UP Board Solutions for Class 10 Commerce Chapter 24 Capital: Meaning, Classification and Characteristics

UP Board Solutions for Class 10 Commerce Chapter 24 Capital: Meaning, Classification and Characteristics

Capital: Meaning, Classification and Characteristics Objective Type Questions (1 Mark)

Question 1.
All capital is the product of (UP 2017)
(a) Investment
(b) Saving
(c) Production
(d) None of these
Answer:
(b) Saving

Question 2.
By the term capital formation we mean:
(a) Fixed Assets
(b) Capital Formation
(c) Investment
(d) None of these
Answer:
(b) Capital Formation

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Question 3.
……… and forced savings constitute the two types of savings.
(a) Voluntary
(b) Non-voluntary
(c) Either (a) or (b)
(d) none of these
Answer:
(a) Voluntary

Question 4.
…….. and ………. are essential for making additions to the stock of capital.
(a) Saving, Capital
(b) Capital, Investment
(c) Saving, Investment
(d) None of these
Answer:
(c) Saving, Investment

Question 5.
Under-developed countries are characterised by ……….. rate of capital formation.
(a) High
(b) Low
(c) Either (a) or (b)
(d) None of these
Answer:
(b) Low

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Capital: Meaning, Classification and Characteristics Definite Answer Type Questions (1 Mark)

Question 1.
Give the name of any two kinds of capital.
Answer:
Fixed and circulating (UPBoardSolutions.com) capital.

Question 2.
Which term is used in the service of money or wealth or property?
Answer:
Capital.

Question 3.
What are the primary factors of production?
Answer:
Land and Labour.

Capital: Meaning, Classification and Characteristics Very Short Answer Type Questions (2 Marks)

Question 1.
Define Capital.
Answer:
According to Marshall, “Capital consists of those kinds of wealth other than free gifts and nature which yield income.”
According to Thomas, “Capital is that part of the (UPBoardSolutions.com) wealth of individuals and communities, other than land, which is used in the production of further wealth.”

Question 2.
Give any two functions of capital.
Answer:
The following are the functions of capital:

  • Capital makes the provision of tools and implements to workers for productive purposes.
  • A part of capital is spent on purchasing raw materials.

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Capital: Meaning, Classification and Characteristics Short Answer Type Questions (4 Marks)

Question 1.
What is the importance of capital in production?
Answer:
Capital has been a very important factor of production even in earlier stages of human development. In the hunting, stage man used some implements to kill wild animals for food. These implements were his capital. Since then capital in some form or the other has played a significant role in the economic development of society. Under capitalism, capital is most (UPBoardSolutions.com) significant. It is equally important under communism. Though capital is not a primary factor of production yet its importance is as great as that of any primary factor of production such as land as labour.

Question 2.
What do you mean by Gross Capital Formation and Net Capital Formation? (UP 2016)
Answer:
Every producing unit has to make provisions for the depreciation of the plant and machinery. So, it keeps aside a part of its profits for replacing the warm out machinery and plant. But it sometimes keeps another part of its income away for buying new machinery and equipment when it feels a need to expand itself. So every producing unit not only keeps its capital intact but it tries to expand its productive capacity through making additions to further capital in future. So, the gross capital formation induces two things:

  • Maintaining capital intact.
  • Making further additions to capital equipment to expand the volume of production.

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While net capital formation includes only one thing, i.e., making further Addition to capital equipment.

Question 3.
Make out the main differences between Fixed and Circulating Capital. (UP 2009, 17)
Answer:
Difference between Fixed Capital and Circulating Capital:
Fixed Capital: Fixed Capital exists in a durable shape, renders continuous service for many years and its return is spread over a greater length of time. Fixed Capital includes those goods which are used again and again for further production. Their utility does not get exhausted in a single-use. For example, machinery is used in a factory for several years until it becomes (UPBoardSolutions.com) useless. Similarly, factory premises are fixed capital because they are used for several years. Examples of fixed capital are machinery, plant, tools, implements, building and other durable goods.

Circulating Capital: Circulating capital refers to those goods which can be used only once in production or those goods which cannot be used in production over and over again. They are single-use producer goods. Examples of circulating capital are raw materials, fuel and goods in process, money paid on wages to workers etc.

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Question 4.
Draw a clear line of demarcation between Capital and Wealth. Mention the point of differences between Land and Capital. (UP 2009)
Answer:
Difference between Capital and Wealth: Capital is that part of the wealth that is used for the production of further wealth. Thus, “all wealth is not capital, though all capital is wealth.”

Professor Benham and Fisher do not find any difference between wealth and capital because both are used for production and consumption. According to these scholars, all wealth is capital because the direct effect of goods is on production of wealth. The only difference lies in use. If, for example, a car is bought for excursions and enjoyment, it is not capital, but if it (UPBoardSolutions.com) is bought for doing business, it is capital.
Differences between Land and Capital

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Land Capital
1. Land is a free gift of nature. 1. Capital is formed through human efforts, i.e., it is a ‘produced’ agent of production.
2. Land lacks mobility. 2. Capital is fairly mobile.
3. The supply of land is fixed and limited in the area. In the event of fluctuations in rent, its supply cannot be increased or withdrawn. 3. Supply of capital can be increased or decreased with human efforts.
4. Rent of land varies. 4. Income from capital is more or less uniform.
5. Land is a permanent factor of production and indestructible. Land does not depreciate or wear out. 5. Capital is perishable and becomes completely worn out and the same needs to be replaced.

Question 5.
Distinguish between wealth and capital. Explain the importance of capital in production. (UP 2019)
Answer:
Difference between capital and wealth
Capital is a part of wealth which is used for the production of further wealth. Thus, “All wealth is not capital, Though all capital is wealth”.

Professor Benham and Fisher do not find any difference between wealth and capital because both are used for production and consumption. According to these scholars, all wealth is capital because the direct effect of goods is on production of wealth. The only difference lies in use if for example. A car is bought for excursions and enjoyment. It is not capital but if it is bought for doing business it is capital.

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Importance of capital is production in the modern large scale production system. Capital is a very important factor of production, so important that other factors of production manpower resources of a country cannot be utilised without capital nor can the natural resources be exploited for the use of man.

