SST Set - 7 (Q.1 to 20)
Q.1. What are the causes of decrease in demand?
Ans : Important causes of decrease in Demand are as under :
(i) When income of the consumer falls.
(ii) When price of the substitute good decreases.
(iii) When price of the complementary good increases.
(iv) When taste of the consumer shifts against the commodity due to change in fashion or climate.
(v) When price of the commodity is expected to decrease in the near future.
(vi) Decrease in the number of consumers
(vii) When the income of the consumer is expected to fall in near future.
Effect of Change in the Income of the Buyer on the Demand for a Commodity
Effect of change in income of the buyer on the demand for a commodity is studied with reference to (i) Normal Goods and Inferior Goods.
(i) Normal Goods : Normal Goods are those in the case of which income effect is positive. Demand increases when income increases, and vice-versa. Thus, in case of normal goods, there is direct relationship between income and demand. Following figure Illustrates the relationship. The figure show that OQ quantity of the commodity is demand when income is OY. Quantity increases to QO1 when income increases to OY1. This establishes positive relationship between income and demand.
(ii) Inferior Goods : Inferior goods are those in the case of which income effect is negative. Demand decreases when income increases, and vice-versa. Thus, in case of inferior goods, here is negative (-) relationship between income and demand. Following Figure illustrates this point :
The Figure show that OQ of the commodity is demanded when income is OY. Quantity decreases to OQ1 when income increases to OY1. This establishes negative relationship between income and demand.
Q.2. Define 'Returns to a Factor'. What are the phases it exhibit ?
Ans : When the input of one factor is increasing while all other factors remain constant, then the proportion between the factor is altered. Supposing, there are two factors of production, i.e., land and labour. Land is a fixed factor and labour is a variable factor. Supposing, you have a land measuring 2 hectares . You grow tomatoes on it with the help of one labourer. Accordingly, the proportion between labour and land will be 1 : 2. If the number of labourers is increased to 2 then the new proportion between labour and land will be 2 : 2, in other words, if there are 2 hectares of land per labourer previously, now there will be 1 hectare of land per labourer. On account of change in the proportion of factors there will also be a change in total output, but a different rates. Initially, when more workers are employed on the fixed land, total output may increase at the increasing rate. Subsequently, total output may increase at the constant rate. But, a stage must come when, as a matter of law, total output will increase only at the diminishing rate. Thus, returns to a factor exhibit three phases.
(1) Increasing Returns to a Factor
(2) Constant Returns to a Factor
(3) Diminishing Returns to a Factor or Law of Diminishing Returns.
Q.3. What determines Elasticity of Demand for a Factor ?
Ans : Elasticity of Demand for a factor refers to proportionate change in demand in response to a given change in the price of the factor. It depends upon the following parameters :
(i) Elasticity of Demand for the Product : We know each factor is demanded to produce some good. Accordingly,elasticity of demand for factors depends on the elasticity of demand for the product that it produces.
(ii) Percentage of Factor Cost to the Total Cost : In case percentage of factor cost (cost of the concerned factor) to the total cost of production is low, elasticity of demand for the factor should also be low, and vice-versa. Demand for the factor should not show any significant change when the overall cost of production is not much affected.
(iii) Rate of Decline in Productivity : Demand for the factor is identified with marginal revenue product of the factor.As, more and more of the factor is employed, its marginal product tends to decline in accordance with the law of variable proportions. Higher percentage change in marginal revenue productivity should obviously imply higher percentage change in demand for the factor, or higher elasticity of demand of the factor, other things remaining constant.
(iv) Substitutability between Factors : Demand for a factor will be elastic if it can be substituted for another factor. But it will be inelastic if it cannot be substituted for another factor.
Q.4. Do you believe that the economy is always in a state of equilibrium corresponding to full employment is wrong.
Ans : Criticising the Classical Theory of income and employment. Keynes in his book "The General Theory of Employment, Interest and Money" makes following observations:
(i) The assumption that supply creates its own demand (and therefore aggregate supply is always equal to aggregate demand) is just childish. It may hold good in the primitive economies with Barter System of exchange, but certainly not in modern economies where money plays an important role. Aggregate demand may be more than aggregate supply in which case inflation (Increase in prices) will set in. Also aggregate demand may be less than aggregate supply in which case deflation (Decrease in price) will set in.
