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(i) To show that chlorophyll is necessary ku photosynthesis. 

(ii) Starch test. Solution used in Iodine solution.

(iii) Variegated leaf/Coleus leaf (leaf having non green and green regions).

(iv) After performing starch test, Part A turns blue black v/ith Iodine solution. Part B turns brown with Iodine solution Sunlight

(i) 

1—Posterior Vena Cava 

2—Aorta 

3—Renal Artery 

4—Renal Vein 

(ii) Part 5 : Ureter – Carry urine from kidneys to urinary bladder.

Part 6 : Urinary bladder – Contain the urine till it is released out. 

Part 7: Sphincter muscles – Guards the urethra 

Part 8: Urethra – Passage through which urine is given out of the body. 

(iii) Adrenal gland. It is located above each kidney in the form of a cap.

(i) Osmosis : The process of movement of solvent molecules from a region of low concentration to a region of higher concentration through a semipermeable membrane. 

(ii) Allele – It is one of the alternative form of the same gene responsible for determining contrasting characteristics. 

(iii) Pulse – It is a wave of pressure of blood passing through the arteries as it is pumped out of the heart. 

(iv) Reflex Action : It is a spontaneous, automatic, involuntary response to a stimulus. 

(v) Synapse : It is the point of contact between the axon endings of one neuron with the dendrites of the other neuron through where the impulse is transmitted from one neuron to the other.

1. True

2. False,

meiosis results in four daughter cells.

3. False, 

meiosis keeps the chromosome number constant through the generations.

4. True

5. True

Repo rate, or repurchase rate, is the rate of interest at which RBI lends to the Commercial Banks for short periods against government bonds. This is done by RBI by buying government bonds from banks with an agreement to sell them back at a fixed rate. If RBI wants to make borrowing it more expensive, it increases the repo rate. Similarly, if RBI wants to make it cheaper for banks to borrow money from RBI, it reduces the repo rate.

Reverse repo rate is the rate of interest at which the RBI borrows from commerical banks for short period. This is done by selling government bonds to banks. Banks utilises the reverse repo rate facilities to deposit their short term excess funds with the RBI and earn interest on it.

Real Capital refers to all those goods which are used for further productions of more goods. 

Examples—Machines, tools, factory, buildings, transport equipments etc.

Helmut Kohl became the first Chancellor of United Germany since the Second World War.

Seasonal rainfall experienced in the map extract. Two evidences to show seasonal rainfall are : 

(i) seasonal water features,

(ii) broken ground

PO means Post Office

Three types of roads are shown in the map extract :

(i)  Cart tracks

(ii)  Pack tracks

(iii)  Unmetalled roads

(i)  Permanent settlements

(ii)  Perennial wells

The slopes are steep.

(i)  Hill

Causes of glare: 

1. Brightness of source – causes annoyance and blinding effect. 

2. Total volume of light – more than desired light in the direction of eyes causes discomfort. 

3. Location of the field of view – a source of light located too close to the eye causes glare. 

4. Contrast with background – fight source against a dark background of wall is tiring to eyes. 

5. Time exposure – Eye fatigue is caused if the light is within the field of view for a longer time

Five work centres of a kitchen: 

1. Preparation centre — for all preparations made before cooking. The centre facilitates chopping and mixing.

2. Cooking centre – where gas is placed. Requirements – heat resistant counters, wall cabinets to store spices, small utensils and base cabinets for heavy utensils. 

3. Washing centre or sink centre — for clearing and for dish washing. Equipment and materials for cleaning should be stored here. 

4. Serving centre—can be a continuation or a separate table may be provided in the kitchen. 

5. Storage centre – for keeping groceries, cooking utensils and cleaning materials.

Five work centres of a kitchen: 

1. Preparation centre — for all preparations made before cooking. The centre facilitates chopping and mixing.

2. Cooking centre – where gas is placed. Requirements – heat resistant counters, wall cabinets to store spices, small utensils and base cabinets for heavy utensils. 

3. Washing centre or sink centre — for clearing and for dish washing. Equipment and materials for cleaning should be stored here. 

