| Non-Rationalised Economics NCERT Notes, Solutions and Extra Q & A (Class 9th to 12th) | |||||||||||||||||||
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| 9th | 10th | 11th | 12th | ||||||||||||||||
| Class 12th Chapters | ||
|---|---|---|
| Introductory Microeconomics | ||
| 1. Introduction | 2. Theory Of Consumer Behaviour | 3. Production And Costs |
| 4. The Theory Of The Firm Under Perfect Competition | 5. Market Equilibrium | 6. Non-Competitive Markets |
| Introductory Macroeconomics | ||
| 1. Introduction | 2. National Income Accounting | 3. Money And Banking |
| 4. Determination Of Income And Employment | 5. Government Budget And The Economy | 6. Open Economy Macroeconomics |
Class 12th Economics NCERT Notes, NCERT Question Solutions and Extra Q & A (Non-Rationalised)
Introductory Microeconomics
1. Introduction
This chapter introduces the fundamental concepts of microeconomics, which studies the economic behaviour of individual units like consumers, firms, and markets. It begins with the central economic problem: scarcity of resources in the face of unlimited human wants. This scarcity forces every society to make choices, leading to the three fundamental economic questions: what to produce, how to produce, and for whom to produce? The chapter introduces the Production Possibility Frontier (PPF), a graphical tool that illustrates the concepts of scarcity, choice, and opportunity cost (the cost of the next best alternative foregone). It also distinguishes between different types of economies: centrally planned, market, and mixed economies, setting the stage for the study of individual economic decision-making.
2. Theory Of Consumer Behaviour
This chapter delves into the theory of consumer behaviour, seeking to understand how a rational consumer allocates their income to maximize satisfaction or utility. It introduces two main approaches. The first is Cardinal Utility Analysis, which uses concepts like Total Utility, Marginal Utility, and the fundamental Law of Diminishing Marginal Utility. The second, more modern approach is Ordinal Utility Analysis, which uses the tools of Indifference Curves (representing combinations of goods that give equal satisfaction) and the Budget Line (representing all affordable combinations of goods given a consumer's income and prices). Consumer's equilibrium is achieved at the point where the budget line is tangent to the highest possible indifference curve. The chapter also derives the concept of demand and explains the inverse relationship between price and quantity demanded, known as the Law of Demand.
3. Production And Costs
This chapter focuses on the producer's side of the market, exploring the theories of production and costs. The production function is introduced as a technical relationship between physical inputs and physical output. The chapter distinguishes between the short run and the long run. In the short run, it explains the Law of Variable Proportions (or Returns to a Factor), which describes the output behaviour as one variable input is increased while others are fixed. In the long run, it discusses Returns to Scale. The chapter then provides a detailed analysis of various cost concepts, including Total Cost (TC), Total Fixed Cost (TFC), Total Variable Cost (TVC), and their per-unit counterparts: Average Cost (AC) and Marginal Cost (MC). Understanding these cost curves is essential for a firm's profit-maximization decision.
4. The Theory Of The Firm Under Perfect Competition
This chapter analyzes the behaviour of a firm in a market structure of Perfect Competition, characterized by a large number of buyers and sellers, a homogeneous product, and free entry and exit. In this market, a single firm is a 'price taker', meaning it has no control over the market price. The chapter explains that for a perfectly competitive firm, Price = Average Revenue (AR) = Marginal Revenue (MR). The core of the chapter is the firm's profit maximization problem. It establishes the equilibrium condition where a firm maximizes its profit by producing the quantity of output at which Marginal Cost (MC) equals Marginal Revenue (MR), and MC is rising. The derivation of the firm's short-run and long-run supply curves is also detailed.
5. Market Equilibrium
This chapter brings together the forces of demand and supply to explain how market equilibrium is determined under perfect competition. Equilibrium is a state of balance where the market clears—the quantity demanded by consumers equals the quantity supplied by producers at a specific price, known as the equilibrium price. The chapter explains the concepts of excess demand (shortage), which pushes prices up, and excess supply (surplus), which pushes prices down, demonstrating how market forces automatically guide the market towards equilibrium. It further analyzes the impact of shifts in the demand and supply curves on the equilibrium price and quantity, and discusses the implications of government interventions like price ceilings and price floors.