(ii) It is wrong to assume that wage rate is perfectly flexible. Trade unions may not allow wage rate to fall below its existing level. Accordingly, supply of labour may exceed the demand for labour and there can be a situation of unemployment in the economy. Keynes says that aggregate demand may be equal to aggregate supply even when there is unemployment in the system.
(iii) That it is always possible to use more of labour in place of capital is also technically wrong. Techniques of production in modern economies are generally not htat flexible.
Hence, the classical assertion that the economy is always in a state of equilibrium (where AS = AD or S = I) corresponding to full employment, proves wrong.
Q.5. What is Capital Expenditure?
Ans : Those expenditures of the Government are capital expenditures which
— create assets for the Government. Equity (or shares) of the domestic or multinational corporations purchased by the Government may be cited as an example.
— cause reduction in liabilities of the Government. Repayment of loans certainly reduces liability of the GoverFfrnent. Accordingly this is to be treated as capital expenditure.
In short, capital expenditure refers to the estimated expenditure of the government in a fiscal year which either creates assets or causes a reduction in liabilities.
Q.6. What was the objectives of the second plan. How did it perform?
Ans : The Second Plan was based on Prof. P.C. Mahalanobis model which introduced a clear strategy of development based on the 1928 Soviet Model of Feldman. This strategy stressed investment in heavy industry to achieve industrialisation which was assumed to be the basic condition for rapid economic development. Besides, the Industrial Policy of 1956 emphasised the role of public sector and accepted the establishment of a socialistic pattern of society as the goal of economic policy.
Due to the success in agricultural sector in the First Plan it was concluded that agriculture could be assigned lower priority and emphasis was made on the development of heavy industries for a rapid economic development. Hence the objectives of the Second Plan were : (i) to give a 'big push' to the economy in order to enable it to reach 'take' off-stage; (ii) emphasis on rapid industrialisation, particularly on development of basic and heavy industries; (iii) to achieve 4.5% growth rate in national income; (iv) larger expansion of employment opportunities; and (v) reduction of inequalities in income and wealth.
The plan envisaged the objectives of achieving socialistic pattern of society (incorporated in 1954) and in the process shifted the basic emphasis from agriculture to industry far too soon. This led to failures in foodgrains and commercial crops, inflation and decline in foreign exchange reserves. The Suez crisis and failure of monsoons proved further setbacks.
The plan, however, did meet with some success in the shape of public sector evolving as catalyst for industrialisation; adoption of taxation as a mechanism for resource mobilisation; and straightening of infrastructure including energy, transport and communication —the foundation for achieving accelerated economic growth.
Q.7. What is the nature and type of unemployment in India?
Ans : Unemployment refers to the segment of workforce which is willing to accept job at prevailing wage rate, but fails to get a job. Workforce means people in the age group of 15-60 years.
Indian problem of unemployment is basically structural and chronic in nature. Due to high rate of populaiton increase in our country, the number of people coming to labour market in search of jobs has also increased rapidly, whereas employment opportunities have not increased correspondingly due to slow economic growth. Hence the magnitude of unemployment has increased from plan-to-plan. Apart from structural unemployment some cyclical unemployment has also emerged in the urban areas due to industrial recessions.
Structural unemployment : It arises when a large number of persons are unemployed or underemployed because of the other factors of production required to engage them fully are not sufficiently available. There may be a scarcity of land, capital or skill in the economy causing a structural disequilibrium in the labour sector.
Cyclical unemployment : This arises due to the changes occurring the recession phase of the trade cycle.
Unemployment usually takes three forms : (i) open unemployment, (ii) underemployment and (iii) disguised unemployment.
(i) Open unemployment : Open unemployment is a situation where in a large labour force does not get work opportunities that may yield them regular income. It is caused as a result of lack of complimentary resources, specially capital or in other words it is caused due to structural disequilibrium in the economy and hence can be identified as 'structural unemployment'.
(ii) Underemployment : Underemployment can be defined in two ways:
(a) a situation in which a person does not get the type of work he is capable of doing due to lack of suitable jobs;
(b) a situation in which a person does not get sufficient work to absorb him for the total length of the identified working hours of a day or the person gets some work during some days, weeks, months of a year, but not regularly throughout the year. This is also called seasonal unemployment and is caused largely by natural circumstances (as in agriculture).