4. Serving centre—can be a continuation or a separate table may be provided in the kitchen. 

5. Storage centre – for keeping groceries, cooking utensils and cleaning materials.

Consumer rights: 

1. Right to safety’ 

2. Right to be informed. 

3. Right to choose 

4. Right to be heard 

5. Right to seek redressal 

6. Right to consumer education

Adulterants in: 

1. Mustard oil – Argemone oil 

2. Bengal gram – Kesari dal or lathyrus

A Trekking Expedition: A trekking expedition is always interesting and thrilling. We a group of friends decided to go on trekking in Manali during the winter season. I was highly excited. I thought we would have tun all the way. So I took keen interest in making preparations. Some of my friends had already had trekking experiences. They sounded less enthused than others in the group, including myself. When they cautioned us about the difficulties on the way I just pooh-poohed what they said.

We decided to walk all the day to reach Manhar, a small sleepy village where the uncle of one of our friends lived. He said that we would stay at his place for the night, and then resume our journey back to Manali the next day. Throughout the day long journey we all enjoyed a lot. Though after some hours of trekking in the valley on zigzag, rough paths we felt tired. We saw in thedistance a black bear, but it disappeared in no time.

In my enthusiasm I opted to take a short-route. No one accompanied me. I went on and on, all alone. After an hour, the sun suddenly disappeared, and black clouds came threateningly over me. There was no one visible. Only a mixture of animal sounds struck my ears. I realized that I had got lost I tried to look for some hut to take shelter. In no time the rain started. I was full of fear. It was becoming difficult to find the way. I slipped once or twice. A sudden roar of some animal—maybe a tiger—gave me shivers of fright. Thankfully, no animal came on my way.

Suddenly my eyes fell on a deserted hut on a mound. I rushed, almost running, to the place. I was surprised that there was no one in the hut. But to my good luck, a cot and a blanket were there. There were a few packets of eatables I ate some and lay down on the cot after having secured the door.

When I woke up I found myself surrounded by my friends who had come all the way in search of me when the day had dawned. I was happy to be reunited with them.

I would never forget this trekking expedition. It taught me not to be over zealous at any time in life.

Mass of three alpha particles = 3 x 4.002604 u

= 12.007812 u

Mass of ¹²2C nucleus = 12.000000 u

Mass defect = 12.007812 - 12.000000

Δm = 0.007812 u

Energy released during the fusion

= Δm x 931.5 MeV

= 0.007812 x 931.5 MeV = 7.2768 MeV

(B) a deficiency of 5 electrons

Emf of the battery AB is 8 V

(i) Promotion of welfare : In India, ‘socialistic pattern of society’ has been regarded as the national goal. This goal calls for state participation in industrial and commercial enterprises to promote social welfare. In our economy, public sector enterprises are being used as an instrument to promote economic growth with social justice.

(ii) Infrastructure : Without the development of infrastructural facilities (such as transport, communication, power, irrigation, education, basic industries, etc.) economic development is not possible. These infrastructural facilities are developed only by the public sector of the country because private sector does not take interest in their development due to lack of resources and less profitability. Public sector investment in infrastructure has paved the way for agricultural and industrial development.

(iii) Strong Industrial Base : There is no denying the fact that rapid industrialisation during the first three decades after independence was mainly due to the public sector. Thus, by developing a strong industrial base, the public sector has now opened the path of rapid industrialisation of the country.

(iv) Export Promotion and Import Substitution : Public sector enterprises have been contributing a lot for the promotion of India’s exports. This has resulted in foreign exchange earning.

(i) 1. Contraction of Public Sector : Number of industries reserved for the public sector has been reduced from 17 to 8. And now only 3 industries (namely, atomic minerals, atomic energy and rail transport) are reserved for the public sector. Hence, even core industries like iron and steel, electricity, air transport, shipbuilding, heavy machines and strategic industries like defence productions have been opened for the private sector.

