Rajasthan Board RBSE Class 11 Economics Chapter 2 Nature and Scope of Economics
RBSE Class 11 Economics Chapter 2 Text book Questions
RBSE Class 11 Economics Chapter 2 Multiple Choice Questions
Question 1.
Normative science is associated with :
(a) What is it
(b) What ought to be done
(c) from where is it
(d) from where was it
Answer:
(b) What ought to be done
Question 2.
Positive science is associated with
(a) What is it
(b) Where was it
(c) Where is it
(d) What ought to be
Answer:
(a) What is it
Question 3.
’What ought to be done’ is a subject matter of :
(a) Positive Science
(b) Normative Science
(c) Art
(d) None of these
Answer:
(b) Normative Science
RBSE Class 11 Economics Chapter 2 Very Short Answer Type Questions
Question 1.
Into how many parts is the subject matter of economics divided?
Answer:
The subject matter of economics is divided into 5 parts.
Question 2.
What is consumption?
Answer:
Consumption is that economic activity which is associated to the consumption of utility of goods and services for the direct satisfaction from personal and collective requirements.
Question 3.
What is the meaning of production?
Answer:
Production is related to the increase in the utility or increase in the value of goods and services.
Question 4.
What is distribution?
Answer:
Distribution of income among the different factors of production is called distribution.
Question 5.
What is exchange?
Answer:
The exchange action is related to the purchase-sale or exchange of a product or service.
Question 6.
What is positive science?
Answer:
It is the science that tells the relationship between causes and consequences but does not say anything about merits and demerits. It is also called real science.
Question 7.
What is normative science?
Answer:
Normative science analyzes the policy related facts. It also explains what should be done in a particular situation.
Question 8.
What is an art?
Answer:
The branch of knowledge that shows the best way to achieve certain objectives is called an art.
Question 9.
In the form of normative science, which types of questions are solved by economics?
Answer:
In the form of a normative science, economics solves the questions- what should be, done in a given situation.
RBSE Class 11 Economics Chapter 2 Short Answer Type Questions
Question 1.
Describe the components of the subject matter of economics.
Answer:
Following are the 5 components of the subject matter of economics
- Consumption :
Consumption is that economic activity which is associated with the consumption of utility of goods and services for direct satisfaction of individual and collective requirements. - Production :
Production is associated with increasing the utility or value of goods and services. - Exchange :
Exchange is associated with sale and purchase of a product or service. Exchange is required for consumption of goods produced and for fulfillment of wants. - Distribution :
Production is the result of collective efforts of various resources. Therefore, it is very important to determine the remuneration for every resource of production under the process of production and this is known as income distribution. - Public Finance :
Study of public income, public expenditure, public debt, deficit financing system, tariff system, etc. are done under this branch of economics.
Question 2.
Describe the limitations of economics.
Answer:
Following are the limitations of economics.
- Economics is a social science. Only human activities are studied in this. Activities of animals and birds and other living organisms are not studied in economics.
- Study of activities of abnormal and unsocial human beings is not done in economics.
- That is only those activities are studied in it which can be measured in terms of money. Only economic activities are studied under economics. Although economics is helpful in solving practical problems, yet it does not give a definite solution in their context.
Question 3.
“Economics is a positive science”. Explain this statement.
Answer:
As a positive science, economics explains the relationship between causes and effects. It explains-what it is? Why it happens? and how it happens? It cannot tell anything about the merits and demerits of economic activities, their correctness or faults. That is based on discretion and prudence.
Question 4.
“Is economics a science?” Clarify this statement.
Answer:
Science is a systematic and complete study of knowledge which interprets the relationship between cause and effect. Economics performs substantial analysis of an incident, studies it systematically and on the basis of this analysis and study, it forecasts and makes prediction regarding any fact. It is therefore a science.
Question 5.
“Art is the activity of performing an activity in the best possible manner”. Elucidate this statement.
Answer:
It is art to work with skill to fulfill any goal. It gives us practical knowledge. It not only analyzes the problem but also solves it. It tells the best way to fulfill certain objectives.
RBSE Class 11 Economics Chapter 2 Long Answer Type Questions
Question 1.
