CHAPTER 1

INTRODUCTION TO MACROECONOMICS
QUESTIONS:
(ENTIRE CHAPTER)
1. Introduction of macroeconomics.
1. How is the subject economics classified?
2. Who was the economist who coined the word ‘micro’ and ‘macro’?
3. How is the economist related to the nobel prize?
4. In which year did the economist coin the word ‘macro’ and ‘micro’?
5. Who brought the concept of the modern economist in its modern form?
6. The name of the book of modern macroeconomics and in which year was it
published?
7. Who is the father of modern macroeconomics?
8. Why is he called the father of modern macroeconomics?
9. What is the meaning of macro economics?
10. From which did the word ‘macro’ is derived?
11. What does macroeconomics deal with?
12. Macroeconomics is also known as what?
13. What is the subject matter covered in macroeconomics?
14. What is the importance of macroeconomics?
a) Why is there a need for understanding the functioning of an
economy?
b) Why should we understand the future problems,needs, and
challenges of an economy?
c) Why do we understand reality?
d) Macroeconomics helps to make meaningful comparison and
analysis of what?
e) Why does macroeconomics provide ample opportunities to use
scientific investigation?

15. What is the scope of macroeconomics?

16. What are the limitations of macroeconomics?

2. Economy and its types

1
 1. What did the two economists have defined as the term ‘economy’?
Distinguish each separately.
2. What is the economy in genral?
3. What does vary accordingly in an economy?
4. The diagram of the functioning of an economy by its activities (flow chart).
5. What is the fundamental economic activity in an economy?
6. What is the ultimate aim of these activities?
7. How does the consumption activity support?
8. How are these activities influenced?
9. What are the major economic activities?
10. What are the major non economic activities?
11.What are the external economic activities?
12. What does the various economic activities do to the functioning of an
economy?
13. What are the different types of economics? (based ons)
IN DEPTHS
1. Capitalistic, mixed economics -
2. Static and dynamic -
3. Small and large economics -
4. Closed and open econ -
5. Low income, high income -
6. Traditional and modern -
7. Developed and underdeveloped -

3. Economic Systems
CAPITALISTIC ECONOMY.
1. What does the economic system refer to?
2. What are the major types of economic systems?
3. What ideology is made to denote the new market ideology of globalization
that connects nations together?
4. What is called extended capitalism and who coined it?
5. What are the two extreme and opposite approaches?
6. State the meaning of capitalism, socialism and mixedism in short answers.
7. Explain the meaning of capitalism in more brief answer:
8. The examples of capitalism.
9. Who is the father of capitalism?
10. Capitalism is also called as?

2
11. Whose role is minimum and maximum in the capitalistic economy?
12. What determines economic activities?
13. What is the major motive in a capitalist economy?
14. What are the features of the capitalistic economy?
15. In which economy the property can be transferred to heirs after death?
16. Who is free to buy any commodity as per their choice in a capitalistic
economy?
17. What is the driving force behind all economic activities in a capitalistic
economy?
18. What is the golden rule for a producer under capitalism?
19. In which market, there is a free competition?
20. What is the heart of any capitalistic economy?
21. What are the basic services government provides in a capitalistic
economy?
22. What are the different classes in the capitalistic economy?
23. State the merits and demerits of capitalism.
24. Where there is a wastage of resource in a economy?
25. Which system leads to frequent violent economic fluctuation and
crises?
26. What leads to higher rates of capital formation?

SOCIALISTIC ECONOMY.

27. Who is the father of socialism?

28. What does socialism refer to?
29. Define socialism.
30. What is the socialistic economy known as?
31. Explain the socialist economy. In brief.
32. What is the main motive behind all the economic activity?
33. What does it aim at?
34. What are examples of socialistic economy?
35. What are the features of socialism?
36. What is called classless society?
37. Who owns all the resources under the socialist economy?
38. What manages the factor of production under the socialist economy?
39. What is the integral part of a socialist economy?
40. Who undertakes the decision under the socialist economy?

