ANSWER KEY

Q1.A) Give economic Terms (one mark for each correct answer)
1. Study of large economic unit - Macroeconomics
2. The theory which deals with the price determination of individual commodity by
forces of demand and supply - Price theory
3. Maximum satisfaction of people due to efficiency in the allocation of resources -
Economic welfare
4. Price determination of factors of production - Factor pricing theory
5. Determination of the prices of goods and services as well as factors of production -
Price theory
6. Study of small or millionth part of economic unit - Microeconomics
7. Equal distribution of Produce goods and services to the society for consumption -
Distributive efficiency
8. Production of most desired goods and services - Allocative efficiency
9. This concept is the key tool of micro economics - Marginalism principle
10. The two main branches of modern economics - Microeconomics and
Macroeconomics
11. Assumption of micro economics i.e. other things remaining constant - Ceteris Paribus
12. A type of economy wherein economic decisions regarding the production of goods
are taken at individual level - Market economy
13. This branch of economics explains determination of currency exchange rates of any
two countries - International economics
14. The theory which explains the cause of underdevelopment and poverty -
Development economics
15. The theory which deals with the relative shares of rent, wages, interest, profit in the
total national income - Distribution theory
16. The method which engages in the study of whole economy rather than its part -
Lumping method
17. The average of all prices of goods and services currently being produced in the
economy - General price level
18. Policy oriented science - Economics
19. The process of measuring, monitoring and reporting to stakeholders the social and
environmental effects of an organization's actions - Social accounting
20. This macro theory is a part and parcel of the theory of income and employment -
Theory of general price level
21. Policy oriented science - Economics (repeated question)
22. The process of measuring, monitoring and reporting to stakeholders the social and
environmental effects of an organization's actions - Social accounting (repeated
question)
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23. This macro theory is a part and parcel of the theory of Income and employment -
Theory of general price level (repeated question)
Q1.B) ASSERTION AND REASONING
1. A) Micro and Macro economics were two branches of modern economics. B) These
two terms were coined by prof Alfred Marshall. Answer: A (A is true but R is false) -
The terms were coined by Ragnar Frisch, not Alfred Marshall.
2. A) Micro economics is known as price theory B) Micro economics deals with
determination of prices of goods and services as well as prices of factors of
production. Answer: C (Both A and R are true but R is the correct explanation of A)
3. A) Micro economics begin with certain assumptions. B) The assumptions make micro
theories/analysis complex. Answer: A (A is true but R is false) - The assumptions
actually simplify, not complicate the analysis.
4. A) General equilibrium deals with the behavior of individual price of a commodity. B)
Lumping method is the study of aggregates. Answer: B (A is false but R is true) -
General equilibrium deals with the entire economy, not individual prices.
Q1.C) Choose the correct options:
1. Tool used in micro economics: a) Marginalism principles
2. Balance between 2 factors: a) Equilibrium
3. Method that studies each factor separately: b) Slicing
4. Economists who compare economy with human body: d) Alfred Marshall
5. Economist who popularized micro economics: d) Alfred Marshall
Q1.D) Complete the correlation.

1. Individual Demand : Micro Economics :: Aggregate Demand : Macro Economics

2. Slicing method : Micro Economics :: Lumping method : Macro Economics
3. Partial equilibrium : Micro Economics :: General equilibrium : Macro Economics
4. Micro : MIKROS :: Macro : MAKROS
5. Micro economics : Marshall :: Macro economics : Keynes
6. Micro : Isolation :: Aggregation : Macro Economics
7. Personal income : Micro :: National Income : Macro Economics
8. Study of individual variables : Micro Economics :: Study of aggregate variables :
Macro Economics
Q1.E) Odd Word Out.
1. Micro economic variable: National Income (others are individual variables)
2. Features of Micro: Slicing Method is repeated (or possibly Interdependence)
3. Economist who develop micro branch: Keynes (others developed micro, while
Keynes developed macro)
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4. Classification of market on competition: Wholesale Market (others are based on

competition structure)
5. Assumptions of Micro: Full employment (typically a macro assumption)
6. Economic efficiency: Skill Efficiency (not a standard economic efficiency type)
7. Scope of Micro: Theory of business cycle (this is macro, not micro)
8. Importance of Micro: National Income (this is macro, not micro)
9. Scope of Macro: Theory of Factor Pricing (this is micro, not macro)
Q1.E. Choose the correct options (matching):
i) Looking at option 1: 1-c, 2-e, 3-a, 4-g, 5-h Ragnar Frisch - 1933 Lord Keynes - 1936
Marginalism principle - 1950 Micro Economics - Limited Scope Macro Economics - Wide
Scope
ii) Looking at the second matching section, option 3 seems most likely: 1-a, 2-b, 3-e, 4-f
Q2) Identify and explain the concept (Two marks for each correct answer)
1. This describes distributive efficiency - ensuring goods are distributed equitably
2. This describes slicing method - dividing a whole into parts to analyze separately
3. This describes the multiplier effect in macroeconomics - how increased government
spending leads to increased economic activity
4. This describes the lumping method - collecting aggregate data for macroeconomic
analysis
Q3) State with reasons whether you agree or disagree

1. "The scope of Macro economics is limited" - Disagree. Macro economics has a wide
scope covering national income, employment, general price level, economic growth,
etc.
2. "Micro economics is a microscopic study" - Agree. Micro economics studies individual
economic units like households, firms, etc. in detail.
3. "Micro economics studies behavior of individual economic unit" - Agree. It focuses on
individual decision-making units like consumers, firms, etc.
4. "Micro economic theories are based on certain assumptions" - Agree. Micro theories
use assumptions like ceteris paribus, perfect competition, rational behavior, etc.
5. "Macro economics is individualistic" - Disagree. Macro economics is holistic, dealing
with aggregates rather than individuals.
6. "Macro analysis is based on general equilibrium" - Agree. Macro economics
considers the economy as a whole and studies the interrelationships between
different sectors.
7. "Macro economics is based on interdependence between aggregate economic
variables" - Agree. It studies how aggregate variables like national income,
employment, and general price level affect each other.
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8. "Macro economics is useful to the government" - Agree. Government uses macro

analysis for policy formulation regarding inflation, unemployment, economic growth,
etc.
9. "Micro economics is different from Macro economics" - Agree. They differ in scope,
methodology, and assumptions, though they complement each other.