Is economics a science or an art or both? Explain.
Answer:
Economics as a science :
Science is a systematic and complete study of knowledge which explains the relationship of cause and effect. Science performs substantial analysis of an incident, studies it systematically and on the basis of this analysis and study it forecasts and makes prediction regarding any fact. In the same way, economics uses scientific method to understand the causes and consequences of economic events and to build economic principles and rules.
It is observed in the context of the behaviour of individuals or groups, that is, the scientific method is used in economics. By generating standard rules, economics also has the capability to interpret economic events accurate ‘and appropriate’, and since economics has the ability to explain, it also has the ability to forecast economic events. Apart from this, economics performs an ordered study of wealth-related activities, examines the capability, and establishes the relationship between the factor and the result. Thus economics is science.
Economics as an art :
In the general sense, achieving an objective using skill is art. Art provides us with practical knowledge. It not only makes a proper analysis of the problem, but also provides the solutions. Only an economist can take the final decision on the problems that are purely of economic nature. The purpose of economics is to maximize the welfare of a person society. The policies and the attain adopted by the economist or the government to and actions a definite goal, is said to be an art.
The practical use of economic rules and principles makes economics an art. Presently the importance of practical economics is increasing, and economists often spend most of their time in solving problems related to real problems of life such as price rise, unemployment, economic development, inflation, etc. Therefore, it is appropriate to consider economics as an art. If economics is studied in the form of art, then it will facilitate the action of examining economic principles and it will also be possible to find if a principle is correct or not.
Economics as an art and science both :
It is clear from the above discussion that economics is an art as a well as a science. Economics as science is not only a positive science but also normative science. Economics studies the theoretical and practical aspects of the subject, the theoretical side is related to its scientific nature, whereas practical economics is related to art. Thus theoretical economics a science while practical economics is an art. An economist can also have two forms like a scientist – as a scientist and as a good citizen. Like all citizens, an economist also has the right to participate, debate and act as a technical advisor in all issues of national importance.
Question 2.
Explain the nature and domain of economics.
Answer:
At present, due to continuous change in the economic activities of human life, and due to the contradictory definitions of economics, many disagreements are found in the economists regarding the nature and extent of economics. Prof Keynes has included three elements in the scope of economics.
- Subject matter of economics
- Nature or characterstics of economics
- Relationship between economics and other sciences
The subject matter of economics is divided into five parts :
- Consumption
- Production
- Exchange
- Distribution
- Public finance.
Nature or Behaviour of Economics :
The following issues are included in the study of nature/behaviour of economics
i. Nature of Economics as a Science :
Science is such a systematic and complete study of knowledge which interprets the relationship between cause and effect. Science performs substantial analysis of an incident, studies it systematically and on that basis, it forecasts and makes prediction regarding any fact. Likewise, economics uses a scientific procedure to understand the relation between the causes and consequences of economic activities and for the formation of economics principles and regulations. It also has the capability of interpreting economics events in a correct and appropriate way and also has the power to make predictions. Therefore economics is science due to all these features.
ii. Nature of Economics as normative or positive :
In the form of positive science, economics tells about the relationship between causes and consequences. It interprets that-What is this ? Why is it so? How does it happen? It cannot tell anything about the merits or demerits, correctness or defects of economic activities. This is based on discretion or on prudence.
While as a Normative science it analyzes the facts associated with policies, i.e. what ought to be done? What should be done in a particular condition? In the form of normative science, economics throws light on the merits and demerits of economic activities and actions.
iii. Economics as an art :
Achieving an objective with skill is art. Art provides us practical knowledge. It not only analyzes the problem, but also provides solutions, and only an economist can take decision on the problems which are purely of economic nature. Major objective of economics is to maximize the welfare of an individual or the society. Policies which are adopted by the government or an economist to achieve a fixed objective will be considered as an art.
If economics is studied in the form of art, then this will facilitate the examination of economic principles and it will also be helpful in finding out whether the principle is correct or not, by which it becomes possible to implement that principle.
iv. Both Science and Art :
Economics is a science as well as an art. In the form of science, economics is not only a positive science, but a also is normative science. Economics performs a study of both theoretical as well as practical aspects of a topic. Theoretical aspect is associated with science and practical aspect is associated with art. Theoretical economics is a science and practical economics is an art.