2. Policy of Disinvestment: Selling off a part of the equity of public sector undertakings is called disinvestment. According to the government, the purpose of disinvestments of shares of PSUs was to raise resources for the budget to reduce fiscal deficit and to provide funds for the modernisation of PSUs. The government has adopted two methods of disinvestments – (i) selling of shares in select PSUs and (ii) strategic sale of a PSU. Disinvestment was primarily through sale of minority shares in small lots.

Under the . latter method, the government started selling major part of its stake one or another a private sector company. It resorted to strategic sales of a number of companies. Modem Foods India, Bharat Aluminium Company (BALCO), Videsh Sanchar Nigam Ltd. (VSNL), Maruti Udyog Ltd. (MUL) etc. are examples of strategic sales. At present, the emphasis is to list large profitable PSUs on domestic stock exchanges and to sell their equity in small portions.

(ii) (a) Poor performance of Public Enterprises : In view of the poor performance of public sector undertakings, public sector has become an economic burden on the national economy.

(b) Rising Budgetary Deficits : The budgetary deficits in India are increasing considerably and further contribute to rising prices. To reduce budgetary deficits, the scope of public sector should be contracted and that of private sector be expanded. 

(c) High Capital Output Ratio : The capital output ratio in the economy has been increasing particularly for the public sector. It is likely to increase further. High capital output ratio in the public sector demands privatisation. In short, as private enterprises are motivated by profits, they take right economic decisions. This will avoid the wastage of resources. Hence, the economy is expected to show greater efficiency and productivity under privatisation.

Land like other factors of production differs from another in respect of location, fertility, nature and productivity. Two prices of land are not exactly the same.

Two merits of Direct Tax are :

1. Economical : Direct taxes are economical because the cost of collecting these taxes is relatively low as they are collected at source and paid to the government by the tax payers. 

2. Certainty : Direct tax satisfy tax payers as they have the knowledge of correct assessment of tax and the government is fully aware of the amount of tax revenue they will receive. 

Two demerits of Direct Tax are:

1. Possibility of evasion : The collection of direct tax is dependent on the honesty and good intentions of the tax-payers. Hence, there is a great possibility of tax evasion. 

2. Inconvenience : Direct taxes are considered highly inconvenient by the taxpayers. The tax-payers have to maintain accounts and submit statements of their income with other relevant details. This creates inconvenience to the taxpayers.

Commercial Banks play an important role in mobilizing savings from the individual savers. They provide the households, the most important agency where they may deposit their savings, to earn income based on interest assuring a high degree of security of their funds. 

There are various kinds of deposits through which Commercial Banks mobilize funds :

1. Fixed Deposit Account : In such deposits, the deposited amount can be withdrawn only after the period of time agreed upon by the bank and the depositor. The interest rates are higher in case of such deposits. The longer the period, higher is the interest rate. However, in practice banks allow the depositors to withdraw funds from such deposits even before the maturity period, but at a low interest.

2. Current Account : A depositor can withdraw their money from such accounts at any time. Usually no interest is paid by the bank on such deposits, but in fact, the bank charges some amount for the services rendered on maintaining such deposits. In some cases, the bank provides overdraft facility also to the depositor against certain securities or personal guarantee. Such deposits are mainly kept by traders and industrialists who are required to make regular deposits and payments through banks.

3. Savings Account : This kind of account is opened by banks with the objective of collecting small savings from the people who have small earnings, and deposit, in small amounts as they like, but the withdrawals are allowed, thrice a week only. However, the rate of interest is less than that on fixed deposits.

4 Recurring Account : In case of such deposits, an account holder has to deposit certain fixed amount every month for a specified period. The amount accumulated along with interest is paid to the depositor after the specified period. Rate of interest paid by the bank is higher than the savings account but less than the fixed deposit account.

Under monopolistic competition, products are differentiated and these differences are made known to the buyers through selling costs. Selling costs refer to the expenses incurred on marketing, sales promotion and advertisement of the product. Such costs are incurred to persuade the buyers to buy a particular brand of the product in preference to competitor’s brand. Due to this reason, selling costs constitute a substantial part of the total cost under monopolistic competition.