Capital has been a very important factor of production even in the earlier stage of human development in the haunting stage man used some implements to kill wild animals for food. These implements were his capital. Since then capital in some form or the other has played a significant role in the economic development of society. Under capitalism capital is most (UPBoardSolutions.com) significant it is equally important under communism. Though capital is not a primary factor of production. Yet its importance is as great as that of any primary factor of production such as land or labour.

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Capital: Meaning, Classification and Characteristics Long Answer Type Questions (8 Marks)

Question 1.
Define Capital and write its characteristics.
Or
Clarify the meaning of Capital. Describe the importance of capital in the business. (UP 2012)
Answer:
Meaning of Capital: Capital generally means money, but in Economics, the term capital means that part of man-made wealth which is used for further production of wealth. In the words of Marshall, “Capital consists of all those kinds of wealth other than free gifts of nature, which yield income.”

Characteristics of Capital: The main characteristics of capital are as follows:
1. Capital is man-made factor of production. Under capital, only man-made factors can be included such as machines, buildings etc. On the contrary, the gifts from nature such as land, climate etc. cannot be considered as capital.

2. All wealth cannot be counted as capital, but only that part of the wealth which is helpful in further production is counted as capital.

3. No production is possible without capital. But capital does not produce anything by itself. Production is carried out with the help of capital and it is rightly said that capital is an inactive factor of production.

4. The capital involves the element of time. The capital renders its services for a period of time. This is the reason why the payment of capital is measured in terms of a particular rate, per cent and per year.

5. The capital is subjected to depreciation. The capital used in the form of machinery (UPBoardSolutions.com) due to constant use suffers wear and tear. Therefore, this needs to be replaced.

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6. Capital possesses the quality of mobility. Capital is the most mobile factor of production. The capitalist can carry his capital anywhere he likes without any difficulty.

7. Capital has the characteristics of elasticity. Supply of capital can be increased or decreased depending upon the situation.

8. Production is possible only due to the use of capital. The application of capital (UPBoardSolutions.com) increases the efficiency of labour and productive power of all the factors of production with which it is combined and used.

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UP Board Solutions for Class 10 Commerce Chapter 23 Labour: Meaning, Characteristics and Efficiency

UP Board Solutions for Class 10 Commerce Chapter 23 Labour: Meaning, Characteristics and Efficiency

Labour: Meaning, Characteristics and Efficiency Objective Type Questions (1 Mark)

Question 1.
Labour plays a very important role in:
(a) Economy
(b) Production
(c) Manufacturing
(d) None of these
Answer:
(b) Production

Question 2.
Land is a passive factor of ……..
(a) Production
(b) Assets
(c) Organisation
(d) None of these
Answer:
(a) Production

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Question 3.
Physical labourer requires the maximum use of muscular strength and ……….
(a) Mentally Power
(b) Intelligency
(c) Physical Energy
(d) None of these
Answer:
(c) Physical Energy

Question 4.
Mental labour can be either professional or ……..
(a) businessmen
(b) employment
(c) administrative
(d) None of these
Answer:
(c) administrative

Question 5.
Efficiency means: (UP 2015)
(a) Human Power
(b) Mental Capacity
(c) Productive Capacity
(d) None of these
Answer:
(d) None of these

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Labour: Meaning, Characteristics and Efficiency Definite Answer Type Questions (1 Mark)

Question 1.
Is production possible only with the help of labour ? Give answer in Yes or No.
Answer:
Yes.

Question 2.
If the labourers will be educated and trained the quality of labour will improve? Give answer in Yes or No.
Answer:
Yes.

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Labour: Meaning, Characteristics and Efficiency Very Short Answer Type Questions (1 Mark)

Question 1.
What is the efficiency of labour?
Answer:
Efficiency means productive capacity: Efficiency of labour, therefore, denotes the capacity of the worker to produce relatively large amount or better kind of work or both in a given period of time. (UPBoardSolutions.com) The efficiency of labour is that quality of the worker by which in given conditions in a specified time be produces more or better type of goods. Hence, the efficiency of labour depends on the. quantity and quality of the product and the time is taken for its production.

Question 2.
Give any two characteristics of labour in India. (UP 2017)
Answer:
Two characteristics of labour are as follows:
(a) Labour is indispensable for production: A labourer sells his labour and not himself. In no case can we separate human effort from him.

(b) Labourers have not the same power of bargaining as these employers: Labourers are at a disadvantage in bargaining with their employers because their labour cannot be stored up and has to be sold of lower rates.

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Labour: Meaning, Characteristics and Efficiency Short Answer Type Questions (4 Marks)

Question 1.
Mention three factors that increase the efficiency of labour.
Answer:
Three factors that increase the efficiency of labour are as follows:
(a) Moral Qualities: The efficiency of a worker depends upon his moral structure. Honest, sincere, industrious and sober workers work more efficiently than those who lack these qualities.

(b) Diet, health and standard of living: The healthier worker is more efficient than a diseased, malnourished poor worker. Insufficient diet, insufficient clothing, filthy living quarters, decreased efficiency. A labourer whose standard (UPBoardSolutions.com) of living is low is less efficient than the one whose standard of living is high.

(c) Education: Education is general and technical. General education enlarges the conception of a man about the matter and widens his knowledge about general things. Technical education makes a man a specialist in the work. The man who has received general and technical education is more efficient that one who lacks them.

Question 2.
Write the four disadvantages of division of labour.
Answer:
Four disadvantages of division of labour are as follows:
(a) Disadvantages to Producers:

  • Disadvantages of large scale production: Big producers reduce their costs up to the limit where other competitors could not stay in the market.
  • More use of Machines: Due to the more use of machines, products will bp (UPBoardSolutions.com) increases which will result in low prices.

(b) Disadvantages to Labourers:

  • Disadvantages of large scale production: The use of machines reduces the importance of labour.
  • Disadvantages of use of machines: Due to the implementation of division of labour, the introduction of machines also increases. Machines take the place of men which results in unemployment.