Question 3.
What is the meaning of science? Is economics a science? Elucidate.
Answer:
Science is a systematic and thorough study of knowledge which interprets the relationship between cause and effect. Science does an objective analysis of an event, it systematically studies it, and based on this analysis and study, it predicts any fact. On the basis of following grounds, it can said that economics is a science
- Use of scientific procedure :
Economics uses a scientific procedure to understand the relation between the causes and consequences of economic activities and for the formation of economic principles and regulations. Observation is done in context to behaviour of individuals or groups, hypothesis is made and evaluated, and after that, any economic regulation is formed. This means that scientific procedure is used in economics. - Power to explain :
An economist also has the capability of interpreting the economic incidents in a correct and appropriate way by forming standard regulations. - Power of prediction :
As economics has the power of interpretation, therefore economics also has the power to make predictions about economic activities. In the present time, due to the use of mathematical and statistical procedures and modem computers and due to rapid development of financial system, the power of economics, of making prediction, has increased even further. - Systematic study :
Systematic study of only a single subject, i.e. interrelated activities of consumption, production, exchange, distribution, etc. which are associated with money, is done in economics. - Validity of laws :
Validity of laws is examined in every science. The laws of economics are also based on human nature and these apply equally on the residents of all the countries of the world. - Relationship between cause and consequence Many rules of economics (such as law of diminishing utility, law of equi-marginal utility, law of demand, etc.), clarify the causes and consequences. On this basis, economics is a science.
Question 4.
Is economics a positive science or a normative science or both? Explain.
Answer:
Economics as a Positive Science :
Professor J. B. Say, Senior, among classical economists, and Professor Robbins, among modem economists, have regarded economics to be positive science. According to Robbins, “Economics studies the facts which can be examined, while normative science the facts of evaluations and findings.”
- In economics, the actual viewpoint can provide systematic, argumentative and correct economic conclusions, because the basis of relationship between causes and consequences is logical.
- Strong economic principles are formed on the basis of actual view points, beliefs and scientific analysis.
- If only the study of authenticity of economic activities is done in economics, then disagreement amongst economists will lessen, understandability will increase amongst them and the development of economics will also take place in a rapid way.
- Professor Robbins had said that realizing the scarcity of resources, mankind should perform work according to the best of his skills. He should undertake only such work in which he specializes. If an individual starts doing all kinds of works, then he will waste both, his time as well as money. Therefore, an economist should concentrate only on the cause and its consequence.
Economics is a Normative Science :
Various economists such as Fraser, Henderson, Quandt and others consider economics to be a normative science. Following arguments can be given in favour of this :
- Mankind is both emotional and argumentative :
Along with being logical, an individual is emotional also, and therefore it is essential to study both the aspects of human behaviour, thus, along with being a positive science, economics is also a normative science. - More useful :
In fact, economics is an agent of social welfare. Therefore, its use in the form of normative science will be more important. Along with the study of economic activities, an economist should also think about making it more useful and effective. - Wrong argument of division of labour :
The argument that economists should merely interpret the relationship between causes and consequences, and the task of finding solutions should be assigned to the policy makers and political leaders, is not correct. Its actual analysis will become monotonous and uninspiring and labour and power would not be saved. Therefore, the power of taking decisions should also vest in the economists. - More realistic :
The nature of economics is continuously changing. Today, economics is rapidly developing in the form of welfare economics. Subjects such as economic planning and social security have become major subjects of economics. In such condition, one cannot ignore the normative aspect of economics. - Helpful in betterment of the society :
A economics is a social science and it works for the betterment of the society, its normative aspect cannot be ignored.
From the above discussion, it is clear that economics is both, positive as well as normative science. We can consider economics to be pure and real science, but certain normative objectives should also be kept for practical use.
RBSE Class 11 Economics Chapter 2 Other Important Questions
RBSE Class 11 Economics Chapter 2 Multiple Choice Questions
Question 1.
The classical economist is
(a) Adam Smith
(b) J.B.Say
(c) Senior
(d) All of these
Answer:
(d) All of these
Question 2.
