ECONOMICS (856)

CLASS XII
There will be two papers in the subject:
Paper I - Theory: 3 hours ……80 marks Paper II- Project Work ……20 marks
Note: The syllabus is intended to reflect a study of the theory of Economics with specific reference to the Indian
Economy. Therefore, examples and specific references to the Indian Economy must be made wherever relevant.

PAPER - I (THEORY) – 80 Marks

1. Micro Economic Theory Various methods of measurement of the

(i) Demand: meaning, factors affecting demand; elasticity of demand: point method -
Demand function; Law of Demand; percentage method, expenditure method and
derivation of demand curve; movement and geometric method. (Numericals required on
shift of the demand curve; exceptions to the percentage method only). The cross and
Law of Demand. income elasticity of demand must be
explained. Degrees of elasticity of demand to
Law of Diminishing Marginal Utility, Law of be explained. Use diagrams wherever
Equimarginal Utility, consumer’s necessary.
equilibrium through utility approach
(Cardinal) and indifference curve analysis (iii) Supply: meaning; difference between stock
(Ordinal). and supply; determinants of supply; Law of
Supply; movement and shift of the supply
The concept of demand: meaning, types of curve; elasticity of supply
demand. A demand function to be specified
incorporating the determinants of demand. Difference between stock (intended supply)
Diagrams should be used in explaining the and supply (actual supply) with the help of
Law of Demand, reasons for downward slope relevant examples. A supply function should
of demand curve, its derivation using demand be specified and explained. Law of Supply:
schedule. Derivation of market demand curve Meaning, supply schedule and supply curve.
from individual demand curve. Derivation of market supply curve from
individual supply curve. Movement and shift
(a) Cardinal Utility Analysis: meaning of of the supply curve, exceptions to the Law of
utility, total utility, marginal utility, Supply. Elasticity of Supply: Meaning,
relationship of TU and MU, Law of degrees of elasticity of supply and
Diminishing Marginal Utility (schedule and measurement of elasticity of supply by
diagram, Only assumptions to be taught, percentage method and geometric method.
criticisms not required), Consumer’s
equilibrium – one commodity (schedule and (iv) Market Mechanism: Equilibrium and
diagram), Law of Equimarginal Utility disequilibrium; Equilibrium price and effect
(statement, schedule) and conditions of of changes in demand and supply on the
consumer’s equilibrium using marginal equilibrium price. Simple applications of
utility; (b) Ordinal Utility Analysis: tools of demand and supply.
Indifference Curve – its meaning and A basic understanding of the concept of
properties (including MRS and DMRS), equilibrium. The effects of changes in
indifference map, consumer’s budget line, demand and supply - both along the curves
Consumer’s equilibrium – condition (to be and shift of the curves to be explained. Basic
explained with the help of a diagram). understanding of Price control, rationing,
(ii) Elasticity of demand: meaning, types of Price ceiling and Floor price with the help of
elasticity of demand, measurement of demand and supply curves.
elasticity of demand; factors affecting (v) Concept of production and production
elasticity of demand. function: (short run and long run production

1
function), returns to a factor, returns to scale 2. Theory of Income and Employment
(meaning only) total, average and marginal Basic concepts and determination of Income and
physical products; Law of Variable Employment
Proportions and its three stages.
The concept of demand (exante) and effective
A production function (concept only). Law of (expost) demand. Aggregate demand and its
Variable Proportions: statement, components, propensity to consume and
assumptions, schedule (for the purpose of propensity to save (average and marginal),
understanding and not for testing), diagram equilibrium output (aggregate demand and
and explanation to the three stages. aggregate supply approach; and saving and
(vi) Cost and revenue: Basic concepts of cost; investment approach); investment multiplier (its
fixed cost, variable cost, total cost, marginal meaning and mechanism with the help of a
cost and average cost – their relationships; diagram). Simple numerical based on the above.
opportunity cost; short run and long run cost Meaning of full employment. Problems of excess
curves. Revenue: meaning; average revenue, demand and deficient demand; measures to
marginal revenue and total revenue and their correct them.
relationships under perfect competition and
imperfect competition, Producer’s 3. Money and Banking
equilibrium. (i) Money: meaning, functions of money, supply
Basic concepts – private cost, economic cost, of money.
social cost, money cost, real cost, explicit Meaning, kinds of money, functions of money
cost, implicit cost. (primary, secondary and contingent) to be
Cost concepts – Fixed cost, variable cost, explained; supply of money (only meaning of
total cost, marginal cost, average cost with M0, M1, M2, M3 & M4). Inflation: meaning,
schedule and diagram; relationship between demand pull and cost push (diagrams not
average cost, marginal cost, total cost (only required)
concepts of long run and short run cost (ii) Banks: functions of commercial bank; high
curves, derivations not required). powered money, credit creation by
Opportunity cost – meaning only. Difference commercial banks; Central Bank: functions.
between accounting cost and opportunity Basic understanding of the functions of
cost. commercial banks, credit creation process
Revenue – Average revenue, marginal with limitation. The regulatory role of the
revenue, total revenue – concepts and Central Bank, its functions and the way it
relationships under perfect competition and controls the flow of credit needs to be
imperfect competition. Producer’s explained. A brief mention may be made of
equilibrium (Profit maximization goal) – quantitative CRR, SLR, Bank Rate policy
meaning; conditions: (a) TR and TC (repo rate and reverse repo rate) and Open
approach along with diagram (b) MR and Market Operations) and qualitative methods.
MC approach along with diagram. 4. Balance of Payment and Exchange Rate
(vii) Main market forms: perfect competition, Balance of Payment – meaning, components;
monopolistic competition, oligopoly, foreign exchange – meaning, determination of
monopoly, monopsony; characteristics of the exchange rate (Flexible).
various market forms; equilibrium of a firm
in perfect competition under short run and Balance of Payment - Meaning and components;
long run. Causes of disequilibrium and how the
disequilibrium can be corrected; Foreign
Features of perfect competition, monopolistic Exchange Rate – meaning, meaning of fixed and
competition, oligopoly, monopoly and flexible exchange rate, determination of exchange
monopsony (meaning only). Equilibrium of a rate in a free market. Concepts of depreciation,
firm in perfect competition under short run appreciation, devaluation and revaluation
(explanation and diagram, shut down point (meaning only).
and break-even point) and long run (diagram
not required).

