ECONOMICS QUESTION PAPER FOR HSC MAHARASHTRA STATE BOARD AS PER NEW BOARD PATTERN

AS PER NEW SYLLABUS MAHARASHTRA STATE BOARD HSC STUDENTS. 

Time : 3 hours                                                      Marks :  80 Marks

Q.1 (A) Select the correct answer form the possible options given below and rewrite the statements:                        5 Marks

1. Economics is a …….. science.

(Natural / Social / Anthropology / Political)

2. Labour is ……….. .

(Imperishable / Perishable / Convertible / Non-convertible)

3. The nature of the market of barter system is ………. .

(wide / limited / personal / social)

4. There is lack of ………. In monopoly.

(consumers / competition / sellers / people)

5. ……….. has monopoly to issue the currency notes.

(Commercial Bank / Central Bank / Co-operative Bank / Rural Bank)

   

(B) Match the correct Pairs:                                                                                                                                                    5 Marks

Group A	Group B
1. Entry Barriers. 2. Entrepreneur  3. D- mat Account 4. RBI 5. Monopolistic Competition.	1. Prof. E.H. Chamberlin 2. Paul A. Samuelson 3. Share Broker 4. Monopoly 5. Profit 6. Rent 7. Commercial Bank 8. Central Bank

(C) State whether the following statements are True or False:                                                                                       6 Marks

1. The demand curve of monopolistic competitive market is horizontal. (False)
2. Credit Money is created by Central Bank of a country. (False)
3. The commercial bank perform agency functions. (True)
4. Demand for Raw material is derived demand. (True)
5. Perfect competition is a real concept which exist. (False)
6. Micro economics deals with full employment, price stability and economic growth in an economy. (False) 

Q.2 (A) Define or Explain the following concepts: (Attempt any Three)                                                                             6 Marks

1.       DERIVED DEMAND.

2.         COMPETITIVE DEMAND 

3.         PARTIAL EQUILIBRIUM.

4.         MARKET DEMAND

5.         ECONOMIC EFFICIENCY

6.         FORM UTILITY

       (B) Give Reasons or Explain the Statements: (Attempt any Three)   6 Marks

1.       Macro economics given an overall view of the economy. 

2.       Overdraft facility is not given to saving account holders.

3.       GNP = C + I + G +  (X - M) + (R - P)

4.      The point where ASF = ADF is the point of "Effective Demand"

5.       In Deficit budget, Government Expenditure Exceeds Government Receipts. 

6.       National income at factor cost includes subsidy. 

Q.3 (A) Distinguish Between: (Attempt any Three)   6 Marks

1.       Utility V/S Usefulness

2.       Extension of Demand V/S Contraction of Demand

3.       Relatively Elastic Demand V/S Relatively Inelastic Demand

4.       Perfect Competition V/S Pure Competition 

5.       Saving V/S Consumptions

6.       Commercial Bank V/S Central Bank

       (B) Write Short Notes: (Attempt any Two)    6 Marks

1.       Determinants of Elasticity of Demand.

2.       Secondary Functions of Commercial Bank.

3.       Components of Government Budget.

4.       Relationship between Total Utility and Marginal Utility.

Q.4 Answer the following questions: (Attempt any Three)   12 Marks

1.       What are the types of Money?

2.       Explain the Law of Supply.

3.       What are the Qualitative Method Credit Control by RBI.

4.       What are the types of Monopoly?

5.       State the features of Monopolistic Competition. 

6.       What are the factors Determinants of Consumption Function? 

Q.5 Do you agree or disagree with the following statements. Give reasons (Attempt any three)                  12 Marks

1.       There are many difficulties involved in the estimation of national income. 

2.       Commercial bank performs many functions. 

3.       There are no Exception in Law of Supply

4.       Utility and Usefulness are different concepts. 

5.       Macro economics is the study of an individual unit. 

6.       National income estimates are accurate in India. 

Q.6 Answer in Detail: (Attempt Any Two)  16 Marks

1.       Explain the types of Monopoly.

2.       Define Law of Demand? Explain its Assumption?

3.       Features of Land?

4.       (A) What are the Types of Investment Expenditure?

      (B) Features of Perfect Competition?

Write short notes on National Stock Exchange?