The Welfare economist is
(a) Marshall
(b) Pigou
(c) J.S. Mill
(d) (a) and (b) both
Answer:
(d) (a) and (b) both
Question 3.
The subject matter of economics is divided into how many parts?
(a) One
(b) Two
(c) Four
(d) Five
Answer:
(d) Five
Question 4.
That economic action, which is related to the utility of goods and services for direct satisfaction of individual and collective necessity, is
(a) Consumption
(b) Utility
(c) Distribution
(d) Exchange
Answer:
(a) Consumption
Question 5.
The action which is related to the purchase and sale of a commudity or resource-
(a) Utility
(b) Production
(c) Exchange
(d) Distribution
Answer:
(d) Distribution.
Question 6.
Sequential and thorough study of knowledge is called-
(a) Art
(b) Science
(c) Social Science
(d) None of these
Answer:
(b) Science
Question 7.
States the cause-effect relationship
(a) Science
(b) Art
(c) Social Science
(d) None of these
Answer:
(a) Science
Question 8.
Under which subject are public income, public expenditure, public debt, deficit, financing, tariff policy, etc. studied?
(a) Distribution
(b) Exchange
(c) Public finance
(d) None of these
Answer:
(c) Public finance
Question 9.
Who can take the final decision on the issue which is purely of economic nature?
(a) Scientist
(b) Sociologist
(c) Economist
(d) Philosopher
Answer:
(c) Economist
Question 10.
To achieve a certain goal, the policies adopted by the economist or government have been called-
(a) Science
(b) Art
(c) Both
(d) None of these
Answer:
(b) Art
RBSE Class 11 Economics Chapter 2 Very Short Answer Type Questions
Question 1.
What is called the beginning and end of economics?
Answer:
Consumption is called the beginning and end of economics.
Question 2.
What are the main sources of production?
Answer:
Main sources of production are land, labour, capital, organization and entrepreneurship the willing not. ability to take risks.
Question 3.
How has the subject matter of economics become broader?
Answer:
The continuous expansion and diversification of economic activities has made the subject matter of economics broader.
Question 4.
What are the five parts of the subject matter of economics?
Answer:
- Consumption
- Production
- Exchange
- Distribution
- Public Finance
Question 5.
Why is exchange required?
Answer:
Exchange is required to meet the consumption and supply of the manufactured goods.
Question 6.
Which activities related to material welfare are considered to be the subject matter of economics by Marshall?
Answer:
Marshall has considered the economic activities related to material welfare as the subject matter of economics,
Question 7.
To what Is economics related in Adam Smith’s wealth centred definition?
Answer:
In Adam Smith’s wealth centred definition, economics is related to the earning and accumulation of wealth.
Question 8.
Production, exchange, distribution etc., activities are done for what?
Answer:
Economic activities like production, exchange, distribution, etc. are done for consumption.
Question 9.
Which activity is related to the sale-purchase of any commodity or resource?
Answer:
The activity of exchange relates to the purchase or sale of any commodity or resource.
Question 10.
What is the basis of the theory of price determination?
Answer:
The principle of price determination is based on currency.
Question 11.
What is the result of collective efforts of various resources?
Answer:
The result of collective efforts of various resources is production.
Question 12.
What is the paramount interest of the state at present?
Answer:
At present, the state’s paramount interest has become to ensure the economic welfare of the people.
Question 13.
What is studied under public finance?
Answer:
Under this division of economics, public income, public expenditure, public debt, arrangement of deficit financing, etc. are studied.
Question 14.
Define science.
Answer:
Science is an orderly and thorough study of knowledge which explains the relationship of cause and effect.
Question 15.
Which economists have accepted economics as a real (positive) science?
Answer:
Among the prominent economists, J.B.Say, Nassav Williams Senior, and among modem economists, Robbins considered economics as a real science.
Question 16.
Which economists have considered economics as a normative science?
Answer:
Fraser, Henderson and Quandt.
Question 17.
What does the word art means?
Answer:
The branch of knowledge that provides the best way to fulfill certain objectives is called art.
Question 18.
Who can take the final decision on the problems which are purely economic in nature?
