CBSE Class 12th Economics Answer Key


cbse class 12th economics answer key


In this essay, I will be discussing the role of economics in society. Specifically, I will be discussing how economics affects the way people behave and the way societies function.

Economics is a social science that uses mathematical models and principles to explain human behaviour. It is important to understand economics because it can help us to better understand why people behave the way they do and how societies function.

One of the most important aspects of economics is the role of money. Money is a necessary component of any economy, because it allows people to trade goods and services. In order to trade goods and services, people need to have something that they want and something that they are willing to give up. The thing that people are willing to give up is called currency, or money in general. Currency is valuable because it allows people to buy things that they want.

Another important aspect of economics is the role of prices. Prices are important because they determine how much currency people have available to buy goods and services. Prices are also important because they help us to determine how much wealth is available in an economy. Wealth is defined as the total value of all assets owned by a person or group of people. Wealth can be used to purchase goods

CBSE Class 12th Economics Answer Key

The Quantity Theory of Money

The Quantity Theory of Money is a theory that states that the value of a good or service is determined by the number of units that are available.

This theory is based on the idea that people will spend more money if they have more options. For example, if someone has two jobs and can earn $10,000 each, they may be more likely to spend their money than someone who only has one job and can only earn $8,000.

The Quantity Theory of Money was first proposed by John Maynard Keynes in 1915. He believed that it was important for governments to create enough money to allow people to spend freely. This would help to stimulate the economy and bring about increased prosperity.

Demand and Supply in the Market

Demand and Supply is a key concept in economics that is used to explain the prices of goods and services in the market.

The law of demand states that when the prices of two goods are equal, the quantity demanded of each good will be equal. The law of supply states that when the prices of two goods are unequal, the quantity supplied of each good will be inversely proportional to the price of the second good.

The law of demand is often used to explain how market equilibrium is reached. When two goods are in equilibrium, the quantity demanded for one good will be equal to the quantity supplied for the other good. This occurs because people are not willing to pay more for one good than they are paid for the other.

The law of supply is also used to explain how markets mishandle resources. When there is too much of one good compared to another, the law of supply will tell us that the price of that good will increase. This is because suppliers will start supplying more of that good in order to make a profit.

CBSE Class 12th Economics Answer Key

Economic Growth and its Effects on the Economy

Economic growth is a process by which the incomes of individuals and businesses increase over time. It has many positive effects on the economy, including increased production, higher wages, and more jobs.

Economic growth is usually measured in terms of real GDP (Gross Domestic Product). GDP is the total value of all goods and services produced in a country during a given period.

One important factor that affects economic growth is investment. Investment refers to the net acquisition of capital, either in the form of new assets or the creation of new enterprises.

Investment plays an important role in economic growth because it leads to increased production and innovation. It also creates jobs, as well as opportunities for capital gains.

The Labor Market

The labor market is the place where people who want to work can find a job. This section will discuss the different types of markets in the economy, and how they affect the supply and demand for labor.

The economic definition of a market is an area where buyers and sellers are able to exchange goods and services without the need for a middleman. There are two main types of markets in the economy: complete markets and imperfect markets.

A complete market is one where all the buyers and sellers are known ahead of time. This type of market is usually found in industries where products or services are homogeneous and there is little variation between them.

An imperfect market, on the other hand, is one where buyers and sellers are not known ahead of time. This type of market is found in industries where products or services are heterogeneous and there is a lot of variation between them.

Markets can also be divided based on their size. A small market refers to an industry or sector with a limited number of buyers or sellers. A large market refers to an industry or sector with a large number of buyers and sellers.

The supply and demand for labor is determined by two factors: wages and employment. Wages are determined

Inflation and Its Causes

Inflation is a general rise in prices across an economy. It usually results from an increase in the money supply, which leads to an increase in the price of goods and services.

There are many different factors that can cause inflation, including:

1. Raising interest rates: When a bank increases its interest rates, this can cause the price of loans to rise, which then leads to an increase in the price of goods and services.

2. Changes in international trade: Changes in international trade can lead to a change in the prices of goods and services.

3. Changes in domestic demand: Changes in domestic demand can lead to changes in the prices of goods and services.

4. Changes in technology: technological innovations sometimes lead to changes in the prices of goods and services.

Unemployment and Its Causes

Unemployment is a situation in which people cannot find jobs, or are not able to work the number of hours they want.

There are many different causes of unemployment. Some of these causes are temporary and will go away on their own, while others are long-term and will require more than just a few solutions.

One of the most common causes of unemployment is the loss of jobs in a particular sector of the economy. If there are too many jobs in one sector, but not enough jobs in another sector, businesses will start to move their operations into the latter sector. This results in a decrease in the number of jobs in the original sector, and an increase in the number of jobs in the new sector.

Another cause of unemployment is when businesses can no longer afford to hire workers. This can happen for a number of reasons, including when the economy goes into a recession and businesses start to lose money hand over fist.

In order to avoid unemployment, governments need to make sure that there are enough jobs available for everyone who wants them. They also need to make sure that businesses have enough money to keep hiring workers, so that they don’t have to lay off employees due to financial constraints.

Fiscal Policy and the Balance of Payments

Fiscal policy is the government’s use of economic tools to achieve specific economic goals. Fiscal policy can be divided into three types: revenue, expenditure, and balance of payments.

Revenue fiscal policy is when the government raises taxes or reduces spending to increase government revenue. This type of policy is used to raise money to fund government programs or to reduce the national debt.

Expenditure fiscal policy is when the government spends money on programs that it doesn’t have to in order to stimulate the economy. This type of policy is used to help reduce unemployment or increase spending on important social programs.

Balance of payments fiscal policy is when the government changes the value of its currency in order to export more goods and import less goods. This type of policy is used to try and improve the country’s balance of payments.

9.International Trade

International trade is the exchange of goods and services between countries. International trade helps to improve the economic well-being of both countries involved.

International trade can be divided into two main types: importation and exportation. Importation is when a country imports goods from another country. Exportation is when a country exports goods to another country.

Importing goods from other countries can help to increase the country’s GDP. It can also help to reduce the country’s unemployment rate. Exporting goods can help to reduce the country’s inflation rate.

International trade is complex, but it is an important part of our economy. If you want to learn more about international trade, you should read one of the following books: “The World Economy: A Very Short Introduction” or “Globalization: A Very Short Introduction.”


In this article, we will be discussing the topic of supply and demand in economics. In order to understand it better, let us first look at what is meant by these terms. Supply refers to the total quantity of a good or service that producers are willing to offer for sale. Demand refers to the level of demand that consumers place on a good or service. When looking at competitive markets, producers will aim to increase supply so that it matches or exceeds demand. If there is too much supply relative to demand, then prices will fall and more people will buy the product; conversely, if there is not enough supply then prices will rise and fewer people will buy the product. Let us take an example: Suppose there are three bakeries in a town and each bakery wants to sell cakes everyday. The cake market is perfect competition where each bakery tries to produce as many cakes as possible in order to satisfy consumer demands (supply). If two bakeries want to sell their cakes everyday while one bakery only wants to sell one cake per day, then the market would become disequilibrium because two bakeries would have more than enough cakes and no one would be able to purchase them (demand equals quantity demanded less quantity supplied).

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