit.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 20.
Discuss the various types of disequilibrium in the balance of payments.
Answer:
There are three types of BOP disequilibrium
(i) Cyclical disequilibrium:
This occurs of because of two countries passing through different phases of business cycle and the elasticities of demand may differ between countries.

(ii) Secular disequilibrium:
This occurs because of long-run and deep changes in an economy, as it advances from one stage of growth to another. In the initial stages of development imports exceed exports and domestic investment exceeds domestic savings.

(iii) Structural disequilibrium:
Structural changes in the economy may also cause BOP disequilibrium such structural changes include development of alternative sources of supply etc.

Question 21.
How the Rate of Exchange is determined? Illustrate.
Answer:
The equilibrium rate of exchange is determined in the foreign exchange market in accordance with the general theory of value that is by the interaction of the forces of demand and supply. Thus the rate of exchange is determined at the point where demand for Forex is equal to the supply of Forex.

TN Board 12th Economics Important Questions Chapter 7 International Economics 5

Explanation of diagram:
(i) Y axis – Exchange rate (value of rupee in dollars)
(ii) X axis – Demand and supply of Forex
(iii) E – point of Equilibrium. (At this point of ‘E’ DD interseeks SS)
(iv) P2 – The exchange rate

Question 22.
Explain the relationship between Foreign Direct investment and economic develop.
Answer:
FDI – Foreign direct is an important factor in the economy. FDI and Foreign trade are closely related. In, developing countries, FDI in the natural resource sector, including plantations increase the trade volume. Foreign production by FDI is useful to substitute Foreign trade.

FDI is helpful to accelerate the economic growth by facilitating essential imports needed for carrying out development programmes. FDI is encouraged by the factors such as Foreign exchange shortage and acceleration of the pace of economic development. Many developing countries prefer Foreign investment to imports.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Multiple Choice Questions:

Question 1.
Trade between two countries is known as trade.
(a) External
(b) Internal
(c) Inter-regional
(d) Home
Answer:
(a) External

Question 2.
Which of the following factors influence trade?
(a) The stage of development of a product
(b) The relative price of factors of productions
(c) Government
(d) All of the above
Answer:
(d) All of the above

Question 3.
International trade differs from domestic trade because of:
(a) Trade restrictions
(b) Immobility of factors
(c) Different government policies
(d) All the above
Answer:
(d) All the above

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 4.
In general, a primary reason why nations conduct international trade is because:
(a) Some nations prefer to produce one thing while others produce another
(b) Resources are not equally distributed among all trading nations
(c) Trade enhances opportunities to accumulate profits
(d) Interest rates are not identical in all trading nations
Answer:
(b) Resources are not equally distributed among all trading nations

Question 5.
Which of the following is a modern theory of international trade?
(a) Absolute cost
(b) Comparative cost
(c) Factor endowment theory
(d) None of these
Answer:
(c) Factor endowment theory

Question 6.
Exchange rates are determined in:
(a) money market
(b) foreign exchange market
(c) stock market
(d) capital market
Answer:
(b) foreign exchange market

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 7.
Exchange rate for currencies is determined by supply and demand under the system of:
(a) Fixed exchange rate
(b) Flexible exchange market
(c) Constant
(d) Government regulated
Answer:
(b) Flexible exchange market

Question 8.
Net export equals:
(a) Export × Import
(b) Export + Import
(c) Export – Import
(d) Exports of services only
Answer:
(c) Export – Import

Question 9.
Who among the following enunciated the concept of single factoral terms of trade?
(a) Jacob Viner
(b) G.S.Donens
(c) Taussig
(d) J.S.Mill
Answer:
(a) Jacob Viner

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 10.
Terms of Trade of a country show:
(a) Ratio of goods exported and imported
(b) Ratio of import duties
(c) Ratio of prices of exports and imports
(d) Both (a) and (c)
Answer:
(c) Ratio of prices of exports and imports

Question 11.
Favourable trade means value of exports are than that of imports.
(a) More
(b) Less
(c) More or Less
(d) Not more than
Answer:
(a) More

Question 12.
If there is an imbalance in the trade balance (more imports than exports), it can be reduced by:
(a) decreasing customs duties
(b) increasing export duties
(c) stimulating exports
(d) stimulating imports
Answer:
(c) stimulating exports

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 13.
BOP includes:
(a) visible items only
(b) invisible items only
(c) both visible and invisible items
(d) merchandise trade only
Answer:
(c) both visible and invisible items

Question 14.
Components of balance of payments of a country includes:
(a) Current account
(b) Official account
(c) Capital account
(d) All of above
Answer:
(d) All of above

Question 15.
In the case of BOT,
(a) Transactions of goods are recorded.
(b) Transactions of both goods and services are recorded.
(c) Both capital and financial accounts are included.
(d) All of these
Answer:
(a) Transactions of goods are recorded.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 16.
Tourism and travel are classified in which of balance of payments accounts?
(a) merchandise trade account
(b) services account
(c) unilateral transfers account
(d) capital account
Answer:
(b) services account