Answer:
An economist can take a better final decision on the problems which are purely of economic nature.
Question 19.
Who takes the decisions about problems like exchange rate, bank rate, etc.?
Answer:
An economist takes the decisions regarding issues of exchange rate, bank rate, etc.
Question 20.
What is the main purpose of economics?
Answer:
The main objective of economics is to maximize the welfare of individual and society.
Question 21.
How are most of the countries in the world resolving the economic problems?
Answer:
Most of the world’s countries are solving their economic problems by adopting the process of economic development.
Question 22.
What is the theory of economics related to?
Answer:
Theoretical aspect of economics is related to its scientific nature.
Question 23.
Is the study of birds-animals and other organisms done in economics?
Answer:
No, only the human activities are studied in economics.
Question 24.
What activities are studied in economics?
Answer:
In economics, only economic activities are studied.
Question 25.
Robbins has considered economics to be which science?
Answer:
Robbins has considered economics to be a human science.
Question 26.
What is determined under distribution?
Answer:
Under distribution, it is determined what the national income is, and how is it to be allocated to different developmental and welfare programmes.
Question 27.
What is ensured by distribution?
Answer:
Distribution ensures a fair distribution of national income among all contributive factors.
Question 28.
Is economics a science?
Answer:
Yes, a complete and thorough study of knowledge is done economics, which shows the relationship between the cause and effect.
Question 29.
Economics has the power to predict, how?
Answer:
Economics has the power to interpret and explain, therefore, economics has also the power to predict economic events.
Question 30.
Why are the figures given in economics not simple and credible?
Answer:
The figures given in economics are not simple and credible because they keep changing.
Question 31.
Which science investigates the policy-related facts?
Answer:
Normative science investigates policy-related facts.
Question 32.
Realizing the scarcity of resources, mankind should perform work according to the best of his skills. Who said that?
Answer:
Robbins.
Question 33.
What is the role of economics as a normative science?
Answer:
Economics as normative science highlights the merits and demerits of economic events and activities and helps in attaing economic welfare for the society and individual.
Question 34.
Give an argument in favour of not considering economics to be an art.
Answer:
The nature of economics is like pure science, so to maintain this relationship, it is not right to consider it as an art.
Question 35.
Give arguments in favour of considering economics to be an art.
Answer:
If economics is studied in the form of art, then it will also help in examining economic principles and it can also be investigated whether a principle is correct or false.
Question 36.
What are two forms of an economist like a scientist?
Answer:
As a scientist and as a good citizen.
Question 37.
Write down any one limitation of economics.
Answer:
Economics is social science. In this, only human actions are studied. In economics animal birds, and other living organisms are not studied.
RBSE Class 11 Economics Chapter 2 Short Answer Type Questions
Question 1.
Why is there a difference of opinion about the nature and the scope of economics?
Answer:
At present, due to the constant change in economic activity of human life and the conflicting definitions of economics, different economists have many different opinions about the nature and scope of economics.
Question 2.
Explain the opinion of the classical economists.
Answer:
Some of the reputed economists are Adam Amith, J.B. Say, Mill, etc. According to the wealth-based definition of Adam Smith, economics is related to earning and accumulation of wealth. According to this ideology, all such things related to origin, use and distribution of wealth.
Question 3.
Explain consumption.
Answer:
Consumption is an economic activity that is related to the consumption of the utility of goods and services for direct satisfaction of personal and collective requirements. Consumption is called both the beginning and end of economics, because all the economics activities such as production, exchange, distribution, etc. are done only for consumption.
Question 4.
Clarify the exchange process.
Answer:
Exchange is related to the sale or purchase of a product or service. Exchange is required to ensure the consumption of the manufactured goods and the fulfillment of wants and necessities. Because of the defects in the barter system, the invention of money made the process of exchange all the more easier.
Question 5.
Give four arguments in favour of the scientific aspect of economics.
Answer:
Following are the four arguments favouring the scienctific aspect of economics
- Use of scientific procedure Economics uses a scientific procedure which interprets the relation between the causes and effects of economic activities and for the formation of economic principles and regulations.
- Power to explain An economist also has capability of interpreting the economic events in a correct and appropriate way by forming standard regulations.