1. Money resolves the problem of double co-incidence of wants by acting as the Medium of Exchange. Since money has general acceptability and purchasing power, it is used for purchasing various goods and services. Since nobody refuses to accept money in exchange for goods and services, there is no need for double co-incidence of wants which was a major problem under the barter system.

2. As a store of value: Wealth is usually kept in the form of money because money is the most liquid foim of wealth. Since savings is usually done with a view to use the savings for purchasing some commodities or services. It is often said that ‘Money is a matter of functions four: A medium, a measure, a standard, and a store.’

3. Every producer aims to maximise his/her profit while employing various factors of production. A profit-maximising entrepreneur will equate marginal productivity expressed in value terms of a factor with the remuneration such as wage rate, rate of interest, etc. Since rates of remuneration are expressed in money terms, it is money which helps the producer in arriving at decisions with regard to the units of a factor of production to be employed by him.

Development of cities and towns is known as urbanisation. Adverse impact of urbanisation on the ecosystem :

Temperature : Temperature increases severely due to factors such as paving over formerly vegetated land, increasing the number of residences and giant apartments and industries.

Air pollution : There is enormous growth of factories and automobiles due to urbanisation. Harmful emissions of gases and smoke from factories and vehicles cause air pollution. It contributes to allergies and respiratory problems, thereby becoming a huge health hazard.

Water issues : The water cycle changes as cities have more precipitation than surrounding areas. Dumping of sewage can lead to outbreaks of epidemics.

1. Monopolistic competition is a market situation where there is a large numberof buyers and sellers selling closely related goods but surely not homogeneous. 

For example, take the case of tooth-paste, most commonly used commodity. There are qiany tooth pastes in the market, such as Colgate, Cibaca, Close-up, Pepsodent, etc. These are all closely related goods but there may be difference in quality, colour, size, taste etc. which separate them from one another. Each producer has a monopoly control over his own product but competition exists between them. Thus, we find a combination of monopoly and competitive elements. Similarly, we can take another example of toilet soap. There is a large number of firms producing different brands or varieties of soap, e.g. Hamam; Pears, Lifebuoy, Lux, Nirma etc. Each firm enjoys monopoly over its brand. For instance, Hindustan Lever Ltd. has monopoly over the trademark Lux. But there is a competition among these firms producing soap. Similarly, markets of so many products like tea, shoes, shampoo, watches, clothes, fans, bulbs, T.V. sets, pens, sewing machines, washing machines, etc. are example of monopolistic competition.

2. Two Features of monopolistic market: 

1. Non-price competition: Non-price competition is an essential part of monopolistic competition. Firms under this compete with each other not merely by price cutting, but also on the basis of non-price competition, i.e., by producing differentiated products. 

2. Free entry and exit: There are no restrictions on the entry of the new . firms. There is freedom of entry in the sense that the new firms are free to produce close substitutes of any brand of product.

Two dissimilarities between perfect and Monopolistic competition:

Two similarities between Perfect and Monopolistic Competition

1. Large number of buyers and sellers. 

2. Perfect mobility of factors of production.

1. Wage earners and salaried class tend to lose dining inflation as their salary fails to keep pace with the rising, prices, second, even thought wages and salaries may eventually rise during inflation, there is a time lage between the price rise and increase in wages and salaries. 

2. To advertise the product, an organisation adapt sales promotion measures which give rise to selling costs. Selling cost is the expenditure incurred by a firm to promote the sale of its product. Thus, selling costs are high in monopolistic competition as there are close substitutes and many rivals. 

3. High rates of taxes reduces the savings capacity as an individual’s ability to work and save is adversely affected. Due to high cost of living, he is unable to save a part of his income. 

4. The demand for newspaper is inelastic. As individuals who are habituel and prefer to read newpaper for hours and hours, will not postpone its use. Thus, it is inelastic for them.

Ecosystem: An Ecosystem is a complex set of relationship among the living resources habitats and residents of an area but changing global pattern of land use have had a significant negative effect on ecosystem.

There is a biotic balance in an ecosystem, which makes it possible to sustain the various interdependent members (plant and animal life). Ecosystem maintains a very delicate balance. Various human activities have been done to disrupt this balance and destroy the world’s ecosystems.

