Economics is a subject where students analyse economy as a whole or an individual analysis is done. It is a study about how certain decisions can impact different firms and industries and how certain government policies effects economy and employment. Economy of class 12th can be quite tricky, some students find it extremely interesting and some find it difficult to understand. However, Economy is a subject where students can relate the theories and concepts with real life situations and a proper understanding of concepts and theories can help students to score well in this subject.
After understanding how firms’ and consumers’ behave in the market and what leads to fluctuations of prices in commodity markets student is introduced to the fundamentals of Macroeconomics in class 12. Macroeconomics deals with broader side of Economics i.e. it studies economy wise phenomena such as national income, rate of economic growth, inflation, level of employment etc. Syllabus of 12 class also covers issues concerning Indian economy. The two papers to be tested in class 12 are –
1. Introductory Macroeconomics
2. Indian Economic Development
It includes five units:
1. National Income and Related Aggregates – National is the sum of all final goods and services produced by the normal residents of a country during a year .This chapter deals with circular flow of income in a two sector model which explains to the student that it is the output that generates incomes which is distributed amongst factors of production to be spent on the goods and services. Thus National Income can be calculated by three methods – Value added method, Income Method and Expenditure Method.
2. Money and Banking – ‘Money is what money does’ This concept is explained along with the role of commercial banks in credit creation in an economy. Central bank performs vital functions in an economy like issuer of currency, Supervisor of banks, Lender to the government, Custodian of foreign exchange reserves and controller of credit. Central bank regulates the money supply through various instruments like bank rate, repo rate, reverse repo rate etc.
3. Determination of income and output – Recession is a period of declining economic performance marked by high unemployment, fall in retail sales, stagnant wages etc where as a boom is a period of increase in economic activity associated with rise in GDP, increase in demand ,rising prices and low rate of unemployment. These phases of business cycle are understood by the students through this unit.
4. Government budget and the economy – This unit delves in detail with objectives of budget and the structure of Government Budget .The Government budget is divided into two parts i.e. Revenue Budget and Capital Budget. The unit helps students to understand the difference between Revenue deficit, Fiscal deficit and Primary deficit with its implications.
5. Balance of payments – All inflows and outflows of foreign exchange are recorded in balance of payments account. The student learns as to how foreign exchange rate is determined and why does it fluctuate on everyday basis. The unit also explains the challenges economy faces in maintaining foreign exchange reserves and the ways central bank can cover up deficit in the balance of payment account.
Indian Economic Development
It has three units-
1. ‘Development Policies and Experience’ and Economic Reforms since 1991 - This unit contains three chapters. These chapters give us an overview of the state of the Indian economy on the eve of independence followed by Industrial Policy Resolution in 1956, i.e. our strategy of economic development after independence. It concludes with economic policies pursued post 1991. In the first chapter the student becomes familiar with the state of the Indian economy in 1947 which was backward and stagnant due to the British rule in India. India’s GDP was growing at less than 2% and per capita GDP was growing at less than 0.5%.
Second chapter of this unit is ‘Indian Economy 1950-1990’. After studying this chapter, the student will come to know the goals of Indian’s five year plains, the development policies in different sectors such as agriculture and industry from 1950-1990.
In the last chapter ‘Economic Reforms since 1991’ of this unit, the student will come to understand the background of the reform policies (Liberalisation, Privatisation & Globalisation) introduced in India in 1991, . This year CBSE also introduces the concepts of ‘Demonetization and GST’ in this chapter.
2. Current Challenges facing Indian Economy - Indian economy is witnessing huge challenges in the course of its growth. There were around 21% people below poverty line in 2011-2012 out of which 7% reside in rural areas. This shows the need to develop rural areas. Rural areas need credit and marketing facilities and also development of ancillary industries to create jobs and uplift standard of living in rural areas. The country also needs to invest huge amount in building both social and economic infrastructures i.e. Power generation, Health, Education etc. Every year many people enter the labor force. Government has to create jobs for those who are already unemployed and also for those who are entering the labor force. Development is needed to solve the problems of poverty, unemployment, rural development, infrastructural development but not at the cost of environment. Therefore Sustainable development is the need of the hour i.e. the process of development which meets the needs of the present generation without reducing the ability of the future generations to meet their own needs.
3. Development Experience of India – A comparison with Neighbours: This unit emphasizes on the need for India to understand the development strategies of its neighbors China and Pakistan. After studying this chapter, the students will figure out comparative trends in economic and human development indicators of all the three countries. They will be able to assess the strategies that these countries have adopted to reach their current state of development.