Question 17.
Cyclical disequilibrium in BOP occurs because of:
(a) Different paths of business cycle.
(b) The income elasticity of demand or price elasticity of demand is different.
(c) Long-run changes in an economy
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

Question 18.
Which of the following is not an example of foreign direct investment?
(a) the construction of a new auto assembly plant overseas.
(b) the acquisition of an existing steel mill overseas.
(c) the purchase of bonds or stock issued by a textile company overseas.
(d) the creation of a wholly owned business firm overseas.
Answer:
(c) the purchase of bonds or stock issued by a textile company overseas.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Question 19.
Foreign direct investments not permitted in India:
(a) Banking
(b) Automic energy
(c) Pharmaceutical
(d) Insurance
Answer:
(b) Automic energy

Question 20.
Benefits of FDI include, theoretically:
(a) Boost in Economic Growth
(b) Increase in the import and export of goods and services
(c) Increased employment and skill levels
(d) All of these
Answer:
(d) All of these

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

Samacheer Kalvi 12th Economics Notes Chapter 7 International Economics

→ Internal trade: Trade within country – (domestic trade) or (home trade) or intra – regional trade.

→ Net barter terms of trade: The ratio between exports and imports also known as (commodity terms of trade).

→ Visible trade: Movements of goods, exports and imports of commodities.

→ Favourable balance of trade: When the total value of commodity exports of a country exceeds the total value of commodity imports of that country (opp) is unfavourable balance of trade.

→ Credit side: When payment is received from foreign country, it is credit transaction.

→ Debit side: Import of goods and services.

→ Devaluation: Deliberate reduction of the official rate at which domestic currency is exchanged for another currency.

→ Exchange control: The state intervention in the FOREX market.

→ FOREX: Foreign currencies.

→ Current account deficits: A deficit in the current account is excess of payments over receipts.

→ FPI: Entry of funds into a nation where foreigners deposit money in nations bank.

→ FII: It is an investment in hedge funds, pension funds and mutual funds.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

→ International economics:
Economics which deals with the economic interdependence among countries and studies the effects of such interdependence and the factors that affect it.

→ Absolute cost advantage:
According to Adam Smith, “the basis of international trade was absolute cost advantage. It is the ability of a business to produce more, sell more of goods or services than competitors, using the same amount of resource.’’’

→ Ricardo’s theory of comparative cost advantage:
According to Ricardo, “a country can gain from trade when it produces at relatively lower cost. Even when a country enjoys absolute advantage in both goods, the country would specialize in the production and export of those goods which are relatively more advantageous.”

→ International trade:
“A capital – abundant country will export the capital intensive goods, while the labour. Abundant country will export the labour intensive goods”.

→ FOREX:
“FOREX is the system or process ofconverting one national currency into another, and of transferring money from one country to another.”

→ Equilibrium Exchange Rate – Ragner Nurkes:
“The equilibrium exchange rate is that rate, which over a certain period of time, keeps the balance of payments in equilibrium”.

→ Foreign Direct Investment:
Investment in a foreign country that involves some degree of control and participation in management.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

→ Net Barter Terms of Trade T = (Px / Pm) × 100
Tn = Net Barter Terms of Trade
Px = Index number of export prices
Pm = Index number of import prices

→ Gross Barter Terms of Trade Tg = (Qm / Qx) × 100.
Qm = Index of import quantities
Qx = Index of export quantities

→ Income Terms of Trade Ty = (Px / Pm) Qx
Px = Price index of exports
Pm = Price index of imports
Qx = Quantity index of exports

→ The Single Factoral Terms of Trade Tf = (Px / Pm) Fx
Tf = Single factoral terms of trade index
Fx = Productivity in exports

→ Double Factoral Terms of Trade Tff = (Px / Pm)(Fx / Fm)
Fm = Import index

→ Balance of Payment (BOP) Account Chart
Credit (Receipts) – Debit (Payments) = Balance [Deficit (-), Surplus (+)]
Deficit if Debit > Credit

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

→ Balance of Payments Disequilibrium R / P = 1
It occurs when
Demand ≠ supply
Debit > Credit → Deficit

→ Favourable BOP R/P > 1

→ Unfavourable BOP R/P < 1

→ Real Exchange Rate = \(\frac{e \mathrm{P}_{f}}{p}\)
P = Price levels in India
Pf = Price levels in abroad (US)
e = Nominal exchange rate.

Samacheer Kalvi TN Board 12th Economics Important Questions Chapter 7 International Economics

→ WTO – World Trade Organization

→ IMF – International Monetary Fund

→ BOT – Balance Of Trade

→ BOP – Balance Of Payments

→ FOREX – Foreign Exchange

→ USD – United State Dollars

→ NEER – Nominal Effective Exchange Rate

→ REER – Real Effective Exchange Rate

→ NER – Nominal Exchange Rate

→ RER – Real Exchange Rate

→ FDI – Foreign Direct Investment

→ LDC – Lower (or) Less Developed Country

→ FPI – Foreign Portforio Investment

→ FII – Foreign Institutional Investment

→ UDC – Under Developed Countries

→ SDRs – Special Drawing Rights

TN Board 12th Economics Important Questions