 Meaning: -National Stock Exchange was established in the year 1992. At present, it is India's biggest stock exchange by volume. It also ranks 3^rd in the world for transacted volume. It has developed into a sophisticated electronic market where the trades take place on computers through NSEI dealer.

The features of NSE are as follows: -

1.       NSE is a company limited by shares.

2.       NSE is an all India level stock exchange

3.       The investors can trade in securities from anywhere in the world through internet.

4.       The settlement takes place on T (trade) + 2 days i.e. trade plus two working days. Thus, the money received within 2 days from the date of sale.

5.       NSE has many indexes but the most famous index is NIFTY.

6.       NSE provides transparency as the investors can check the prices for each tick.

What are the various constituents and concepts in Depository system?

1.      Depository: - A depository can be defined as ‘an institution which transfers the ownership of securities in electronic mode on behalf of its members.’ A depository is a nominee of the investors, who keeps the shares on their behalf. Therefore, the depository acts as a custodian of securities

2.      Depository participant: -Depository participant is the representative of the Depositor. Depository participant acts as intermediary between investors and depositories. An investor has no direct access to the Depositaries. The investor has to trade his securities/share through the Depository Participant. The depository participant has an identity number for identification. It has to maintain accounts of securities of each investor. Depository Participant gives intimation about holdings from time to time by sending a statement of holding or giving a pass-book. If investor desires the services of Depository, he has to open an account with Depository through a Depository Participant. At present in India, there are two depositories. They are

·         National Securities Depositories Limited (NSDL)

·         Central Depositories Services Limited (CDSL)

3.      Beneficial owner: -An investor is known as 'beneficial owner'. He is the person in whose name Demat account is opened. His name is recorded with the depository. He enjoys the rights and benefits of a member such as to get dividend, to get bonus shares, to vote at meeting.

4.      Issuer Company: -It is a company which makes an issue of securities. It must register itself with a depository.

5.      Dematerialisation: -it is the process in which share certificate are converted into electronic form.

6.      Fungibility: -The shares in depositories are fungible. They don't have distinctive number for identification.

7.      Rematerialisation: -Rematerialisation is the process by which shares in electronic form are reconverted into physical form.

8.      International Securities Identification Number (ISN): -it is an identification number given to a security of an issuer company at the time of admitting such security in the depository system.

DEPOSITORY PARTICIPANT

                  Depository participant is the representative of the Depositor. Depository participant acts as intermediary between investors and depositories. An investor has no direct access to the Depositaries. The investor has to trade his securities/share through the Depository Participant. The depository participant has an identity number for identification. It has to maintain accounts of securities of each investor. Depository Participant gives intimation about holdings from time to time by sending a statement of holding or giving a pass-book. If investor desires the services of Depository, he has to open an account with Depository through a Depository Participant. At present in India, there are two depositories. They are

·         National Securities Depositories Limited (NSDL)

·         Central Depositories Services Limited (CDSL)

According to SEBI guidelines financial institutions, banks, stock brokers can be registered as Depository Participant.

EXPLAIN THE NEED and importance OF DEPOSITORY.

Meaning: - A depository can be defined as ‘an institution which transfers the ownership of securities in electronic mode on behalf of its members.’ A depository is a nominee of the investors, who keeps the shares on their behalf. Therefore, the depository acts as a custodian of securities.

The need for depository arose mainly due the following reasons:

1.       Growth in Securities transactions: - There has been considerable growth in securities transactions, especially, in the post-reform period, i.e., since 1991. After 1991, the Govt of India introduced several reforms in the Indian Economy, including capital market reforms.

2.       Limitations of Physical Transfer: -There were several limitations relating to physical transfer of shares. The limitations were

·         Delay in transfer of shares.

·         Problem of bad deliveries

·         High cost of handling and transfer

·         Chances of loss of certificates in transit.

·         Chances of theft of certificates, etc

3.        To comply with global standards: -Almost all the developed markets had introduced the depository system ensuring efficient transfer and settlement of securities. Due to reforms in capital markets, the foreign institutions investors (FIIs) were allowed to deal in stock exchanges. For this purpose the government also introduced the depository Act, 1996.

4.       To enhance liquidity in stock markets: -There was a need to enhance liquidity in Indian Stock Markets. The seller of securities to get immediate cash payment for their transactions. The depository undertakes the trade and settlement processing through its subsidiary.