- Systematic study Systematic study of only a single subject, i.e. interrelated activities of consumption, production, exchange, distribution, etc. which are associated with wealth, is done in economics.
- Validity of laws Validity of law is examined in every science. The laws of economics are also based on human nature, which are applicable on the residents of all the countries of the world.
Question 6.
What is the ‘cause effect’ relationship of economics?
Answer:
Many rules of economics such as law of diminishing utility, law of equi-marginal utility, law of demand , etc., clarify the cause and consequences. On this basis, economics is a science.
Question 7.
Why can’t economics be objective like natural sciences?
Answer:
Economics, like natural sciences, cannot be objective because the subject matter of economics is the human being. Economics studies the economic activities associated with humans, not the non-living things. The economist is also a human being. Hence his views and opinions influence his analysis and discoveries. Therefore, economics cannot be an objective science.
Question 8.
Definite predictions are not possible in economics, Why?
Answer:
Human behaviour is studied in economics, and the extent of ups and downs which takes place in human behaviour is not found in any other sphere. Definite predictions are not possible in the event of uncertain behaviour. The economist has no control over the subject matter of economics.
Question 9.
Explain economics as a real science.
Answer:
Economics as a real science tells the connection between causes and consequences. It explains What is this, Why is that?, and how does it happen?. It cannot say anything about the goodness and evil or right and wrong of economic activities. That is based on discretion.
Question 10.
Explain economics as a normative science.
Answer:
Normative science analyses the facts associated with policy related matters, that is what should be? what to do in a given situation? As normative science, economics throws light on the merits and demerits of economic events and activities.
Question 11.
Give arguments in favour of not considering economics as an art.
Answer:
The following are the arguments infavour of not considering economics as an art
- Art gives practical information about a subject. The science works to formulate principles, while art provides the practical role to the principle. So, if economics is considered as a science, then it cannot be considered as an art.
- The nature of economics resembles a pure science, so to maintain this form it is not right to consider it as an art, so the economist should work analyst only.
Question 12.
Give arguments in favour of economics to be considered as an art.
Answer:
Following are the arguments in favour of economics to be considered as an art :
- Only an economist can take the final decision on problems that are of purely economic nature. For example, problems like exchange rates, bank rates, etc. are related to economics, so only the economist can give solutions for them.
- The main objective of economics is to maximize the welfare of individual or society. The policies adopted by the economist or the government to achieve a certain goal is considered as an art.
Question 13.
Economics is both an art and a science. How?
Answer:
Economics is a science as well as an art. Economics as a science is not only positive science but also a normative science. Economics studies both the theoretical and practical aspects of the subject. Theoretical side is related to its scientific nature, whereas the practical side is related to the art. Theoretical economics is science and practical economics is art. An economist like a scientist can also have two roles, One in the form of a scientist and the other in the form of a good citizen, so science and art complenent each other.
Question 14.
State two limitations of economics.
Answer:
- Study of activities of abnormal and unsocial human beings is not done is economics. Professor Robbins considered economics to be human science rather than social science.
- Only economic activities are studied under economics. Economists accept economics in the form of a science as well as an art. In the form of science, they regard it to be not only positive science, but also normative science. There are two branches of economics. Pure economics and Applied economics – which are considered to be science and art respectively.
Question 15.
Explain the arguments in relation to economics being a normative science.
Answer:
Following are the arguments in relation to economics being a normative science Economist Fraser, Henderson and Quandt, believed economics to be a normative science.
- Mankind is both emotional and logical :
Along with being logical, an individual is emotional also, and therefore it is essential to study both the aspects of human behaviour, thus, along with being a positive science, economics is also a normative science. - More useful In fact, economics is an agent of social welfare :
Therefore, its use in the form of normative science will be more important. Along with the study of economic activities, an economist should also think about making it more useful and effective. - Wrong argument of division of labour :
The argument that economists should merely interpret the relationship between causes and consequences, and the task of finding solutions should be designated to the policy makers is incorrect. Its actual analaysis will become monotonous and uninspiring and labour and power would not be saved. - More realistic :
The nature of economics is undergoing a continuous change. Today, economics is rapidly developing and diversifying. Subjects such as economic planning and social security have become major subjects of economics. In such conditions, one cannot ignore the normative aspect of economics.