1. Industrialisation: 

1. Industrialisation has resulted in emission of green house gases into the atmosphere, leading to rise in global temperature. 

2. Industrialisation has led to water pollution due to flow of chemical and industrial effluents into rivers and other water bodies.

2. Automobiles: 

1. Automobiles emmits several million tons of gases each year into the atmosphere which causes air pollution and damage to human heath. 

2. Transptation activities has an adverse impact on hydrological conditions and water quality. Fuel, chemical other hazardous particulate mixed in water and pollute it.

3. Dwelling Houses: 

1. Urban development and rapid construction is continously removing soil nutrients, surface vegetation and trees that filter the air and equalize the carbon cycle. 

2. Urbanization also displaces animals and causes serious migratory obstacles for animals and replaces native plant with impermeable concrete.

Perfect competition: is a market structure where there are a large number of producers (firms) producing a homogenous product so that no individual firm can influence the price of the commodity.

The characteristics of a perfectly competitive market are as follows:

1. Large number of sellers: The number of sellers is large and every individual seller sells a quite insignificant part of the total supply. No seller is able to influence the market price either by Withdrawing from the market or by supplying its entire stock. 

2. Large number of buyers: There are many buyers and no single buyer is able to influence the market price in any way. The quantity purchased by each buyer is too small to influence the market price. 

3. Homogeneous product: All sellers sell completely identical products, in respect of quality, colour, size etc. They are perfect substitutes of one another. The product sold by different firms in the market are equal in the eyes of buyers. All sellers are equal in the eyes of buyers. No seller can charge higher price otherwise he is liable to his customers. 

4. Free entry and exit of firms: There is no restriction on entry of new firms in the industry or exit of old firms from the industry.

Migration: Cities provide better employment opportunities. There is attraction of city life in view of more comfofts’and amenities available there. Therefore, a large number of persons migrate from villages and small towns to the larger cities for better prospects. Migration has led to overcrowding in cities. There has been change in the land use patterns to meet the basic needs for sheltering of migrating population.

Three stages of capital formation:

1. Industrialisation: As a result of industrialisation, industrial activities are replacing agricultural activities as more income and wealth can be generated there. This has led to change in land use pattern. Industries have developed by occupying agricultural, grassland and forest areas. Industrialisation has disastrous impact on natural environment and atmosphere. It has also resulted in various types of industrial hazards like air and water pollution.

Industrialisation has resulted in emission of greenhouse gases into the atmosphere, leading to rise in global temperature. It has polluted the air. Industrialisation has led to water pollution due to flow of chemical and industrial effluents into rivers and other water bodies.

2. Population Growth: Large increase in human population is also responsible for change in the land use patterns. World population has been increasing at a very fast rate since the early eighteenth century. A very large track of forests and grasslands has been converted into agricultural land to provide food for the exploding population.

3. Construction of Large Dams: Land use patterns have also changed because of construction of large dams on the upper catchment of rivers. Large dams have been constructed to provide hydro power and irrigation facilities on a large scale. Construction of large dams have submerged large areas of agricultural land and forests surrounding these dams, thereby reducing the area under agriculture and forested land. These large dams have also led to ecological disasters and loss of habitat species.

Microeconomics, the study of the economic behavior of small economic groups such as firms and families, is one of the largest subfields in economics. These resources will help you ace your test, get a good mark on your microeconomics term paper, and help you understand how economic decisions are made.

1. Capital Formation: “Capital formation consists of both tangible goods like plants, tools and machinery and intangible goods like high standard of education, health, scientific progress and research.”

2. The process of capital formation consists of the following steps:

1. Creation of Savings: It is the first step in the process of capital formation. It is savings which are transformed into capital. If there is no saving, there cannot be any capital formation, even if all other conditions are favourable for capital formation. Savings are done by households and it depends on their income and willingness to save. 