2
5. Public Finance PAPER II – PROJECT WORK – 20 Marks
(i) Fiscal Policy: meaning and instruments of Candidates will be expected to have completed two
fiscal policy. projects from any topic covered in Theory.
Meaning and instruments of fiscal policy – The project work will be assessed by the teacher
Public Revenue: Meaning, taxes (Meaning and a Visiting Examiner appointed locally and
and types), difference between direct and approved by the Council.
indirect taxes; Public Expenditure: Meaning
and importance; Public Debt: Meaning and Mark allocation for each Project [10 marks]:
redemption; Deficit Financing: meaning. Overall format 1 mark
(ii) Government Budget: meaning, types and Content 4 marks
components. Findings 2 marks
Meaning and types of Government budget – Viva-voce based on the Project 3 marks
union, state; components – revenue and
capital. Concept of deficit budget: revenue A list of suggested Projects is given below:
deficit, fiscal deficit, primary deficit – their 1. Study a Public Sector Enterprise with reference
meaning and implications. to its relevance to the Indian Economy and its
future prospects. Analyse the trend of its growth
6. National Income
for the last ten years.
(i) Circular flow of Income.
2. Conduct a Socio-Economic survey of a locality
A simple model explaining the circular flow (minimum sample size should be 30 households)
of income with two, three and four sector with reference to:
models with leakages and injections.
(a) Demographic features.
(ii) Concepts and definition of NY, GNP, GDP, (b) Consumption Pattern – Expenditure on
NNP, private income, personal income, necessities, comforts and luxuries.
personal disposable income, National
(c) Occupational structure.
Disposable Income and per capita income;
relationship between the income concepts. 3. Compare the contribution made by different
sectors of the economy towards GDP growth
A brief understanding of the mentioned
during the planning period.
national income aggregates is needed. The
concepts of GNP and NNP should be 4. Prepare a report on the competition in the
explained both at factor cost and market Aviation Sector in India with reference to:
prices, real GDP and nominal GDP, (a) Performance of the Public Sector and Private
National Disposable Income (Gross and Sector.
Net), GDP and Welfare, GDP as an indicator (b) Operational strategies adopted by budget/low
of Economic welfare. cost carriers.
(iii) Methods of measuring National Income: 5. Make a comparative analysis of lending
product or value-added method; income performance of five Commercial Banks in the
method and expenditure method with simple past six years with reference to the changing
numericals based on them. CRR and SLR.
Simple numericals based on all the methods 6. Many thinkers believe that we are rapidly
to be covered for better understanding of the depleting our natural resources. Assume that
concept. Precautions and difficulties of there are only two inputs (labour and natural
measuring National Income for each method. resources) producing two goods (wheat and
gasoline) with no improvement in technology

3
over time. Show what would happen to the 7. Make a comparative study of the allocation of
Production Possibility Curve over time as natural financial resources of the Central Government
resources are exhausted. How would invention Budget on Agriculture, Defence, Industry and
and technological improvement modify your Education in the last ten years. Prepare a report
answer? On the basis of this example, explain on your observations.
why it is said “economic growth is a race 8. Prepare a trend Analysis of Growth and
between depletion and invention.” Productivity of any one industry such as:
Textile / Automobiles / Electronic and
Tele-communication, etc. in India for the past ten
years.

NOTE: No question paper for Project Work will be

set by the Council.

4
SAMPLE TABLE FOR PROJECT WORK
S. Unique PROJECT 1 PROJECT 2 TOTAL
No. Identification MARKS
Number
(Unique ID) A B C D E F G H I J
of the
candidate Teacher Visiting Average Viva- Total Teacher Visiting Average Viva- Total (E + J)
Examiner Marks Voce by Marks Examiner Marks Voce by Marks
Visiting Visiting
(A + B ÷ (C + D) (F + G ÷ (H + I)
Examiner Examiner
2) 2)
7 7 Marks* 7 Marks 3 Marks 10 7 7 Marks* 7 Marks 3 Marks 10 Marks 20 Marks
Marks* Marks Marks*
1
2
3
4
5
6
7
8
9
10

*Breakup of 7 Marks to be awarded separately by

the Teacher and the Visiting Examiner is as Name of Teacher:
follows:
Signature: Date
Overall Format 1 Mark
Content 4 Marks Name of Visiting Examiner
Findings 2 Marks
Signature: Date
NOTE: VIVA-VOCE (3 Marks) for each Project is to be conducted only by the Visiting Examiner, and should be based on the Project only.