5.       To ensure transparency in allotment of shares: -Now-a-days, the allotment of shares is to be done only through the Demat mode. The allotment of shares is to be effected through the depository in the Demat account of the investors. This has generated transparency in allotment of shares and reduced manipulations relating to transfer of shares.

6.       Centralised Systems in Securities Dealings: - There was a need to adopt a central system for handling all the securities dealings. This has been made possible by setting up Central depository system, although there are two different depositories (NSDL, and CDSL).

STATE THE PROVISION FOR ISSUE OF DEBENTURES?

1.       A joint stock company can issue debentures at any time.

2.       Debentures can be issued by public company as well as by private company. Private company after securing certificate of incorporation can issue debentures. Public company has to obtain Trading Certificate for the issue of Debentures.

3.       As per section 292(1) the board of Directors has the power to issue debentures. The power must be exercised by means of resolution passed in the Board Meeting.

4.       A company cannot borrow money exceeding the aggregate of the paid capital of the company and its free reserves. As pre section 293 (1) the Act empowers Board of Directors to raise excess money with the consent of members in general meeting. The Articles of Association should specify the maximum amount that company can borrow.

5.       According to the companies Act, company cannot issue debentures carrying voting rights.

6.       Debentures can be issued at par or at premium or even at a discount. They may be issued through prospectus or private arrangement.

7.       Companies (amendment) Act, 2000 prohibits issue of unsecured debentures. Now companies can issue only secured debentures.

BOMBAY STOCK EXCHANGE

BOMBAY stock exchange limited is the oldest stock exchange in Asia with a rich heritage, it is popularly known as ‘BSE’. It was established as “The Native Shares Stock Exchange Association” in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the securities contracts (regulation) Act, 1956.

The Exchange is pivotal (essential) and plays pre-eminent role in the development of the Indian capital market. It is widely recognised. Earlier an Association of persons (AOP) but now the exchange is demutualised and corporatized entity incorporated under the provisions of the company’s act 1956. BSE received its certificate of incorporation on 8^th August 2005, and certificate of commencement of business on 12^th August 2005. The name has been changed to ‘Bombay Stock Exchange Limited”

                                The operations and dealings of BSE were fully computerized and thus the auction (sale) system of share trading was replaced by screen based trading known as BOLT (Bombay on-line Trading System) as in other modern stock exchanges around the world. The BSE SENSEX (SENSITIVE index) also called the BSE 30, is widely used marked index in India and Asia.

                BSE has introduced a centralized online trading system called BSE webx.co.in wherein investors can register themselves with brokers worldwide and undertake transactions.

BSE aims for the following:

1.       Securities transaction to be undertaken on fair basis.

2.       Protecting investors and members interest

3.       Mobilizing resources effectively from those who have it to those who need it.

4.       Establishing a market wherein buyers and sellers can come together effectively.

OVER THE COUNTER EXCHANGE OF INDIA - (OTCEI) AND ITS FEATURES?

Meaning: -OTCEI is the abbreviation of Over the Counter Exchange of India. This is the country’s first ring less and scrip less electronic stock exchange where trading of the securities is done on the computer through a networking of the computers. OTCEI was incorporated under the provisions of section 25 of the companies Act, 1956, with the intention to protect the interest of small investors and small companies. Small companies find it difficult to get their shares and debentures listed on stock exchanges. As a result their securities become untradeable and lack liquidity. OTCEI was established in October 1990, and was promoted by a consortium of financial institution.

FEATURES:

1.       OTCEI provides trading facilities in the securities of small companies which could not meet the listing requirements of stock exchange.

2.       It has nationwide coverage through its dealers.

3.       It offers ringless and screen based trading through fully automated system. Transactions are made through satellite communication network.

4.       Small companies with a paid up capital between Rs. 30Lakh and Rs. 25 Crore are eligible for listing of OTCEI. Companies listed on any other recognised stock exchange cannot be listed on OTCEI and vice-versa.

ROLE/OBJECTIVE/POWER OF SEBI IN MONITORING THE STOCK EXCHANGE

Meaning: -Stock exchange is a specific place where trading of the securities is arranged in an organised method. In simple words it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.

