Economics: NBSE class 9 social science chapter 16 answers/notes

Here are the notes, questions, solutions, textual answers, pdf, extras, for Chapter 16: Economics, which is a part of the Social Science Class 9 syllabus for students studying under the Nagaland Board of School Education. However, these notes should be used only for references and additions/modifications should be made as per the requirements.

Introduction

In this chapter, you will understand the concept of “economy” in a detailed manner. An economy can be defined as the sum total of all the economic activities of a country. All the activities that are related to the production, distribution and consumption of wealth are called economic activities.

Different countries have different forms of economies, and thus the economy does not have a singular form in every country in the world. In some countries, the main source of income for the people is agriculture, and therefore they are called agricultural economies. Some economies in the world are very systematic and developed, like the economy of the United States of America, and therefore they are called developed economies. On the other hand, economies like the Indian economy have not reached the level of the American economy, and therefore our economy is identified as a developing economy.

Again, economies are classified on the basis of ownership of the means of production. In some countries, private companies own the means of production. Search economies are called capitalist economies. In China, it is the government that owns most of the means of production. China’s economy is called a “socialist economy.” In India, we have both private companies and government agencies that own the means of production. India’s economy is known as a “mixed economy.” In the chapter, you will learn in brief about the economy and how the economy can be classified depending on different factors.

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Textual questions and answers

Choose the correct answer

1. Which of the following is a characteristic of a mixed economy?

A. All resources are owned and controlled by the government. B. Economic decisions are solely driven by supply and demand. C. Both private individuals and the government play a role in economic activities. D. Economic decisions are determined by tradition and cultural practices.

Answer: C. Both private individuals and the government play a role in economic activities.

2. In a mixed economy, what is the role of the government in economic activities?

A. It has no role in the economy. B. It plays a limited role, regulating key industries and providing some services. C. It controls all aspects of the economy. D. It only enforces contracts but doesn’t regulate industries.

Answer: B. It plays a limited role, regulating key industries and providing some services.

3. Which group of countries is more likely to have a higher Human Development Index (HDI)?

A. Underdeveloped countries B. Developed countries C. Emerging economies D. Least developed countries

Answer: B. Developed countries

4. There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below.

Assertion (A): There is a co-existence of private and public sectors in the mixed economy.
Reason (R): Since 1991 Indian economy is set on the path of liberalisation and globalisation.

A. Both (A) and (R) are true and (R) is the correct explanation of (A)
B. Both (A) and (R) are true but (R) is not the correct explanation of (A)
C. (A) is correct but (R) is wrong
D. (A) is wrong but (R) is correct

Answer: B. Both (A) and (R) are true but (R) is not the correct explanation of (A)

5. Consider the statements given below and choose the correct answer.

Statement I: One of the main features of an underdeveloped economy is low per capita income.
Statement II: Most of the people are employed in the industrial sector in an underdeveloped economy.

A. I is correct and II is incorrect
B. I is incorrect and II is correct
C. Both I & II are incorrect
D. Both I & II are correct

Answer: A. I is correct and II is incorrect

6. Identify the type of economy as per the characteristics given below.

I. Property is privately owned and economic decisions are privately made
II. Entrepreneurs are guided by self-interest and profit motive
III. It is also known as free economy or laissez-faire economy

A. Mixed economy B. Socialist economy C. Capitalist economy D. Planned economy

Answer: C. Capitalist economy

Very short answer type questions

1. What is an economic activity?

Ans: Activities relating to the production and consumption of wealth are called economic activities.

2. Define production.

Ans: The creation or addition of economic value in goods is called production.

3. What is meant by investments?

Ans: The part of production which is not consumed but used for further production of goods and services is termed as an investment.

4. Name the four factors of production used in the production of a commodity or service.

Ans: Land, capital (money), labour and raw materials are the four factors of production used in the production of a commodity or service.

5. Define a closed economy.

Ans: Closed economy is an economy that has no economic relations with the rest of the world.

6. What is meant by a planned economy?

Ans: Planned economy refers to an economy where the government (i.e., Central Planning Authority) has full control of all economic activities of the country.

7. What is a mixed economy?

Ans: A mixed economy is a form of economy in which both the public sector as well as the private sector coexist.

Short answer type questions

1. What are two important functions that an economy performs?

Ans: The two important functions that an economy performs are:

I. To produce goods and services to satisfy human wants.
II. To provide employment or income-earning opportunities to its people.

2. State the principal features of a capitalist economy.

Ans: The principal features of a capitalist economy are:

I. Freedom of Enterprise and Contract: Capitalists have the freedom to set up business enterprises and sell goods and services to maximise profits.
II. Freedom of consumption: A capitalist economy allows freedom to consumers in the sense that consumers are free to decide which goods they would consume and in what quantities.
III. Free Market: A capitalist economy is an economy where the market mechanism is allowed to work freely.
IV. Competition: In a capitalist economy, there is free and perfect competition.
V. Laissez-Faire State: Under the capitalist economy, the state does not interfere in the economic affairs of society.

3. State the features of a mixed economy.

Ans: The features of a mixed economy are:

I. Coexistence of private and public sectors.
II. Economic planning.
III. Beneficial for the masses. In a mixed economy, prices are generally regulated or administered at certain prices.
IV. Greater welfare.
V. Protects the interests of workers.
VI. Reduction of inequality of incomes.