3
41. What is the guiding principle behind all economic activities under
socialist economy?
42. Where there is an absence of competition?
43. Who has the full control over production and distribution of goods and
services?
44. Who has a limited choice in a socialist economy?
45. The pricing system works under the control and regulation of whom?
46. What are the two things that do not exist in socialism?
47. What provides equal opportunity for all through free health, education
and professional training?
48. List out the merits and demerits of socialistic economy.
49. What are minimized and are pre planned in a socialist economy?
50. What can be avoided in a socialist economy?
51. What helps social welfare? (refer pg:8)
52. What is red tapism and bureaucracy?
53. What is the major limitation in socialism?
54. Who is more powerful in socialism?

MIXED ECONOMY

55. What is a mixed economy?

56. What are examples of a mixed economy?
57. What are the features of a mixed economy?
58. Who have the right to purchase, use or transfer their resources in a
mixed economy?
59. What tends to eliminate the evils of capitalism and socialism?
60. In a mixed economy, what does coexist?
61. What does the central planning prepare?
62. What are the plans drawn up by the government?
63. What are the basic problems in an economy? And how are they solved?
64. List out the merits and demerits of the mixed economy.
65. What is the best advantage of the mixed economy?
66. What promotes balanced growth of the economy?
67. Who ensures a proper utilization of resources?
68. What type of tax does the government use for levying income tax to
bring economic equality in a mixed economy?
69. Who safeguards the interest of the workers and weaker sections? How?

4
70. What is the greatest drawback of mixedism?
71. How should the government and the private should and towards what
and state the reality.
72. Why does most of the public sector remain inefficient?
73. What fear is present in the mixed economy?
74. What widens the gap between rich and poor in the mixed economy?
75. What is found in the mixed economy:
_________ of capitalism and
_________ of socialism
76. Write the comparison of capitalism, socialism and the mixedism
(features)

4. CONCEPT OF MACROECONOMICS

1. How is the variable used in economic anaylsis are classified?

2. How does it increase or decrease?
3. What is stock?
4. What are the examples of stock variables?
5. What is the flow variable?
6. What are the examples of flow variables?
7. Distinguish stock variable and flow variable.
8. What is a model?
9. Why do economists use models?
10. What is an explanation of how the economy works?
11.How are the models built with?
12. What are the commonly used economic models?

5. CIRCULAR FLOW OF INCOME.

1. What is a circular flow of income?

2. What does it show?
3. What are the economic agents?
4. The circular flow analysis is the basis of _______ and _______.
5. What are the models of circular flow of income? Explain.
a) Simple economy -
b) Mixed and closed economy -

5
 c) Open economy -
6. What is called an external sector?
7. Explain the circular flow of income in two - Sector economy briefly.
8. Who is the sole buyer of goods and services?
1. Who is the sole supplier of factors of production?
2. What are the factors of production?
3. How does the household spend its income?
4. What does the household sector receive and by providing what?
5. What sector generates revenue by selling goods to service to whom?
6. Who does the firm hire?
7. What does the firm sell?
8. What is equal in a two sector economy?
9. What circular flow will be present in a two sector economy?
10. What does the outer and inner circle represent?
11.What does the real flow indicate?
12. What are the basic identities of the two sector economy?
13. What makes a three sector economy?
14. On what does the government levies tax on, in a three sector economy?
15. What does the government make in a three sector economy?
16. What are the social transfers?
17. To whom does the government pay and for what in a three sector
economy?
18. The basic identities of the three sector economy?
19. What makes it a four sector economy?
20. What are the four sectors in a four sector economy?
21. What does the external sector of the four sector economy comprises?
22. What kind of expenditure does the economy include in a four sector
economy?
23. What is net exports?
24. The formula for the four sector economy.

6. SUMMARY (SECTION PG: 14)

1. What does macroeconomics study?

2. What does it cover?
3. What does it examine?

6
4. What models based on economic variables are useful in understanding an
economy?
5. What provides a base to understand the functioning of a macro economy?
6. An economy could be classified on the basis of what such as capitalistic,
socialist and mixed economy?

7. GLOSSARY.

1. What is globalism?
2. Macroeconomics
3. Capitalism
4. Socialism
5. Mixedism
6. What is stock?
7. What is flow?
8. What is the economic model?
9. What is a circular flow?