2. Mobilization of Savings: If savings are kept in the form of idle cash at home, they will not lead to capital formation. In this case, the rate of investment in the country will be low, even though the rate of saving is high. The savings must be mobilized from the savers. In a modem society, financial and other institutions as well as the capital markets perform this function. People may keep their savings in the banks or other financial institutions. They can also buy shares or bonds issued by companies. 

3. Investment of Mobilized Savings: Even mobilization of savings is not sufficient for a high rate of capital formation. The mobilized savings must be actually used by producers for the purpose of investment. For instance, the money kepti by the people in the banks must be lent out by the banks to the producers who can use the money.

3. The causes of low capital formation in India are as follows:

1. Lack of Ability to Save: The chief cause of the low rate of capital formation is the low rate of savings. The low rate of saving, in turn, is explained by a number of factors. Among these, the inability to save is the most important. Because of the problem of poverty, the vast majority of the people of India are not in a position to save more than a negligible part of their incomes.

2. Lack of Willingness to Save: It is true that a significant part of the Indian ‘population does not have the willingness to save. Even today there are parts of the Indian economy where a feudal types of economic system prevails. Under this system even those who have the ability to save (for instance, the landlords) spend most of their incomes on consumption or on conspicuous consumption.

3. Insufficient Opportunity to Save: In some cases people in India also do not have sufficient opportunity to save. Inadequate expansion of the public sector banks and other financial institutions in the rural areas, lack of faith of the people upon the indigenous bankers, lack of knowledge of the people regarding the secured savings opportunities, etc. are some of the reasons for such insufficient savings opportunity in India.

4. Inadequate Mobilization of Savings: India also suffers from the problem of inadequate mobilization of savings. The savings that are made by the people are not always used for capital formation. People often keep their savings in the form of cash and gold at home. These are not productively used. This is partly due to inadequate development of the banking habits of the people and partly to the under developed state of the banking and financial network particularly in the rural areas.

Demand may be viewed ex-ante or ex-post: Ex-ante demand is the intended demand and ex-post demand is what is already purchased. The former denotes potential demand, while the latter refers to the actual magnitude purchased.

Entrepreneur: He undertakes all risks and organise the activities related to the business. He has all the qualities of leadership and an experienced and skilled person to guide and lead a company. He makes plans and gets it implemented. He is resourceful and tactful inorder to run the whole organisation. He is responsible for the success as well as for the loss. This is the fourth factor of production. In simple words, the person who takes up the risk and organizes the business is known as an “enterpreneur”. The entrepreneur act as a manager and also takes up the risk of the business, whereas the manager or an organiser only managers the work in a predetermined manner, but he is not liable for any risk or loss in business.

Functions of Enterpreneur:

1. Risk Bearing: He has to bear the risks which can be non-insurable (changes in govt. policy). 

2. Innovator: The entrepreneur conceives new ideas, new products and new processes. He also develops new techniques with a view to avail to better opportunities of maximizing profit ability in the business. Thus, the entrepreneur always looks for changes and modification in business to further improvement.

3. Organizing: The success of business depends directly upon properly planned organization. Organizing means determining and deciding about the entire group of persons who need to be employed to take up different responsibilities and duties to execute the projects-and plans off the entrepreneur. This is one of the most important functions, or to say the main functions which has to be performed by the entrepreneur. In modem times, the organization has become very important and a crucial factor due to complicated nature of present productive systems.

4. Policy Maker: He is the one who makes plans on which the whole organization runs. He hold regular meetings and makes guidelines and distributes the work.

1. Two reasons for the need of a central bank in a country: 

1. Central bank is extrusted with the responsibility of developing and promoting the banking system of the country. 

2. Central Bank is the fiscal agent, banker and advisor to the government.

2. Central Bank acts as a banker to the government: 

1. The government collects large sums of money through taxation. The government also spends equally large sums. 

2. RBI/Central bank revives the deposits of cash, cheques, drafts etc. from the government. It provides cash to the government for paying salaries and wages and other cash disbursements.

3. Open Market Operations: It is one of the most important quantitative instruments to control credit. It refers to the sale and purchase of government and other approved securities by the central bank in the money and capital market. When RBI aims at expansion of bank Credit during the period of recession, it purchases securities from the market and vice verse. This is how credit is controlled in both boom and condition of recession.