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Question 3.
Make out the main differences between Land and Labour.
Answer:
Difference between Land and Labour:

Land Labour
1. Land is a passive means of production. 1. Labour is an active means of production.
2. Land is fixed and limited in supply. It cannot be increased or decreased. 2. Supply of labour depends upon the population. It increases and decreases with the decrease or increase in population.
3. The land is not perishable which means it is not wasted. 3. Labour is perishable, it goes wasted.
4. Land lacks mobility, it cannot be shifted from one place to another. 4. Labour is mobile, it moves from places of less demand to those of more demand.
5. Land can be separated from its owner. 5. Labour is inseparable from the labourer.
6. Land is only the means, not the end. 6. Labour is both the means and the end.
7. Land is a free gift of nature. 7. Labour is a human effort.

Labour: Meaning, Characteristics and Efficiency Long Answer Type Questions (8 Marks)

Question 1.
What is meant by the term “Labour”? What are its kinds? What do you understand by skilled, semi-skilled and unskilled labour? (UP 2009, 17)
Answer:
Meaning of Labour. In simple language, “labour” means human efforts. But in Economics, labour consists of those human efforts, mental or bodily or both which are undertaken in the expectation of reward. Thus, labour includes the following two things:

  • Labour can be physical as well as mental. For example, the labour of a worker is physical and that of a university lecturer mental.
  • Labour is that human effort which is undertaken for the sake (UPBoardSolutions.com) of earning a wealth of a living. For example, where a man sings for his own recreation, his effort does not amount to labour. But, if he sings in expectation of a reward in a theatre, his exertion is labour.

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Kinds of Labour: There are four kinds of labour found in India:

  • Physical and mental labour.
  • Skilled, semi-skilled and unskilled labour.
  • Productive and unproductive labour.
  • Professional and administrative labour.

Skilled Labour: Skilled labour is performed by those workers who have received general education and professional training for a particular trade so that they can solve complicated problem connected with their job.

Semi-skilled Labour: Semi-skilled labour is performed by those workers (UPBoardSolutions.com) who have received no formal training in the trade or job performed by them but they have acquired enough skill to solve various problems of trade by themselves.

Unskilled Labour: Unskilled labour is the labour which is performed by the worker who has obtained no training in any particular trade or line.

Question 2.
What is meant by efficiency of Labour? What factors affect the efficiency of labour?
Answer:
By ‘efficiency of labour’, we mean the productive capacity of a worker to do more work or better work or both during a specified period of time. We know that all workers are not equally efficient. It is usually observed that the labourers working in the same occupation with similar types of tools and types of equipment with the same type of raw materials, with the similar type of working conditions and for the same period of time produce not only different quantities of output but also different qualities of output.

Factors Affecting Efficiency of Labour: Efficiency of labour depends upon a large number of factors. Chief of them are as follows:
1. Racial Characters: People of some races are superior to others in physical strength (UPBoardSolutions.com) and are capable of prolonged physical exertion. Take for example the case of those living in Punjab or Haryana who are taller, stronger and hard-working than the rest of the people of the country.

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2. Hereditary Characters: Hereditary traits of father and mother also influence the efficiency of the workers. For example, the children of educated parents are also usually educated and efficient.

3. Moral Qualities: An honest and sincere worker is regarded as an efficient worker. Moral quantities include the way a child is brought up, his family background, educational, religious and social upbringing etc.

4. Food, Health and Standard of Living: The efficiency of labour to a great extent is determined by the type of food eaten and the kind of physique maintained by a labourer. A large part of the labour force will go waste if a reasonable standard of living for the working class is not provided.

5. General Education: General education enables a person to develop his intellect and widen his knowledge. This knowledge makes a worker intelligent and enlarges his power to distinguish what is right and what is wrong?

6. Technical Education: Technical education trains the worker in a particular (UPBoardSolutions.com) trade or profession and develops in him certain specific qualities and makes him a specialist.

7. Climate: Extreme climatic conditions do not favour hard labour. For example, high rugged mountains and hot deserts impose tremendous handicaps upon the density of population, economic activities, transportation facilities etc. which directly influence the efficiency of labour.

8. Social Conditions: Some people are compelled to continue in the business or trade carried out by their ancestors. Under such conditions, the workers are not in a position to select their profession according to their qualification and taste. When this is the case, they cannot perform according to their efficiency.

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Question 3.
What is Labour? Briefly describe the main features of labour as a factor of production. (UP 2014)
Answer:
Meaning of Labour. In simple language, “labour” means human efforts. But in Economics, labour consists of those human efforts, mental or bodily or both which are undertaken in the expectation of reward. Thus, labour includes the following two things:

  • Labour can be physical as well as mental. For example, the labour of a worker is physical and that of a university lecturer mental.
  • Labour is that human effort which is undertaken for the sake of earning a wealth of a living. For example, where a man sings for his own recreation, his effort does not amount to labour. But, if he sings in expectation of a reward in a theatre, his exertion is labour.

Main features of Labour as a Factor of Production
The main Features of labour as a factor of production are as follows:
1. Role in production: Labour plays a very important role in production (UPBoardSolutions.com) Land cannot produce by itself except when worked by men.

2. Active Factor: Land of its own cannot produce anything unless labour is applied to it. Capital is the produced means of production. Thus, labour alone is the main factor of production and the only active factor.

3. Developed and Undeveloped Countries: The Importance of labour in developed and developed countries is the same. Its importance in undeveloped countries is still greater because the future of these countries depends on the batter utilization of their man-powers resources.

4. Evidence of literacy and technical training: The supply of labour in a country depends not on the number of workers available but also on the quality of workers as judged from the level of literacy and the level of technical training attained by the people of the country.

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Question 4.
Enumerate the characteristics of labour. What are the different kinds of labour? (UP 2019)
Answer:
Characteristics of labour: The following are the main characteristics of labour
1. Labour is indispensable for production: Production is not possible without the help of labour. Even the richest natural resources cannot produce anything without the active support of human exertion. Labour is an active factor of production. Natural resources of a country cannot produce anything without labour exerted on them.

2. Labour is inseparable from the labourer: A labourer sells his labour and not himself. In no case can we separate human effort from him.