(iii) Disguised unemployment : This term was originally referred to mean the cyclical transfer of men from the more productive to less productive jobs during depression. This definition of disguised unemployment relates it to a cyclical type of unemployment and is more suited to industrially developed countries which may be hit by cyclical umemployment. In the context of agriculturally under-developed economies, disguised unemployment is to be treated as part of structural umemployment and can be removed only by increasing the productive capacity of the economy that may create enough work.
Types of Unemployment in India
For analytical convenience unemployment in India can be classified into
(i) rural unemployment and
(ii) urban unemployment.
Rural unemployment in India is largely characterised by existence of open unemployment, seasonal unemployment and disguised unemployment. Whereas urban unemployment is characterised by the existence of both open unemployment, which in turn is an offshoot of rural unemployment. One of the special feature of urban unemployment in India is that the rate of underemployment is higher among the educated than among the uneducated people.
Q.8. Explain the significance of Art. 141 of the Constitution.
Ans. Art. 141 of our Constitution declares that the law declared by the Supreme Court of India shall be binding on all courts within the territory of India.
Q.9. What is the significance of Art. 137 of the Constitution?
Ans. Art. 137 confers on the Supreme Court the power to review its own judgement on the ground of error apparent on the face of the record.
Q.10. Where and under what circumstances can a Judge of the Supreme Court be impeached? Is it a judicial process?
Ans. An 'erring' Supreme Court Judge may be 'impeached' in Parliament, only "on the ground of proved misbehaviour or incapacity". It is a quasi-judicial process.
Q.11. As the Supreme Commander of the Armed Forces, can the Indian President declare a war, on his own?
Ans. The Indian President cannot declare a war without the sanction (or in anticipation of sanction) of Parliament. This power has to be exercised under the authority of law.
Q.12. What do you understand by the term 'consultative power' of the President?
Ans. Under Art. 143, the President has the power to consult the Supreme Court, at any time, on questions of law or fact of public importance.
Q.13. Outline briefly what constitutes the veto power of the President.
Ans. The veto power of the Indian President is a combination of the absolute, suspensive, qualified and pocket vetoes. These four constitute the executive vetoes.
Q.14. Enumerate the Union Territories as at Present listed in the First Schedule.
Ans. There are now seven Union Territories: Chandigarh, Delhi, Daman and Diu, Pondicherry. The Andaman & Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep.
Q.15. Briefly trace the first Proclamation of Emergency under Art. 352.
Ans. The first Proclamation was made by President on 26th October 1962, in the wake of the Chinese aggression in the NEFA. It was revoked on 10th January 1968.
Q.16. Discuss the content of the 96th Constitutional Amendment to the constitution. What are its pros and cons?
And : The 96th Constitutional Amendment Bill, 2003 has been, finally, approved. The Bill seeks to make the 2001 census the basis for delimitation of constituencies of the Lok Sabha Legislatures for SC/ST population. The Delimitation Commission has been permitted to continue with its work on the basis of the provisional 2001 census data. Nevertheless, the freeze on the number of constituencies will continue till 2026. The prealignment of constituencies is to be done for ST/ST on the basis of 2001 census.
Retired Justice of Supreme Court Kuldeep Singh heads the Delimitation commission. The other members are the Election Commissioners of the State and Union Territories concerned. The representatives of the Election commission are supposed to consult the ‘Associate’ members in every state who are nominated by Speakers of assemblies from among the representatives of recognized political parties.
The basic objective of the Commission would be to readjust the territorial constituencies for both the Lok Sabha and the State Legislative Assemblies on the basis of census figures, without affecting the total number of seats allocated for each State in the Lok Sabha and the Legislative Assembly.
The government has refused the demand for the reservation of the SC/ST constituencies on rotational basis. The Government has claimed that there is no consensus amongst the political parties over the rotational issues.
The Government also feels that the population is likely to stabilize by 2026. Any change in the given period would be contrary to National Population Policy. Further, the states, which performed well, would get lower number of political representation in Parliament as against states which did not do well in controlling and stabilizing the rate of population.