(i) When planned expenditure of the Government exceeds the total revenue of the Government then the Government needs to borrow money from individuals and organisations. This is called public debt. 

(ii) Redeemable public debt is the debt that the government promises to pay off at some predetermined future date. The government regularly pays interest on this debt. The principal amount is paid back on the expiiy of the due date. Therefore, in case of redeemable debt, the government has to make some arrangement for its repayment. Public debts are normally redeemable. 

(iii) 

• Loan raised for war. 

• Loan raised for floods.

(i) Lack of Common Measure of Value : Even if the two persons who want each other’s goods meet by coincidence, the problem arises as to the proportion in which the two goods should be exchanged. The value of a commodity or service means the amount of other goods and services it can be exchanged for in the market. It would have to be expressed not just as one in terms of one commodity but in terms of many commodities and services in the market. If there were 1000 goods and services in the market then the value of each would have to be expressed in terms of 999 others. 

There being no common measure of value, the rate of exchange will be arbitrarily fixed according to the intensity of demand for each other’s goods. Consequently, one party is at a disadvantage in the terms of trade between the two goods. 

(ii) Lack of Standard of Deferred (Future) Payments : Another drawback of barter system is that it lacks a standard of deferred payments. So credit transactions requiring future payments cannot take place smoothly under barter trading. For example, if a person borrows a cow for a year or two, he cannot return the same because by that time, it would have become old, it may or may not be of the same quality as the original one. 

There are three main problems in this context. These are :

• It may create controversy regarding the quality of goods or services to be repaid in future. 

• The two parties may be unable to agree on the specific good to be used for repayment. 

• Both parties run the risk that the value of goods to be repaid may increase or decrease in future.

(a) (i) As a fiscal agent, the Central Bank performs the following functions : 

• It manages the public borrowings for the government. 

• It collects taxes and other payments on behalf of the government. 

• It acts as the government agent to enforce foreign exchange control. 

(ii) The central bank also acts as the financial adviser to the government. It gives advice to the government on all financial and economic matters such as deficit financing, devaluation of currency, trade policy, foreign exchange policy, etc. 

(b) (a) Land is defined to include not only the surface of the Earth but also all the other gifts of nature. Four characteristics of land : 

1. Land is limited in supply: Supply of land is fixed as it is given by nature. 

2. Gifts of nature: Land is a gift of nature which does not have any cost of production. Land is readily available for any use. However, other agents of production are available . at a cost. 

3. Primary factor of production : Land is a basic factor of production because it cannot produce anything by itself. 

4. Land has alternative uses: Land can be used for alternative uses such as cultivation, dairy or poultry-farming, rearing of livestock, building of houses, playground etc.

(a) (i) Risk-Bearing Function : It is the most important and specific function of an entrepreneur. Every business involves risk. There is no other factor of production except the entrepreneur, who bears risk of the business. The risk is caused by uncertainities attached to production, investment and profits. Another big risk is of technological obsolescence and frequent changes in Government policies. The entrepreneur has to calculate all these risks and then plan the organisation of various factors of production in different proportions.

(ii) Decision-making function : All the vital decisions of business are taken by the entrepreneur. He conceives the idea of a particular business after making an intensive study of the market conditions, business projects and economic viability. He takes all the vital decisions with regard to ‘what to produce’, ‘how much to produce’ how to produce and in what proportion to combine the factors of production. 

(b) Cost-push inflation refers to inflationary rise in prices which arises due to increase in costs. 

1. Fluctuations in Output and Supply : The wide fluctuations in production of foodgrains has been mainly responsible for price rise. There was a remarkable increase in production of foodgrains during first two plans and supply of foodgrains was good. But fluctuation in foodgrain production, support prices administered by Government, the tactics of hoarding, adopted by the middlemen and subsequently by the farmers too (utilizing the credit facilities – available from co-operatives and commercial banks), resulted in an increase in price. The power breakdowns, strikes and lockouts result in lower production of manufactured goods. As such both, the primary and secondary sectors recorded a price rise almost dining all the plan periods. 