3. Labour is perishable: Labour unsold on a particular day goes waste. If a labourer remains unemployed even for a day due to slackness of demand, strike or lockout, his labour for that day is lost to the nation. In this sense (UPBoardSolutions.com) labour is perishable. Due to this peculiarity, the bargaining power of labour is very weak and this is the reason ununited labourers are exploited by employers to accept the wages they are willing to pay. This weakness of labour is removed to some extent by unions.

4. Supply of labour changes slowly: The supply of labour for a short period can neither be contracted nor expanded to meet the decreasing or increasing demand for it. For example, if the demand for engineers goes up, it will take some five years to produce a sufficient number of trained engineers to meet the growing demand. Similarly, we cannot contract the supply of engineers if their demand falls down.

5. Supply of labour does not behave like other commodities: Ordinarily, the supply of a commodity rises, when its price rise but the supply of labour does not always rise when wages rise. For example, when wages rise beyond the standard of living of workers, they will like to enjoy more leisure and the supply of labour will be contracted even when the price of labour (i.e., wages) rises. So, supply of labour does not behave like the supply of other commodities.

6. Labour is mobile but less mobile than a capital: Labour moves from places of less demand to those of more demand. For example, thousand of labourers move from villages to metropolitan cities where their demand is more than it is in their native villages. But labour is not so mobile as capital.

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A favourable investment condition in a country attracts capital even from foreign countries but better employment opportunities fail to attract a good number of efficient workers from abroad due to various difficulties of language, living, habits and social differences.

7. Labour can absorb capital: If more capital is invested in human beings and they are trained well, then labour quality will improve decidedly to a considerable extent. To train a good number of people we require large capital (UPBoardSolutions.com) in the shape of training institutions, laboratories, laboratory equipment, buildings etc. The efficiency of the labour force so raised will depend upon the type of training received. Thus, labour absorbs capital.

8. Labour produces surplus value: Generally, a labourer produces more than is required for his self-consumption. The total value of his product is much more than the wages paid to him. Hence labour produces surplus value. This surplus is kept by the employer.

9. Labour is means and ends both: Labour is meant because it is used as a means for producing wealth. It is an end in itself because production is carried on to satisfy human wants, i.e., the wants of human labourers.

10. Labourers have not the same power of bargaining as their employers: Labourers are at a disadvantage in bargaining with their employers because their labour cannot be stored up and has.to be sold at lower rates.

11. It is not easy to calculate the cost of labour: It is difficult to calculate the cost of bringing up children and the cost of training when they grow up.

12. Labourers differ inefficiency: The efficiency of all labourers is not the same. Hence, wages differ from man to man.

Kinds of Labour
Labour can be classified according to the nature of work and the professional, technical training required. The following are the most important types of labour:

1. Physical and mental labour: Physical labourer requires the maximum use of muscular strength and physical energy. The labour of the farmer, the bus driver, the mason is physical, while the labour of the teacher, the engineer, the (UPBoardSolutions.com) doctor and the barrister is mental. But the physical and mental labour sometimes cannot be separated from each other. There is no work which can be called purely mental or purely physical. The classification is based on the degree of the aspect used.

Physical labour is universally treated as inferior to the mental labour and is paid lower wages. Mental labour is considered to be of higher status and is accordingly paid higher wages. Mental labour is done by those engaged in white-collar jobs.

2. Skilled, semi-skilled and unskilled labour: The second criterion for deciding the kind of labour is the degree of skill obtained by the labourer. The labour performed by one who has obtained no training in any particular trade or line is called unskilled. He changes his occupation according to the needs of the situation. The second category is that of the workers who have received no formal training in the trade or job performed by them but who have acquired enough skill to solve various problems of the trade themselves. Their labour is called semi-skilled. Lastly, there are workers who have received general education and professional training for a particular trade so that they can solve complicated problems connected with their occupation. Their labour is called skilled.

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Skilled and semi-skilled are terms which change according to time and place. The labour performed by an expert doctor, a good engineer or a great technologist is skilled but the labour of an overseer or a nurse is semi-skilled.

3. Productive or unproductive labour: So long as labour is paid for, it is productive. The labour which results in the creation of some utility is called productive; the labour which fails to do so is called unproductive. For example, the labour devoted to the writing of a book is productive if the book is published, and the writer receives a royalty for it; but if the book is not published, the (UPBoardSolutions.com) labour involved in writing is wasted. It is unproductive. Marshall says that all labour except that which fails to promote the desired aim towards which it is directed and which therefore does not produce any utilities is productive.

The older economists regarded only that labour productive which created matter. So, they regarded labour involved in agriculture and industry as productive and all other labour as unproductive. This was the view of Adam Smith. The present economists do not hold this view.

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4. Professional and administrative labour: Mental labour can be either professional or administrative. The doctors, architects, professors,, lawyers etc. who are engaged in mental work perform professional labour, whereas those who run (UPBoardSolutions.com) and manage establishments and government departments are said to be performing administrative labour. Both these types are highly paid classes.

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UP Board Solutions for Class 10 Commerce Chapter 22 Land: Definition, Characteristics and Importance

UP Board Solutions for Class 10 Commerce Chapter 22 Land: Definition, Characteristics and Importance

Land: Definition, Characteristics and Importance Objective Type Questions (1 Mark)

Question 1.
The main feature of land is its:
(a) Limited Nature
(b) Unlimited Nature
(c) Waste Nature
(d) None of these
Answer:
(a) Limited Nature

Question 2.
Land is fixed in quantity and cannot be:
(a) Decreased
(b) Increased
(c) Either (a) or (b)
(d) None of these
Answer:
(b) Increased

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Question 3.
Land ……….. in fertility.
(a) similar
(b) differs
(c) either (a) or (b)
(d) No
Answer:
(b) differs

Question 4.
Land is a ……….. of nature. (UP 2016, 18)
(a) Costly gift
(b) Valuable gift
(c) Free gift
(d) None of these
Answer:
(c) Free gift

Question 5.
Land is the basis of ……… development. (UP 2017)
(a) Economic
(b) Non-economic
(c) Either (a) or (b)
(d) none of these
Answer:
(a) Economic

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Land: Definition, Characteristics and Importance Definite Answer Type Questions (1 Mark)

Question 1.
Can the land be shifted from one place to another? Give answers in Yes or No.
Answer:
No.