Question 16.
Give arguments in favour of economics being a positive science.
Answer:
Following are the arguments in favour of economics being a positive science:-
- In economics, the actual viewpoint can provide systematic, logical and correct economic conclusion, because the basis of relationship between causes and consequences is logic itself.
- Actual viewpoint can form strong economic principles on the basis of actual beliefs and scientific analysis.
- If only the study of authenticity of economic activities is done in economics, then the disagreement amongst economists will lessen, understanding will increase among them and the development of economics will also take place in a rapid way.
- Prof Robbins has said that realizing the scarcity of resources, man should work in accordance with his superior skills. He should perform only those works in which he specializes. If human beings begin to perform all tasks, he will waste both his time and money. Hence, economists should limit themselves to the study of cause and effect. What is appropriate, what is not, should be of no concern to economists.
Question 17.
Explain the concept of Robbins in relation to the subject matter of economics.
Answer:
Definition of Robbins based on scarcity of resources and unlimited wants has further expanded the field of economics. Robbins considered economics as a human science and considered the subject matter of economics as the important aspect of economic choice between unlimited needs and limited resources.
Question 18.
Explain public finance as a subject of economics.
Answer:
Public Finance :
Study of public income, public expenditure, deficit financing system, tariff system, etc. are done under this branch of economics. Along with time, the subject matter of economics is also changing.
Question 19.
State two arguments in favour of economics as a science.
Answer:
Following are the two arguments in favour of economics as science
- Use of scientific procedure :
Economics uses a scientific procedure to understand the relation between the causes and consequences of economic activities and the formation of economic principles and regulations. - Power to explain :
An economist also has capacity of interpreting the economic incidents in a correct and appropriate way by forming standard regulations.
Question 20.
Give two arguments in opposition of considering economics as a science.
Answer:
Following are the two arguments in opposition of considering economics as a science :
- Absence of uniformity :
In economics, there is a lack of uniformity in context to a particular incident, i.e. evaluation of a particular incident is not done through one medium. Various economists perform the study of a given incident through different mediums. - Disagreements :
It is also said that a lot of disagreements exist between economists on a single issue. Thus, many scholars do not consider economics to be a science.
RBSE Class 11 Economics Chapter 2 Long Answer Type Questions
Question 1.
Is economics a science? Give arguments in its favour and opposition.
Answer:
Science is a systematic and thorough study that explains the relationship between cause and effect. Science performs a logical analysis of an event, it systematically studies it, and based on this analysis and study, it forecasts and predicts facts. On the following bases, it can be said that economics is a science
- Use of scientific procedure :
Economics uses a scientific process to understand the relation between reasons and consequences of economic activities and formulate economic principles and rules. The observation is done in the context of the behaviour of the person or the group, the hypothesis is prepared and evaluated, and after that, some economic principle is formed. It means that the scientific process is used in economics. - Power to explain :
An economist also has the capability of interpreting the economic events in correct and appropriate way by following standard procedures. - Power of prediction :
Economics has the power to interpret, and predict economic events. Due to the use of mathematical and statistical procedures and the use of modem computers and the rapid development of the financial system, the power of economics, to make predictions, has increased even further. - Systematic study :
Systematic study of only a single subject, i.e. interrelated activities of consumption, production, exchange, distribution, etc. which are associated with wealth, is done in economics. - Validity of laws :
Validity of laws is examined in every science. The laws of economics are also based on human nature and these apply equally on the residents of all the countries of the world. - Relationship between cause and consequences :
Many principles of economics (such as law of diminishing utility, law of equi-marginal utility, law of demand, etc.) explain the cause and consequences. On this basis, economics is a science.