The government of India established the market watchdog i.e. Securities Exchange Board of India (SEBI) IN April 1988.

SEBI as securities Exchange Board of India became a statutory body under SEBI Act, 1992, and its Head Office located in Mumbai. At present SEBI have offices in Mumbai, Calcutta, New Delhi and Chennai. SEBI consists of the following members.

a.      A Chairman

b.      Two members from the Ministries of the Central Government. Dealing with Finance and Law

c.       Two other members to be appointed by the Central Government.

In order to regulate and promote capital market, SEBI performs following Role.

1.      Regulating the business in stock exchanges and may other securities market.

2.      Registering and regulating the working of stock brokers, share transfer agents, sub brokers, banker to an issue etc.

3.      Promoting and regulating self regulatory organisations.

4.      Prohibiting fraudulent and unfair trade practices relating to securities market.

5.      Registering and regulating the working of venture capital funds and collective investment schemes including mutual funds.

6.      Promoting Investors education and training of intermediaries of securities market.

7.      Prohibiting insider trading in securities.

8.      Conducting research and carrying out publications.

9.      Calling for information, form undertaking inspection, conducting inquiries and audits of stock exchanges and market intermediaries.

OBJECTIVES of SEBI  

The main objectives of SEBI are as under.

1.      To promote fair dealing by the issue of securities and to ensure a market place where (they) companies or institutions can raise funds at relatively low cost.

2.      To provide protection to the investors and protect their rights and interests so that there is a steady flow of savings into the market.

3.      To regulate and develop a code of conduct and fair practices by intermediaries like brokers etc. with a view to make them competitive and professional.

POWERS OF SEBI 

SEBI has given wide posers. Some of which are as follow –

1.      SEBI can ask stock exchange to maintain the prescribed documents and records.

2.      SEBI may ask stock exchange or any member to furnish information and explanation concerning its affairs.

3.      SEBI can approve and amend bye-laws of stock exchange.

4.      It may call periodical returns from stock exchange.

5.      SEBI can licence dealers in securities in some areas.

6.      It can ask a public company to list its shares.

FUNCTION OF STOCK EXCHANGE?

Meaning: - Stock exchange is a specific place where trading of the securities is arranged in an organised method. In simple words it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.

Presence and vibrant functioning of a stock exchange is necessary for developing economy. It reflects a healthy financial and investment conducive atmosphere in the economy.

The Indian securities market is considered as one of the most promising emerging markets. It is one of the top eight markets of the world.

1.      Liquidity: -It is the Stock Exchange that provides liquidity to private investment in corporate enterprises. The stock exchange provides marketability along with liquidity to the product called securities.

2.      Fair Evaluation of Securities: -Stock exchanges like any other market provide a mechanism (instrument) for evaluating the prices of securities through the basic law of demand and supply. Stock exchange prices help to check the real worth of the securities in the market.

3.      Promotes capital Formation: -Stock exchange motivates the investors to invest their savings in the securities of the reputed companies. As stock exchange is the creation of continuous market where buying and selling of securities continuously goes on. As a result, capital flows continuously into business field. Thus formation of capital goes on.

4.      Protects investors’ interest: -All the transactions in the stock exchanges are effected and controlled by the securities control (regulation) Act 1956. The stock exchanges protect the interest through the strict enforcement of their rules and regulations.

5.      Economic Barometer: -A stock exchange serves as a reliable barometer of a country’s economic status. ‘Stock exchanges support and promote industrial development. It stimulates investment in productive sector which accelerates the process of economic development of the nation.

6.      Motivation to the management to improve its performance: -An exchange allows the trading of listed securities only. While getting the shares listed on exchange, a company is required to follow certain guidelines for protecting the interest of shareholders.

7.      Regulation of speculative transaction: - Speculation is an important part of stock exchange operations. The stock exchange enables speculators to speculate and secure adequate profits through fluctuation in security prices. 

Best utilisation of capital: -The Stock exchange regulates and controls the flow of investment from unproductive to productive, uneconomic to economic, unprofitable to profitable enterprises. Thus, savings of the people are channelized into industry yielding good return and underutilisation of capital is avoided

WRITE SHORT NOTES ON ROLE OF STOCK EXCHANGE (MAR 2009)

Meaning: -Stock exchange is a specific place where trading of the securities is arranged in an organised method. In simple words it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.