While Bihar, Madhya Prades, Rajasthan and UP wanted an increase in the number of seats as the population in these states have grown considerably, the southern states felt that their political clout would reduce as number of seat would decrease since they have been more successful with family planning programs.
The logic here is that increasing the number of constituencies will favour the states, which have lagged in opulation control and, in the process, penalize those who have registered good progress on that score.
Q.17. Discuss the Composition,Tenure, Function and Power of the Backward Classes Commission.
Ans : (i) What are Backward Classes is not defined in the Constitution.
(ii) Article 340, however, empowers the President to appoint a commission to investigate conditions of socially and educationally backward classes.
(iii) On the basis of the report of the Commission the President may specify who are to be considered backward Classes.
(iv) The court can consider whether the classification made by the government is arbitrary or is based on any intelligible and tangible principle.
The “backward classes” means such backward classes of citizens other than the Scheduled Castes and Scheduled Tribes as may be specified by the Central government in the lists.
Composition of Commission
The Commission shall consists of the following Members nominated by the Central Government;-
(a) A Chairperson, who is or has been a judge of the Supreme Court or of a High Court:
(b) A social scientists;
(c) Two persons, who have special knowledge in matters relating to backward classes and
(d) A Member-Secretary, who is or has been an office of the Central government in the rank of a secretary to the Government of India.
Tenure and Removal
(1) Every members shall hold office for a term of three years from the date he assumes office.
(2) A Member may be writing under his hand addressed to the Central government, resign from the office of Chairperson or, as the case may be, of members at any time.
(3) The Central Government can remove a person from the office of Member.
Functions and Powers
(1) The Commission shall examine requests for inclusion of any class of citizens as membership of a backward class and hear complaints of over-inclusion or any backward class in such lists and tender such advice to the Central Government as it deems appropriate.
(2) the advice of the Commission shall ordinarily be binding upon the Central Government.
(3) The Commission shall, while performing, its function, have all the powers of a civil court.
Q.18. Mention the relative positions of the two Houses of Parliament and of a State Legislature regarding Money Bills.
Ans : As regards Money Bills, the position is similar at the Union and the States.
However, there, is an immense scope for the development of fisheries by managing it properly through adoption of modern aquaculture technology. The contribution of the fishery sector could be raised from the present 2.5% to about 6%, extending the benefit to about 6.5 million fishermen population of the country.
The culture technologies developed in the country have resulted in increasing the average yield of fish production from about one tonne to about 8.0 to 10.0 tonne per ha. per year. Major carp species that attain a mean individual weight of more than one kg. in one year are the main components of carp polyculture or composite carp culture. Among the indigenous carps are catla (Catla catla), rohu (Labeo Rohita), mrigal (Cirrhinus mrigala) and Kalbasu and the exotic carps including silver carp (Ctenopharynqdon idella) and common carp (Cyprinus carpio var. communis).
Fresh Water Aquaculture
Fresh water aquaculture presents a rich resource potential in the form of ponds and tanks. About 10 million hectares of ponds and tanks area available for fish culture, while another 0.6 million hectares can be brought under culture. Further irrigation canals and reservoirs are also available to different types of culturable practices.
Considering the 1.0 million hectares of standing water bodies heading available for fish culture, an increasing in production rate from the prevalent 2/t/ha/year to 10/t/ha/year can result in a quantum leap in fish production in the country by 8 million tonnes.
The prospects are so glaring when compared with the present total inland fish production of 1.8 million metric tonnes. The potentials of the sector can be gauged by the annual growth rate of 11% in inland fisheries as compared to 5.8% in the fisheries sector as a whole
Q.20. State the difference between Western Himalayas and the Eastern Himalayas.
Ans : The Western Himalayas
1. The Western Himalayas extend West of 80°E longitude between the Indus and the Kali River.
2. The Western Himalayas have a high altitude
3. The average rainfall is less than 200 cms.
4. Alpine vegetation and conifers are found in this region.
5. These regions get a weak monsoon current.
The Eastern Himalayas
1. The Eastern Himalayas extend east of 88° E longitude between Tista River and the Brahmputra.
2. The Eastern Himalayas have a low altitude.
3. The average annual rainfall is more than 200 cms.
4. Dense evergreen forests are found in this region
5. These region get a strong monsoon current.