Question 2.
Is Nature known to be bountiful? Give answers in Yes or No.
Answer:
Yes.

Question 3.
In the supply of land perfectly limited? Give answers in Yes or No.
Answer:
Yes.

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Land: Definition, Characteristics and Importance Very Short Answer Type Questions (2 Marks)

Question 1.
Write in short land as a free gift of nature.
Answer:
Land is given to human beings as a free gift of nature. Since land is not a produced or man-made agent. It has no cost of production and hence no supply price. Those who had acquired (UPBoardSolutions.com) land, in the beginning, had incurred their labour and capital for the purpose of increasing its productivity. Hence, they sell it to others only after realizing the capital and labour spent on it. Thus, rent or no-rent sale or purchase, the land remains as it is, and is available for the service of mankind as a free gift of nature.

Question 2.
How the land is useful in the development of primary industries?
Answer:
Agriculture, fishery, forestry, mining etc. are dependent on this gift of nature (land). Availability of fertile land and climatic conditions, forest, mines, etc. result in the establishment and development of primary industries. In addition, land also provides us a variety of agriculture products, fruits and ail other basic needs without which life is impossible on the surface of the (UPBoardSolutions.com) earth.

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Question 3.
Write any four characteristics of the land as a factor of production. (UP 2019)
Answer:

  1. Land is limited in supply
  2. Land is permanent and is fixed
  3. Land lacks mobility
  4. Nature of land is passive.

Land: Definition, Characteristics and Importance Short Answer Type Questions (4 Marks)

Question 1.
How can you say that land is limited in supply?
Answer:
The land is strictly limited in quantity i.e., its supply cannot be increased or decreased like the other factors of production. Though human beings have achieved scientific progress and their achievements have touched each and every aspect of human activity, his power to add to the area of land is almost negligible. In the same way, the minerals could be mind, but only what is available in underground deposits We are also blessed with sun, moon rains etc.

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Mankind can only enjoy it as and when it is given to him. For instance on agriculturist may require more rains for his crop, but he must be content with what reaches him by natural process. In this regard some way argue that land surface can increase on account of the operation of some forces of nature, which result in an increase in the quantity of the land already in existence.

Question 2.
Give any two importances of Land in Production.
Answer:
Importance of Land in production:
(a) Helps in moulding life of the people: Land play a decisive role in moulding the life of human beings and helps him to choose an occupation. It facilitates freedom of movement of human beings. He is free to move within (UPBoardSolutions.com) the territory of his country. International movement of labour based on laws governing such movements thus has enabled them to select different occupations, thereby helping to improve their standard of living. Without land, this would not have been possible.

(b) Supply of Food and Fodder: Land as nature provide food of all kinds to human beings. Land (forest) besides supporting wild animals also fodder for cattle. Thus land is the basis of all kinds of life whether human or animal.

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Land: Definition, Characteristics and Importance Long Answer Type Question (8 Marks)

Question 1.
What is land? Describe the characteristics of land. (UP 2008)
Or
Give the definition of land. Write its characteristics. (UP 2013)
Answer:
In common parlance, land refers to the solid part of the earth. But in Economics, land is not used only in the sense of natural resource. Land means all nature, living and non-living, which is used by man in production. Within the concept of land are included all the free gifts of nature or natural resources above the earth and below the surface of the earth, which help in the production of economic resources. No production is possible without the help of land.

According to Prof. A. Marshall, “By land is meant not merely land in the strict sense of the word, but the whole of the materials and forces which nature gives freely for man’s aid in land and water, in air and light and heat.”

According to Prof. J. K. Mehta, “Land is specific or that it is the specific (UPBoardSolutions.com) element in a factor or again that it is the specific aspect of a thing.”

Peculiarities or Characteristics of Land. Land as one of the factors of production possesses certain peculiarities or characteristics which are as follow:

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1. A Free Gift of Nature: Land is freely gifted by nature. As land is not produced or man-made agent, it has no cost of production and hence no supply prices. Thus, rent, or no rent sale or purchase, the land remains as it is and is available for the service of mankind as a free gift of nature.

2. Land is Limited in Supply: Land is strictly limited in quantity i.e., its supply cannot be increased or decreased like the other factors to production. Though human beings have achieved
scientific progress and their achievements have touched each and every aspect of human activity, his power to add to the area of land is almost negligible.

3. Land is Permanent and is Fixed: Land is permanent and is fixed, hence it cannot by destroyed. Lands which are destroyed in a war, havoc caused by an atom bomber by any natural calamity like earthquakes, volcanic eruptions, floods etc. too regain productivity after some time.

4. Land Lacks Mobility: Land cannot be shifted from one place to another. Only its products can be transported from one place to another. Thus, unlike other factors of productions, land lacks mobility. But in Economics, mobility does not imply place mobility, it implies use mobility. The black soil (Land) suitable for cotton cultivation cannot be shifted to Uttar Pradesh from (UPBoardSolutions.com) Maharashtra. Therefore, land lacks place mobility. But an agricultural land can be converted into a site for factory, hence it possesses use mobility.

5. Land is of Different Variety: Land shows variability in its composition and productivity. Just like man are not alike, the pieces of land are also not alike. All lands are not alike, i.e., some land is fertile, while others are infertile.

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6. Passive Nature of Land: Land does not produce the wealth of their own, but human beings spend capital and labour on land thereby producing things of their needs and acquiring wealth. Land can be used for the productive purpose with the able support of labour and capital. Even then we can consider land only as a passive agent of production. Land can be made active by human beings and this nature of passivity of land also constitutes its characteristics.

7. Relativity of Situation: Situation of land is of great importance in deciding the prices of a piece of land. Land in a city fetches more value than a piece of land in a village land suitable for cultivation, the price (UPBoardSolutions.com) of which varies with that of infertile or wastelands. Same is the case with a land situated in a remote corner of a country, away from human inhabitation, markets etc.

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8. Most Important Factor of Production: Land is the most important factor of production. Without land, nothing can be produced. Even the very existence of human beings is because of the existence of land. If the land had not been there, the universe would have been avoided.