Definition: -Securities contracts Regulation Act, 1956 defines stock exchange as “an association, organisation or body of individuals whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.

The stock exchange plays an important role in capital markets. The role of stock exchanges is vital for the economic development of a nation. The role of stock exchanges is briefly stated as follows.

1.      Encourages Capital Formation: -The main role of stock exchange is that it enables public limited companies to raise long term funds from the stock market. The company can issue shares and debentures and obtain long term funds.

2.      Facilitates Listing of Shares: -The Stock exchanges facilitates listing of shares issued by public limited companies. The companies that issue shares to the public can get their shares listed on more stock exchanges in the country. The listing of shares is done through the listing agreements.

3.      Facilitates Trading of Shares: -The Stock exchanges facilitates trading of shares. The shares listed on the Stock exchanges can be trade. The shares can be traded between the sellers and buyers on the stock exchange.

4.      Generates Employment: -It generates Employment facilities in the country. A number of brokers, sub-brokers, and others do get their employment because of Stock exchanges.

5.      Facilitates Capital Formulation: -The Stock exchanges encourages investors to invest in the primary and secondary stock markets. For investing in stock markets, investors need to save money. Saving lead to investment in shares and other securities. Investment leads to capital formulation.

6.      Stimulates Industrial Development: -The Stock Exchanges facilitates mobilization of long-term funds through the issue of shares and debentures. The long term funds can be utilized by companies for the following purposes.

a.      Expansion and Modernization

b.      Setting up of new projects.

7.      Provides Revenue to the Government: -The Stock Exchanges provide revenue to the government, either directly or indirectly. The Stock exchanges pay tax on the revenue or profits earned by them. Also, the investors who invest on stock markets are subject to capital gains tax.

WRITE SHORT NOTES ON provision of SHARE CERTIFICATE

 Meaning: - A Share Certificate is a document of title to shares. It is issued to the shareholders of the company, as evidence to their shareholding in the company. The company issues the Share Certificate under its Common seal. It must be signed by two directors and countersigned by the authorized signatory or secretary of the company. Every Share Certificate must be stamped with revenue stamp of proper value.

Definition: - Section 84 of the companies Act defines share certificate as ‘A certificate, under the common seal of the company, specifying only the shares held by any member, shall be a prima facie evidence of the title of the member of such shares’.

Contents of Share Certificate

a.   Name and Address of the registered office of the company.

b.   Name(s) of the Shareholder(s).

c.   Serial number of share certificate.

d.   Number of Share(s) held.

e.   Number and class of shares. (i.e. whether Preference or equity shares)

f.     Nominal value and amount paid on each share.

g.   Distinctive Number(s) of shares.

h.   Date of issue of Certificate.

i.     Signature of two directors and one authorized signatory.

j.     Seal of the company against the affixed revenue stamp.

k.   The face value of the shares.

l.     Whether the face value is fully paid or partly paid.

The share certificate is required for the transfer and transmission shares. It is a registered document and not a bearer document. It can be transferred only by following a certain transfer procedure.

Statutory Provision regarding share Certificate

1.      Time Limit: -The share certificate must be prepared and delivered to the shareholders within 3 months of allotment of shares. In case of transfer, the share certificate should Reach the transferee within 2 months from the date if transfer.

2.      Resolution: -Share certificate is issued only after passing of resolution in the board meeting to that effect.

3.      Contents in certificate: -Share certificate must specify the name of the shareholder, number, type of shares, amount paid on each shares etc. it should be signed by two directors and the secretary and bear the common seal of the company.

4.      Entry in the Register: -All the particulars of share certificate must be entered in the Register of Members. These entries must be authenticated by the secretary or signatories to the certificate.

5.      Duplicate and Surrendered Certificates: -If the company issues duplicate certificate, it should be clearly mentioned on the certificate by putting a stamp of word ‘Duplicate’ on the face of the certificate.

In case of surrendered certificates a cancellation mark must be put on the face of the certificate such certificates may be destroyed after three years.

Shares under Depository System: -If the shares are dealt in a depository, after the allotment of shares, company must intimate the depository immediately about the details of allotment even though shares are not in physical form.