Solution

DETERMINATION OF INCOME AND ENPLOYMENT

Class 12 - Economics

1.
(b) More persons employed for a job which less can accomplish
Explanation: More persons employed for a job which less can accomplish
2.
(c) 14
Explanation: In urban areas men are able to earn high incomes, families discourage female members from taking up jobs.
3.
(d) Goods are produced by exploiting natural resources
Explanation: The secondary sector includes industries that produce a finished, usable product or are involved in construction.
This sector generally takes the output of the primary sector and manufactures finished goods or where they are suitable for use
by other businesses, for export, or sale to domestic consumers.
4. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
5.
(d) Savings by households
Explanation: Savings by households
6.
(d) All of these
Explanation: All of these
7.
(d) A is false but R is true.
Explanation: A is false but R is true.
8. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
9. An employee is a worker under wage employment i.e., who sells his labour for wages.
10. Male Employment
i. 40.7 % of male population is concentrated in the primary sector.
ii. 26.5 % of male workers are engaged in the secondary sector.
iii. Service or Tertiary Sector provides employment to 32.8 % of male workers.
Female Employment
i. Women workers concentration is also very high in the primary sector. 57.1 % of the female workforce is employed in the
primary sector, whereas only 40.7 % of males work in that sector. It happens because men get opportunities in both secondary
and service sectors.
ii. Only 17.7 % of female workforce are employed in the secondary sector.
iii. The service sector gives employment to 25.2 % of female workers.
11. Final goods are those goods which are consumed only by the households. The given statement is not correct and is thus
refuted. Final goods are those goods which are purchased/consumed either by households or by the producers for investment
purpose, i.e., these are the goods which have crossed the production boundary.
12. Current percentage of regular salaried employees, self-employed and casual wage labourers in India is as follows:-
Labour Bureau has been conducting the Quarterly Employment Survey (New Series) since April 2016 with the objective of
measuring relative change in employment situation over successive quarters in the sizeable segment of Non-farm Industrial
economy covering 8 major sectors viz. Manufacturing. Construction, Trade, Transport, Education, Health, Accommodation&
Restaurants, and TT/BPO. Establishments having 10 or more workers are covered in this survey. These 8 sectors constitute around
81% of the total employment of units with 10 or more workers (Organized sector) in the Sixth Economic Census (6th EC). As per
an official survey conducted some time ago, it is estimated that around 51% of Indian workers are self-employed, mostly in rural

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 areas, while 33.5% of them are casual labour (33.5%) and only 15.6% have salaried employment. Of the 1.21-billion people in the
country, the worker population ratio is 39% at the national level, with 40% in rural areas and 36 percent in urban areas.
13. i. Social security contributions by employees: It should not be included in the estimation of National Income, as it is not a part
of the compensation of employees and it is not a part of factor income or earned income.
ii. Pension paid after retirement: It should be included in the estimation of National Income as it is a kind of deferred payment
to employees and is also a part of the compensation of employees.
14. State True or False:
(i) (b) False
Explanation: False. In the case of open unemployment, workers are totally idle while in case of disguised
unemployment, workers appear to be working.
(ii) (a) True
Explanation: True
(iii) (b) False
Explanation: False. National income = Domestic income + Net factor income from abroad. This equation shows that
national income can increase when the net factor income from abroad increases even when domestic income is
constant.
(iv) (b) False
Explanation: It will be an intermediate product if it is for resale or used by a restaurant for preparing meals.
15. Unemployment is a situation under which those who are willing and capable to work, do not get work through which they can
earn their livelihood. Thus, unemployment means the state of being unemployed.
Following are the types of unemployment found in rural and urban areas of India:
i. Open Unemployment: It refers to that situation wherein the worker is willing to work and he has the necessary ability to
work, yet he does not get work. Thus, he remains unemployed.
ii. Seasonal Unemployment: It occurs in case of agriculture, ice-cream factories, woollen factories, etc which are a seasonal
occupation. Seasonal unemployment caused by the fact that certain activities can be pursued only during specified periods,
e.g., The demand for agricultural labour increases at the time of sowing and harvesting. During the interval between sowing
and harvesting, there is a fall in employment. They have busy and slack seasons. In the offseason, there is no work. The result
is seasonal unemployment
iii. Disguised Unemployment: A situation in which more persons are employed on a job that is optimally required. If a part of
the labour force is withdrawn and the total production remains unchanged, this withdrawn labour will be known as disguised
unemployed labour. In this type of unemployment, marginal physical productivity of labour is zero or sometimes it becomes
negative. An individual is working but he is unable to add to the productivity or to the output.
iv. Industrial Unemployment: It includes those illiterate persons who are willing to work in industries, mining, transport, trade
and construction activities, etc. Problem of unemployment in industrial sector has become acute because of increasing
migration of rural people to urban industrial areas in search of employment.
v. Educated Unemployment: In India, the problem of unemployment among educated people is also quite grave. It is a problem
spread across all parts of the country because of massive expansion in the education facilities. These facilities have
contributed to the growth of educated persons who are on the lookout for white collar jobs.
vi. Technological Unemployment: Technological upgradation is taking place in all spheres of activity. People who have not
updated their skills as per the latest technology become technologically unemployed.
vii. Structural Unemployment: Unemployment caused by the fact that the economy fails to generate enough jobs. It is the result
of the backwardness and low rate of economic development of a country. It is generally witnessed in the underdeveloped
countries, e.g., A change of energy use from coal to electric power is bound to curtail coal mining activity and cause
unemployment there.
16. Domestic income is the sum total of factor incomes earned within the domestic territory of a country during an accounting year.
i. No, it will not be included in the domestic factor income of India because this income is earned outside the domestic territory
(economic territory) of India. It is a factor income from abroad.
ii. No, it will not be included in the domestic factor income of India because the Russian embassy in India is not a part of the
domestic territory of India. So, this income is not earned within the domestic territory of India. It is factor income from
abroad.

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iii. Yes, it will be included in the domestic factor income of India because the foreign company or the foreign bank is located
within the domestic territory of India. So, it is an income earned within the domestic territory of India.
iv. Yes, it will be included in the domestic factor income of India because this income is earned within the domestic territory of
India. The Indian embassy in Korea is a part of the domestic territory of India.
v. Yes, it will be included as it is part of Factor Income earned in the domestic territory of the country.
vi. No, as profits are not earned within the domestic territory of India. It is a factor income from abroad.

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