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UP Board Solutions for Class 10 Commerce Chapter 21 Factors of Production: Meaning and Importance

UP Board Solutions for Class 10 Commerce Chapter 21 Factors of Production: Meaning and Importance

Factors of Production: Meaning and Importance Objective Type Questions (1 Mark)

Question 1.
Fairchild says, “Production consists of the creation of utility in ………..”
(a) Capital
(b) Wealth
(c) Capital Formation
(d) Assets
Answer:
(b) Wealth

Question 2.
Economic utilities are created in goods and services mainly in three ways, which are:
(a) Form, time and value
(b) Form, value and place
(c) Value, place, time
(d) Form, time, place
Answer:
(d) Form, time, place

Question 3.
That part of wealth which is used in production is called: (UP 2012, 18)
(a) Savings
(b) Reserve
(c) Capital
(d) None of these
Answer:
(c) Capital

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Question 4.
………. is/are factor/factors of production: (UP 2013)
(a) Land
(b) Labour
(c) Capital
(d) All of these
Answer:
(d) All of these

Question 5.
An individual has ………
(a) Limited Wants
(b) Infinite Wants
(c) Neither (a) or (b)
(d) None of these
Answer:
(b) Infinite Wants

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Factors of Production: Meaning and Importance Definite Answer Type Questions (1 Mark)

Question 1.
Write the factors which are used in production.
Answer:
Land, Labour, capital, organization (UPBoardSolutions.com) and enterprise.

Question 2.
Is Production possible without land? Give answer in Yes or No.
Answer:
No.

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Question 3.
What are the different ways of creating utilities?
Answer:
Form utilities, Time utilities and Place utilities.

Factors of Production: Meaning and Importance Very Short Answer Type Questions (2 Marks)

Question 1.
What is meant by the term production?
Answer:
Production in common language means making, creating, growing and manufacturing. But in economics, the term production refers to the creation of utilities and not to the creation of matter.

Question 2.
Write the importance of organisation? (UP 2016)
Answer:
Importance of Organisation. In the earlier stages of economic growth, the organisation as a separate and distinct factor did not exist. Production was a simple process. It was carried on in the home of workers who owned their workshops, had their own capital invested and managed the entire production process. But now when the conditions of production and marketing have become complicated, when factors of production lie scattered, the necessity of someone to bring all these factors together, and combine them (UPBoardSolutions.com) in proper proportions has increased tremendously.

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Question 3.
Explain any one factor of production.
Answer:
OrganisationOrganisation: The work of bringing together land, labour and capital at one place, combining them in proper proportion and making them work together for the purpose of production is called the organisation. The man who does this work is called the organiser. The larger the scale of production, the greater is the need for organisation.

Factors of Production: Meaning and Importance Short Answer Type Questions (4 Marks)

Question 1.
Explain the importance of land and capital in production.
Answer:
Importance of Land: No production is possible without land. It is, (UPBoardSolutions.com) therefore, the most indispensable factor of production. Its importance lies in the following ways:

  • The Economic Development of a country depends on land.
  • Development of primary industries.
  • Development of manufacturing industries.
  • Development of means of transport and communication.

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Question 2.
What is the importance of production?
Answer:
Production is important both from the individual and social point of view. An individual has infinite wants. In order to satisfy these wants, he requires a large variety of goods and services for his consumption. These goods and services are produced by a number of people or by himself.

Production is important from the social point of view. If the volume of production is low in the country, the standard of living cannot be high. Production is the basis of the entire economy of the nation. It is on the basis (UPBoardSolutions.com) of production that national income, economic development and industrial progress of a country depends. Thus from the social point of view production has great significance.

Factors of Production: Meaning and Importance Long Answer Type Questions (8 Marks)

Question 1.
What are the different kinds of Production? (UP 2009)
Answer:
Kinds of Production: Production can be of the following kinds:
1. Production by an Addition of Form Utility: When the potter makes an earthenware or when a carpenter makes a table from wood, they create a form of utility in earth or wood.

2. Production by Creating Time Utility: Many things acquire more utility if they are kept aside for some time, for example, vinegar becomes more useful for favouring food and for pickles when kept aside for a long time.

3. Production by Creating Place Utility: When a commodity is taken away from a place where its demand is less to another place where the demand is greater, its utility increases. For example, the wood in the forest areas has less utility there but when it is brought down to someplace in city it acquires more utility. Thus, place utility is created in the wood brought (UPBoardSolutions.com) down to a city for making furniture etc.

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4. Production by Change of Ownership: When the right of ownership is transferred from one person to another, its utility increases for the second person. For example, a book is not so useful to a bookseller who owns the bookstall but when the ownership to the book is transferred to a student, it acquires more utility to him.

5. Production by Increasing Knowledge about a Commodity: Newspaper, films, radio and television increase our knowledge of the usefulness of a commodity. By advertisement, they create utility in it and thus are performing production.

6. Production by Personal Service: Teachers, lawyers, doctors, musicians performs services to society. They create service utility. Thus, the creation of service utilities is also production.

Question 2.
Explain the various factors of production. (UP 2015)
Or
What is meant by Production in Economics? Describe the various factors of production. (UP 2011, 12)
Or
What do you understand by land? (UP 2012)
Answer:
Meaning of Production. Production in common language means making, creating, growing and manufacturing. For example, a conjurer produces a rabbit from his hat; farmers produce good crops; factories produce woollen (UPBoardSolutions.com) goods. But in Economics, the term production refers to the creation of utilities and not to the creation of matter. For example, when a potter produces earthenwares, he creates utility in the damp earth.

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Dr Richard Ely says that production means, “creation of economic utility”
Fairchild says, “production consists of the creation of utility in wealth.”

Let us take more examples and see what these economists mean by the term production in Economics. A mason puts brick and mortar and gets a house built. He simply re-arranges and combines articles of matter and gives (UPBoardSolutions.com) them a form of house which has greater utility for a man than before. Thus, more utility has been created.

A carpenter makes a chair. He changes the form of wood that really exists before. Wood is already there; he makes it more useful for man, i.e., he creates utility in wood.

A tailor does not create a bush-shirt; he simply creates a utility with the help of his needle and thread. Thus, production means the creation of utilities and not matter.