4. State three characteristics of underdeveloped countries.

Ans: The characteristics of an underdeveloped economy are:

I. Low per capita income: One of the main features of an underdeveloped economy is a low per capita income.
II. The high growth rate of the population: The rate of population growth in underdeveloped countries is quite high compared to developed countries.
III. Agriculture: Generally, agriculture is the main occupation of people in underdeveloped countries.
IV. Unequal distribution of income: In underdeveloped countries, there is widespread inequality in the distribution of income.
V. Technological backwardness: In underdeveloped countries, techniques of production are required.

5. State three characteristics of developed economies.

Ans: Three characteristics of developed economies are:

I. High per capita income: National income and per capita income are high in developed countries.
II. The predominance of industrial and service sectors: The developed economy is dominated by large industries and service sectors.
III. Technological advancement: Production techniques used in these countries are highly complex and advanced.

6. Distinguish between the private and public sectors.

Ans: The private sector and public sector can be differentiated on the following lines:

Private sector	Public sector
I. Nearly 80% of the country’s national income is generated by the private sectors in India.	I. The Percentage share of public sector in the country’s national income is 24%.
II. The economic activities are privately owned and controlled.	II. These are owned and controlled by the government.
III. It is guided by profit motive.	III. The main purpose is to remove regional imbalance and develop backward areas.
IV. The private sector is more productive and efficient compared to the public sector.	IV. Public sector is less productive and efficient than the private sector.

Long answer type questions

1. Describe briefly the main features of the Indian economy.

Ans: The main features of the Indian economy are:

An underdeveloped economy: India is considered an underdeveloped economy. Most of the features of an underdeveloped economy are more or less present in the Indian economy.
Dualistic economy: Presently, the structure of our economy is dualistic in nature. In our traditional sector labour-intensive techniques of production are used and in the modern sector of capital intensive techniques are employed.
Mixed economy: Indian economy is a mixed economy. There is the coexistence of the public and private sectors. The private sector is not completely free in its operation. The government controls and regulates this sector through its various industrial, monetary, and fiscal policies.
A developing economy: Achievements of increasing national income, capital formation, agricultural development and industrial policies are sufficient enough to call our economy a developing economy.
A planned economy: Under the able leadership of Prime Minister Jawaharlal Nehru, India had chosen the path of economic planning. The planning commission of India was established under this initiative to assess the country’s available resources and to formulate a plan for their most efficient use.

2. ‘Indian economy is a developing economy.’ Explain the statement.

Ans: The following major achievements of the Indian plans are sufficient enough to call our economy a developing economy:

Increase in national income: India is one of the fastest developing countries in the world. Development in all sectors has resulted in an increase in its national income.
Increase in rate of capital formation: Indian economy is growing very fast. The development in the secondary and tertiary sectors has increased the per capita income.
Agricultural progress: Indian economy is an agrarian economy. 66% of the Indian population is engaged in agricultural activities. The green revolution in agriculture has made India self-sufficient in food grain production.
Industrial progress: There are a large number of industries, both in the private as well as public sector undertakings. India has a large number of large-scale industries, small-scale industries, and cottage industries.

3. Describe in brief the role of private sector in the Indian economy.

Ans: The private sector plays a dominant role in the Indian economy in the following ways:

i. It provides employment to more than 90% of the country’s working population.
ii. Nearly 80% of the country’s national income is generated by the private sector.
iii. IIT accounts for 95.5% of gross domestic savings.
iv. Agriculture, the largest occupation in the private sector in India, contributes 29% to the economy and provides employment to 66% of the total working population.
v. Almost all the training activities are managed by the private sector.
vi. The private sector has made the country self-sufficient, particularly in consumer goods. The entire small-scale and cottage industry is owned by the private sector.

4. Distinguish between a capitalist economy and a socialist economy.

Ans:

Capitalistic economy	Socialist economy
i. Means of production are owned and managed by private people.	i. Means of production are owned and managed by the government.
ii. Economic activities are guided by self-interest and profit motive.	ii. Economic activities are guided by the motive of social welfare.
iii. All economic problems are solved with the help of price mechanism.	iii. All economic decisions are taken by the government through economic planning.
iv. There is the existence of large inequalities of income.	iv. Inequalities of income are relatively very small.
v. Economic fluctuations are widely seen.	v. Economic fluctuations have no place here.
vi. Society is divided into two groups (a) haves and (b) have nots.	vi. There is low degree of class conflict.

5. Has the system of the planned economy in India been successful in producing high economic growth? Why?/Why not?

Ans: Yes, the system of the planned economy in India has been successful in producing high economic growth and thereby increasing national and per capita incomes. In India, all economic decisions are taken by the central planning authority. The Planning Commission was established under the able leadership of our first Prime Minister, Pandit Jawaharlal Nehru, in March 1950 to assess the available resources in the country and formulate a plan for their most effective use. The commission fixes the period of a plan at five years. The first five-year plan was launched on April 1, 1951, and since then we have undertaken and completed 11 plans. This has resulted in a considerable rise in GDP (Gross Domestic Product), savings, and investment. India also achieved self-sufficiency in food grain production after the introduction of the five-year plans.

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