CBSE 12th Class Economics Syllabus

Course Structure

Parts/Units	Topics	Marks
Part A	Introductory Microeconomics	50
I	Introduction	6
II	Consumer Equilibrium and Demand	16
III	Producer Behaviour and Suplly	16
IV	Forms of Market and Price Determination	12
Part B	Introductory Macroeconomics	50
V	National Income and Related Aggregates	15
VI	Money and Banking	8
VII	Determination of Income and Employment	12
VIII	Government Budget and the Economy	8
IX	Balance of Payment	7
Total (Part A + Part B)		100

Unit 1: Introduction

Unit 2: Consumer Equilibrium and Demand

Consumer’s equilibrium −
- Meaning of utility
- Marginal utility
- Law of diminishing marginal utility
- Conditions of consumer’s equilibrium using marginal utility analysis
Indifference curve analysis of consumer’s equilibrium −
- The consumer’s budget (budget set and budget line)
- Preferences of the consumer (indifference curve, indifference map)
- Conditions of consumer’s equilibrium
Demand −
- Market demand
- Determinants of demand
- Demand schedule
- Demand curve and its slope
- Movement along and shifts in the demand curve
- Price elasticity of demand – factors affecting price elasticity of demand
- Measurement of price elasticity of demand −
  - percentage-change method
  - geometric method (linear demand curve)
- Relationship between price elasticity of demand and total expenditure

Unit 3: Producer Behaviour and Supply

Production function −
- Short-Run
- Long-Run
Total Product −
- Average Product
- Marginal Product
Returns to a Factor
Cost and Revenue −
- Short run costs – total cost, total fixed cost, total variable cost
- Average cost; Average fixed cost, average variable cost and marginal cost-meaning and their relationship
Revenue −
- Total revenue
- Average revenue
- Marginal revenue – meaning and their relationship
Producer’s equilibrium −
- Meaning and its conditions in terms of marginal revenue-marginal cost
Supply −
- Market supply
- Determinants of supply
- Supply schedule
- Supply curve and its slope
- Movements along and shifts in supply curve
- Price elasticity of supply
- Measurement of price elasticity of supply −
  - Percentage change method and
  - Geometric method

Unit 4: Forms of Market and Price Determination

Perfect competition −
- Features
- Determination of market equilibrium
- Effects of shifts in demand and supply
Other Market Forms −
- Monopoly
- Monopolistic competition
- Oligopoly – their meaning and features
Simple Applications of Demand and Supply −
- Price ceiling
- Price floor

Unit 5: National Income and related aggregates

Some basic concepts −
- Consumption goods
- Capital goods
- Final goods
- Intermediate goods
- Stocks and flows
- Gross investment
- Depreciation
Circular flow of income −
- Methods of calculating National Income −
  - Value Added or Product method
  - Expenditure method
  - Income method
Aggregates related to National Income −
- Gross National Product (GNP)
- Net National Product (NNP)
- Gross and Net Domestic Product (GDP and NDP)−
  - At market price
  - At factor cost
- National Disposable Income (gross and net)
- Private Income
- Personal Income and Personal Disposable Income
- Real and Nominal GDP
GDP and Welfare

Unit 6: Money and Banking

Money – its meaning and functions
Supply of money −
- Currency held by the public
- Net demand deposits held by commercial banks
Money creation by the commercial banking system
Central bank and its functions (example of the Reserve Bank of India) −
- Bank of issue
- Govt. Bank
- Banker’s Bank
- Controller of Credit through Bank Rate
- CRR
- SLR
- Repo Rate
- Reverse Repo Rate
- Open Market Operations
- Margin requirement

Unit 7: Determination of Income and Employment

Aggregate demand and its components
Propensity to consume and propensity to save (average and marginal)
Short–run equilibrium output
- Investment multiplier and its mechanism
Meaning of full employment and involuntary unemployment
Problems of excess demand and deficient demand −
- measures to correct them – change in government spending, taxes and money supply

Unit 8: Government Budget and the Economy

Government budget −
- Meaning
- Objectives
- Components
Classification of receipts −
- Revenue receipts
- Capital receipts
Classification of expenditure −
- Revenue expenditure
- Capital expenditure
Measures of government deficit −
- Revenue deficit
- Fiscal deficit
- Primary deficit

Unit 9: Balance of Payments

Balance of payments account −
- Meaning and components
- Balance of payments deficit-meaning
Foreign exchange rate −
- meaning of fixed and flexible rates
- managed floating
Determination of exchange rate in a free market