Many distinguished economists do not consider economics as a science, and they argue against it:
- Absence of Uniformity :
In economics, there is lack of uniformity in context to a particular event, i.e. evaluation of a particular event is not done through one medium. Various economists perform the study of a given event through different mediums. - Disagreements :
It is also said that a lot of disagreements exist among economists on every single issue. In such condition of disagreement, the scholars do not consider economics as a branch of science. - It is not objective :
As compared to natural sciences, economics cannot be objective because human beings are the subject of study in economics. Economics performs a study of economic activities associated with human beings and not of non-living things. An economist is also a human being. Therefore, his view points and beliefs influence his analysis and findings. Therefore, economics cannot be an objective science. - Economic laws are not exact :
The rules of natural sciences are standard and are completely fixed, such as the law of gravity. But, the rules of economics are not completely fixed.
Question 2.
Into how many parts can the subject matter of economics be divided? Describe them in detail.
Answer:
- Consumption :
Consumption is that economic activity which is associated with the consumption of utility of goods and services for direct satisfaction of individual and collective requirements. Consumption is regarded to be both the beginning and end of economics because all the economic activities such as production, exchange, distribution, etc. are performed for consumption itself. - Production :
Production is associated with increasing the utility and value of goods and services. The process of making bread is production. Land, labour, capital, organization and enterpreneur are the major resources used in its production. - Exchange :
The process of exchange is associated with sale and purchase of a product or service. Exchange is required for consumption of goods produced and for fulfillment of wants.
Invention of currency, due to the defects in barter exchange system, made exchange an easy affair. Now, all the goods and services are sold and purchased using currency. The theory of price determination is based on currency itself. - Distribution :
Production is the result of collective efforts of various sources. Therefore, it is very important to determine the remuneration for every source of production under the process of production and this is associated with income distribution. Under this, it is understood what is national income, how should this be evaluated, and how should interest, revenue, wages, profit, etc. be determined. Along with this, it is also ensured whether the national income is being judiciously distributed or not. At present, the foremost duty of a state is economic welfare of the people, i.e. interference of the state in economic sphere is continuously increasing. - Public Finance :
Study of public income, public expenditure, deficit financing system, tariff system, etc. are done under this branch of economics. Along with time, the subject matter of economics is also changing.
Question 3.
Explain the arguments regarding economics being a normative science and positive science.
Answer:
Arguments in favour of economics being a normative science.
Various economists such as Fraser, Handerson and Quandt and others consider economics to be a normative science. Following arguments can be given in favour of this :
- Humans are is both emotional and logical :
Along with being logical, an individual is emotional also, and therefore it is essential to study both the aspects of human behaviour, thus, along with being positive science, economics is also a normative science. - More useful :
In fact, economics is an agent of social welfare. Therefore, its use in the form of normative science will be more important. Along with the study of economic activities, an economist should also think about making it more useful and influential. - Wrong argument of division of labour :
The argument, that economists, should merely interpret the relationship between causes and consequences, and the task of finding solutions should be assigned to the policy makers and political leaders, is not correct, as actual analysis will become monotonous and uninspiring and labour and power would not be saved. Therefore, the power of taking decisions should also vest in the economists. - More realistic :
The nature of economics is continuously changing. Today, economics is rapidly developing. Subjects such as economic planning and social security have become major subjects of economics. In such condition, one cannot ignore the normative aspect of economics. A more realistic condition will be said to be present only when the economists provide concrete suggestions on subjects such as increasing the pace of economic developemnt, increasing the level of employment in the economy, economic stability, etc.
Arguments in favour of Economics as Positive Science :
Professor J. B. Say, Senior, among classical economists, and Professor Robbins, among modem economists, have regarded economics to be a psoitive science. According to Robbins, “Economics studies the facts which can be examined, while normative science studies the evaluations and findings”.
- In economics, the realistic view point can provide systematic, logical and correct economic conclusions, because the basis of relationship between causes and consequences is logic itself.
- Realistic viewpoint can form strong economic principles on the basis of actual beliefs and scientific analysis.
- If only the study of authenticity of economic activities, is done in economics, then disagreement amongst economists will lessen, understandability will increase among them and the development of economics will also take place in a rapid way.
- Professor Robbins has said that realizing the scarcity of resources, peoples should perform work according to the best of his skills. He should undertake only such work in which he specializes. If an individual starts doing all kinds of works, then he will waste both, his time as well as money. Therefore, an economist should concentrate only on the cause and its consequence. He should not pay attention on what has to be done or what has not to be done.