2. Public Distribution System : The defective working of the public distribution system results in an uneven supply of various goods, ultimately affecting the prices of essential commodities by way of artificial scarcity. 

3. Rise in Wages : The rise in the general price level raises the cost of living which in turn, leads to demand for higher wages by workers. When the demand for higher wages is met, it will lead to further rise in costs or prices. The fresh rise in prices will again be compensated by giving still higher wages to the workers. This is termed as ‘wage push inflation’.

Net Profit Ratio = Net Profit after tax  / Revenue from Operations x 100

Net Profit = Gross Profit  - Salaries and Rent  - Interest on Debentures + Gain on Sales of Furniture

= Rs  80, 000 - Rs 30, 000 - Rs  5,000 + Rs 2,000

Net Profit = RS 47,000

Net profit  Ratio  = Rs 47,000 / Rs 4,00,000 x 100 = 11.75 %

Perfect Competition: Under perfect competition, AR or price remains fixed for the firm. So MR will also be constant. Hence AR = MR.

(a) (i) A tax is a legally compulsory payment imposed by the government. 

(ii) The main differences between direct tax and indirect tax are given below :

(b) (i) Capital formation refers to net additions of capital stock such as equipment, buildings and other intermediate goods. A nation uses capital stock in combination with labour to provide services and produce goods; an increase in this capital stock known as capital formation. 

(ii) There are mainly three stages in the process of capital formation. 

These are : 

(i) Creation of savings 

(ii) Mobilisation of savings and 

(iii) Investment of savings. 

(i) Creation of Savings : Saving is the first stage in the process of capital formation. Savings in a country are made by different individuals. These depends upon several factors like (a) ability to save (b) desire to save and (c) opportunity to save. Ability to save directly depends upon the level of income. The higher the income of people, the more will be their ability to save. Besides income, taxation policy of the government also affect the ability to save. 

When the rates of income tax and sales tax are high, people will be able to save only less amount than before. Opportunity to save refers to the conditions of peace and security in the country and favourable attitude of the government to motivate people to save. 

(ii) Mobilisation of Savings : Capital formation cannot occur unless savings made by people are mobilised for investment purposes. Savings are done by millions of households and firms. It is very important that these savings are mobilised and used for productive and investment purposes. This requires a network of banks and other financial intermediaries who collect these savings and make them available to the producers or investors. Without banks and other financial intermediaries, these savings would remain idle and might not be utilised for productive and investment purposes. 

(iii) Investment of Savings : The third and last stage of capital formation is the investment of mobilised savings. Unless mobilised savings are not utilised or invested, there cannot be any capital formation. It is, therefore, necessary that the economy should have an entrepreneurial class which is prepared to bear the risk of business and invest savings in productive channels. The entrepreneurs will, however, get motivated only when 

• rate of interest is not very high and 

• there are good expectations of profit.

Differences between a direct tax and an indirect tax:

2. Progressive taxes: A tax is called progressive when the rate of taxation increases as the taxpayer’s income increases, i.e. the higher the income, the higher is the rate of tax. 

For example: a person earning an income of? 5 lakh a year may be taxed at the rate of 20%.

Regressive taxes: A regressive tax is one in which the rate of taxation decreases as the taxpayer’s income increases. In this system the rate of tax falls with increase in income. 

For Ex., income of? 5 lakh a year may be tax at the rate of 20% and income of 10 lakh a year may be taxed at the rate of 20%.

Marginal revenue is the additional revenue added by an additional unit of output, or in terms of a formula:

Marginal Revenue = (Change in total revenue) divided by (Change in sales)

Actual earnings of a factor tell you how healthy that factor is and if it may pay dividends or grow through capital appreciation (higher price).

Advantages: 

• International trade brings in different varieties of a particular product from different destinations. 

• Promotes efficiency in production as countries will try to adopt better methods of production to keep costs down in order to remain competitive. 

• Brings foreign exchange to the exporting countries. It makes the foreign currency reserves healthy.