6. Non-Competitive Markets
Moving beyond the ideal scenario of perfect competition, this chapter explores non-competitive markets where firms possess market power. It begins with Monopoly, a market with a single seller and high barriers to entry, where the monopolist is a 'price maker'. The chapter then discusses Monopolistic Competition, a market with many firms selling differentiated products, leading to brand loyalty and some price-setting power. Finally, it introduces Oligopoly, a market dominated by a few large firms whose decisions are interdependent, often leading to strategic behaviour. The chapter contrasts the features, pricing strategies, and efficiency of these markets with perfect competition, providing a more realistic understanding of market structures.
Introductory Macroeconomics
1. Introduction
This chapter introduces the field of macroeconomics, which studies the economy as a whole, contrasting it with microeconomics. Instead of individual choices, macroeconomics focuses on aggregate variables and economy-wide phenomena such as national income, inflation, unemployment, and economic growth. It highlights the emergence of modern macroeconomics with the work of John Maynard Keynes during the Great Depression. The chapter explains why a separate study of the economy in its entirety is necessary, as the behaviour of aggregates cannot be simply understood by adding up individual behaviours (the fallacy of composition). Macroeconomics provides the tools to analyze the overall performance of an economy and guide government fiscal and monetary policies.
2. National Income Accounting
This chapter provides a detailed framework for measuring the total income and output of an economy, known as National Income Accounting. It defines the most important macroeconomic variable, Gross Domestic Product (GDP), as the market value of all final goods and services produced within a country's domestic territory in a given year. The chapter explains the three different methods to calculate GDP: the Value Added Method (or Product Method), the Income Method, and the Expenditure Method, and shows how they are conceptually equivalent. It also discusses other related aggregates like GNP, NNP, and Personal Disposable Income, and critically examines the limitations of using GDP as a sole indicator of social welfare.
3. Money And Banking
This chapter explores the crucial role of money and banking in a modern economy. It starts by defining money and its functions as a medium of exchange, unit of account, and store of value. The chapter then explains the banking system, detailing the functions of commercial banks and their vital role in the process of credit creation, which expands the money supply. It introduces the apex institution of the monetary system, the Central Bank (the Reserve Bank of India - RBI in India). The chapter elaborates on the RBI's key functions, including its role as the issuer of currency, banker to the government, and controller of the money supply through various instruments of monetary policy (like Repo Rate, CRR, and Open Market Operations).
4. Determination Of Income And Employment
This chapter presents the Keynesian framework for the determination of income and employment in the short run. It introduces the key concepts of Aggregate Demand (AD), which is the total planned expenditure in an economy, and Aggregate Supply (AS), the total output. The equilibrium level of income is determined at the point where AD equals AS (or planned spending equals planned output). The chapter analyzes the components of AD, focusing on the consumption function (C = C̄ + cY) and investment. It also explains the powerful concept of the investment multiplier, which shows how an initial change in investment leads to a much larger change in the total income of the economy. Issues of excess and deficient demand are also discussed.
5. Government Budget And The Economy
This chapter focuses on the Government Budget and its impact on the economy. It explains the budget's structure, breaking it down into revenue receipts (e.g., taxes) and capital receipts (e.g., borrowings), and revenue expenditure and capital expenditure. The chapter defines and analyzes various budgetary deficits, with a special focus on the Fiscal Deficit, which represents the total borrowing requirement of the government ($\textsf{Fiscal Deficit} = \textsf{Total Expenditure} - \textsf{Total Receipts except Borrowings}$). It discusses the objectives of the government budget and how fiscal policy—the use of government spending and taxation—can be used to influence aggregate demand, reallocate resources, and achieve a more equitable distribution of income in the economy.
6. Open Economy Macroeconomics
This chapter extends the macroeconomic analysis to an Open Economy, one that engages in international trade and financial flows. It introduces the Balance of Payments (BoP) account, a systematic record of all economic transactions between a country and the rest of the world. The BoP is divided into the Current Account (recording trade in goods, services, and transfers) and the Capital Account (recording asset transactions). The chapter explains how the foreign exchange rate—the price of one currency in terms of another—is determined in the foreign exchange market. It contrasts different exchange rate regimes, such as the flexible (floating) rate system and the fixed rate system, and discusses their implications for a country's macroeconomic management.