Definition of Production: Let us analyse the definition of production given by Dr Fairchild. He says, “The addition of economic utilities of commodities alone is production.” By the term economic utilities, he means exchange value. Production does not mean the creation of utilities, but on the contrary, it means the creation of economic utilities. Economic utilities are created in goods and services mainly in three ways:

  • Form utilities
  • Time utilities
  • Place utilities.

Thus, the term production in Economics means the creation of goods and services that have exchange value.
In recent years, a new definition of the term ‘Production’ has come up. Prof. J. R. Hicks defines production as, “any activity whether physical or mental which is directed to the satisfaction of other people’s wants through exchange.”

Various Factors of Production. Land, Labour, Capital, Organisation (UPBoardSolutions.com) and Enterprise are the five factors which makes the production possible. The explanation of each factor is as follows:

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1. Land: In economics, land means all the natural resources available not only on land but also in water and air which are given to human beings as free gifts of nature. Thus, by land we do not mean merely soil but it stands for all the free gifts of nature like mountains, hills valleys, rivers, plains, trees, wind, light, etc. The land which forms the original or basic source of all material wealth, thus, is the most important factor of production.

2. Labour: Any type of work undertaken by mind or body with a view to earning an income can be termed as labour. Thus, under the term ‘labour’, we can include not only the labour of unskilled workers but also all those categories of work both mental and physical which are exerted to earn an income.

3. Capital: Capital plays a vital role in the modern productive system. Capital signifies all those physical goods which are used purposely for further production by human beings. But in the ordinary sense of the term, capital is used for money. Whereas in economics, capital stands not only for money but also for tools, instruments, machines, factories, raw materials, transport, equipment etc.
Capital and wealth are two different things. Capital is that part of wealth which is used for further production of wealth. Thus, all wealth is not capital, but all capital is wealth.

4. Organization: A village artisan can perform his work without much organizing skill. This is because his work is quite simple and is done on a small scale. But organization is of supreme importance in the large scale (UPBoardSolutions.com) production of modern times where the division of labour and the use of machines are applied extensively. Land, labour and capital need to be brought up together and put into production effectively. This requires skill and efficiency. A person who has got the skill and organising capacity can make these factors to co-operate effectively in the most harmonious way.

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5. Enterprise: Small scale production, small capital and small output do not involve a greater degree of risk. Industrialisation, large scale production, division of labour have changed the quantum of risk in modern times. The risk element borne by concerns which were quite meagre in the yesteryears has turned out to be greater nowadays. The task of bearing uncertainty or risk is now (UPBoardSolutions.com) borne by the enterprise, and production on a large scale which involves considerable risk and makes it another factor of production.

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UP Board Solutions for Class 10 Commerce Chapter 20 Expenditure and Saving

UP Board Solutions for Class 10 Commerce Chapter 20 Expenditure and Saving

Expenditure and Saving Objective Type Questions (1 Mark)

Question 1.
Income is utilized in:
(a) Expenditure
(b) Saving
(c) Either (a) or (b)
(d) Both (a) or (b)
Answer:
(d) Both (a) or (b)

Question 2.
The expenditure has been classified into:
(a) Individual Expenditure
(b) Social Expenditure
(c) Neither (a) or (b)
(d) Both (a) or (b)
Answer:
(d) Both (a) or (b)

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Question 3.
Social Expenditure are of obligatory expenditure and ……….
(a) Individual Expenditure
(b) Consumption Expenditure
(c) Optional Expenditure
(d) None of these
Answer:
(c) Optional Expenditure

Question 4.
Saving is defined as the excess of income over ………
(a) Consumption Expenditure
(b) Production Expenditure
(c) Optional Expenditure
(d) Individual Expenditure
Answer:
(a) Consumption Expenditure

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Question 5.
When a person incures some expenditure for the benefit of the society, such expenditure is known as ………..
(a) Individual Expenditure
(b) Social Expenditure
(c) Consumption Expenditure
(d) Optional Expenditure
Answer:
(b) Social Expenditure

Expenditure and Saving Definite Answer Type Questions (1 Mark)

Question 1.
Write the type of Income.
Answer:
(i) Monthly Income
(ii) Real Income.

Question 2.
Write the types of social expenditure.
Answer:
(i) Obligatory Expenditure and
(ii) Optional Expenditure.

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Question 3.
What is its called when money received by a person in return of this work services or utilizing his property for any production purpose.
Answer:
Income.

Expenditure and Saving Very Short Answer Type Questions (2 Marks)

Question 1.
Define Expenditure.
Answer:
Expenditure is the way by which man meets (UPBoardSolutions.com) out his necessities. In other words, Expenditure is that portion of the income with which human being derive present day satisfaction.

Question 2.
How saving is disadvantageous to society as a whole?
Answer:
Disadvantages to society as a whole are as follows:
(a) Rise of class conflicts: Savings which far exceed the limits will ultimately result in class-conflicts. Huge savings on the part of the monopolists put them at an advantageous position and they, therefore, exploit the weaker sections of the society.

(b) Fear of over-production and Unemployment: Savings help in the formation of capital, and the use of capital give rise to further production. Increased production still further increases capital formation. This tendency, therefore, leads to overproduction.

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Question 3.
How the saving is disadvantageous to an individual?
Answer:
Disadvantages to an individual ate as follows:
(a) Psychological effect: Postponement of present wants for future gains involve an element of sacrifice on the part of an individual. Consumption, whether it is useful or wasteful, has to be set aside in order (UPBoardSolutions.com) to make savings. A person needs to tighten on his belt to save an amount which he thinks may help to enjoy at a later stage. But how many persons are really able to enjoy this?

(b) Chance of Exploitation: To a mss wealth in order to keep it for future purpose can give rise to exploitation. In addition, if a person gives undue emphasis to savings, he may even resort to evil and undesirable methods in order to attain wealth.

(c) Create a group of Spendthrift and Lazy Persons: These persons who are lucky to get savings from their parents for the creation of which they have not put any effort, fail to understand the need to utilize the savings for productive purposes.

