NCERT Solutions for Class 12 Macro Economics Chapter 1: Introduction to Macro Economics

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Chapter1. Introduction to Macro Economics
TextbookMacro Economics
CategoryNCERT Solutions for Class 12

The NCERT Solutions for Class 12 Macro Economics cover all the questions pertaining to the subject in a very clear and lucid manner. Apart from being highly accurate, these solutions are also very easy to memorize. These solutions are written as per the latest CBSE syllabus and are helpful in clearing doubts. On this solution page, we have provided you with complete overview of the concepts and methods covered in the Chapter 1 of Macro Economics – Introduction to Macro Economics.

NCERT Solutions for Class 12 Macro Economics Chapter 1

Introduction to Macro Economics Solutions

Q1) What is the difference between microeconomics and macroeconomics?

Answer) These are the difference between microeconomics and macroeconomics:

Deals with the behaviour, choices and incentives of individuals or individual companies.Deals with the economy as a whole, including governments, corporations and regulatory institutions.
Pioneered by economists such as Alfred MarshallPioneered by economists such as J.M. Keynes
Can be used to explain consumer behaviour, the theory of price and marketing principles.Can be used to explain aggregate market performance, unemployment, growth and overall market predictions.

Q2) What are the important features of a capitalist economy?

Answer) These are the major characteristics of capitalist economics;

  1. Competitiveness exists between producers and free enterprise is guaranteed.
  2. The market determines the price of the commodity in accordance with demand and supply.
  3. The productive resources are private.
  4. The main reason for producers is to maximise profit.

Q3) Describe the four major sectors in an economy according to the macroeconomic point of view.

Answer) These are the four most important sectors of the economy from a macroeconomic point of view:

  1. The production sector that is responsible for the production of goods and services
  2. The household sector that consumes the goods and services produced in the economy
  3. The government sector that is responsible for framing laws and regulating policies that affect the economy and the people
  4. The external sector that refers to the rest of the world which is interconnected through trade

Q4) Describe the Great Depression of 1929.

Answer) The Great Depression became a serious economic crisis that began in 1929. It began in the United States of America with the stock market crash and gradually spread into other countries of the world. The main cause of the crisis has been the decrease in aggregate demand due to under-consumption and over-investment. As a result of under-consumption and excessive investment, the stock of finished goods began to accumulate, resulting in a low price level and therefore a low level of profit. Money in the economy had been converted into unsold stock of finished products that lead to an acute decrease in employment and thus the level of income has fallen drastically.

The demand for commodities in the economy was so low that output was reduced leading to unemployment. In the United States, the unemployment rate had increased from 3% to 25%. The Great Depression has its own implications and importance in the economy, as it leads to the failure of the conventional approach to the economy. Those who believed in the market forces of demand and supply, opened the door to the emergence of the Keynesian approach. It was this incident that provided economists with sufficient evidence to recognize macroeconomics as a distinct sector of the economy.

That’s it. These were the solutions of NCERT Class 12 Macro Economics Chapter 1 – Introduction to Macro Economics. Our team hopes that you have found these solutions helpful for you. If you have any doubt related to this chapter then feel free to comment your doubts below. Our team will try their best to help you with your doubts.

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