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Question 4.
Point out the difference between expense and saving. (UP 2019)
Answer:

Expenses Savings
1. Meaning Expenses in that portion of income with which human beings derived present-day satisfaction. Saving is the part of income which is set aside in a productive manner in order to meet out some future requirements.
2. Effect In the case of expenditure, the goods and services are applied directly to the satisfaction of wants. In the case of saving the goods and services are applied to the production of other wealth.

Expenditure and Saving Short Answer Type Questions (4 Marks)

Question 1.
What are the points of difference between saving and expenditure?
Answer:
Difference between Savings and Expenditure: Savings and expenditure can be distinguished in the following way:
(a) Savings help a person to satisfy his future wants, while expenditure satisfies his present requirements.

(b) In the case of savings goods and services are applied indirectly to the satisfaction of wants, while in the case of expensive goods and services are applied directly to the satisfaction of wants.

(c) Capital is formed out of the savings of the people and, therefore, (UPBoardSolutions.com) saving constitutes the most important aspect of capital accumulation; whereas expenditure does not help in the creation of capital.

(d) Savings increase the income of a person whereas expenditure decreases the income of a person.

(e) A wise and farsighted person saves something from his current income which constitutes saving, while a person who looks wisdom of farsightedness utilises his whole income on expenditure.

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Question 2.
Discuss the importance of savings from the point of view of the nation.
Answer:
Importance of Savings to the country can be studied under the following heads:
(a) To raise capital formation: Large scale production of modern times is possible only with the help of huge capital. Savings of the people help the country to accumulate capital. In other words, capital is the result of the (UPBoardSolutions.com) savings of the people.

(b) To raise the standard of living of the People: Standard of living of the people depends upon the rate of economic development achieved by a particular country. Rapid economic growth enables its citizens to enjoy the high standard of living.

(c) To Increase Employment Opportunities: Mechanization, large scale production, division of labour and all-round development of the country will create more and better employment opportunities to the people in a country. This is possible only if people are in the habit of saving and moreover are capable to save.

(d) To achieve military power: Savings help a country to achieve military power. The strength of the armed forces to safeguard its boundaries and to wage successful battles bring glory to this nation. Savings, therefore, are of grant importance to increase the might of the forces in a particular country.

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Expenditure and Saving Long Answer Type Questions (8 Marks)

Question 1.
What do you understand by expenditure and saving? Discuss the objectives and social importance of saving. (UP 2009, 18, 15)
Or
Describe the importance of saving in society. (UP 2018)
Answer:
Expenditure: Expenditure is that portion of the income with which human beings derive present day satisfaction. In other words, expenditure is the way by which man meets out his necessities.
Savings: Saving is that part of income which is not spent by an individual for satisfying his present-day necessities but is kept aside for meeting out uncertainties and crisis in future.
Objectives of Savings: Following are some reasons behind savings:

1. To Create Capital: Savings are made for the purpose of creating capital to earn more income in future.

2. To Meet Out the Calamities: Sometimes a man has to face a critical situation in which he has to spend more than his income. In that case, his savings cover the gap between income and expenditure.

3. Provision for Old Age: In old age, the earning capacity of a person (UPBoardSolutions.com) decreases and he needs more money. So savings are made to provide for old age.

Importance of Savings: Following are some importance of saving:

1. To Raise capital-formation: Large scale production of modern times is possible only with the help of huge capital. Savings of the people help the country to accumulate capital. In other words, capital is the result of the savings of the people.

2. To Raise the Standard of Living of the People: Standard Pf living of the people depends upon the rate of economic development achieved by a particular country. Repaid economic growth enables its citizens to enjoy the high standard of living. A country whose people do not have the capacity to save will have only a low per capita income. Higher the per capita income, higher the standard of living of the people.

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3. To Increase Employment Opportunities: Mechanization, large scale production, division of labour and all-round development of the country will create more and better employment opportunities to the people in a country. This is possible only if people are in the habit of savings.

Question 2.
What is the relationship between expenditure and savings?
Answer:
Relationship between Expenditure and Savings: Expenditure and Income result in the increase of production. They increase the economic developments and helps in the upliftment of the nation’s status because both satisfy the various requirements of a human being. The only difference is that savings help a person to satisfy his future wants, while expenditure satisfies his present requirements.

Economists are having two different views in this connection according to one group of economists, “Expenditure is one of the best means for society’s welfare.” On the other hand, other economists suggest that “Savings is the only cause of society’s welfare.”

Those who are of the opinion that savings are more important than the expenditure argue the same because of the following reasons:

1. Savings lead to the capital formation which helps in the production (UPBoardSolutions.com) of further wealth. Accumulation of capital increase production in leaps and bounds boosts trade and commerce and earns huge profits for government and industrialists, which induce them to start more productive units.

2. The workers will enjoy more and better employment opportunities. Hence, a nation whose people give more importance to savings than expenditure enable them to achieve economic development.

3. The national income and per capita income of the people will also simultaneously increase owing to increased savings.
The other group of economists which favour expenditure says that the amount spent by the people will proportionately increase the demand for commodities in the market. With increased demand, industrialists will be induced for increasing production. They will set up new units for earning more profits resulting in better employment opportunities with more wages. The material prosperity of the country will have its far-reaching effect in all walks of human activities. People can increase their income and reuse their standard of living.

From the above study, it can be concluded that for the economic development of a country both savings and expenditure are equally important and the country cannot achieve material prosperity without their co-ordinated functioning. Hence, savings and expenditure are like the two tracks on which a nation progresses.

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Question 3.
Give the main points of difference between Saving and Expenditure.
Answer:
Savings and expenditure can be distinguished in the following way:
1. Savings help a person to satisfy his future wants, while expenditure satisfies his present requirements.

2. In the case of savings, goods and services are applied indirectly to the satisfaction of wants, while in the case of expenditure, goods and services are applied directly to the satisfaction of wants.

3. Capital is formed out of the savings of the people and, therefore, savings constitute the most important aspect of capital accumulation; whereas expenditure does not help in the creation of capital.

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4. Savings increase the income of a person whereas expenditure decreases the income of a person.

5. A wise and farsighted person saves sometimes from his current (UPBoardSolutions.com) income which constitutes savings, while a person who lacks wisdom and farsightedness utilizes his whole income on consumption.

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