CBSE Class 12 Economics Question Paper 2019 (Series: BVM/4) with Solutions

Students can use CBSE Previous Year Question Papers Class 12 Economics with Solutions and CBSE Class 12 Economics Question Paper 2019 (Series: BVM/4) to familiarize themselves with the exam format and marking scheme.

CBSE Class 12 Economics Question Paper 2019 (Series: BVM/4) with Solutions

Time Allowed: 3 hours
Maximum Marks: 80

General Instructions:

1. All questions in both the sections are compulsory.
2. Marks for questions are indicated against each question.
3. Question Nos. 1-10 and 18-27 are very short/objective type questions carrying 1 mark each. They are required to be answered either in one word or one sentence each.
4. Question Nos. 11-12 and 28-29 are short-questions carrying 3 marks each. Answers to them should normally not exceed 60 words each.
5. Question Nos. 13-15 and 30-32 are also short-answer questions carrying 4 marks each. Answers to them should normally not exceed 70 words each.
6. Question Nos. 16-17 and 33-34 are long-answer questions carrying 6 marks each. Answers to them should normally not exceed 100 words each.
7. Answer should be brief and to the point and the above word limits should be adhered to as far as possible.
   * Modified as per Latest CBSE Curriculum.

Section A: Introductory Macroeconomics

Question 1.
Define “demand deposits”. [1]
Answer:
Demand deposits are deposits which can be withdrawn from the bank on demand at any given time.

Question 2.
State any two examples of non-tax revenue receipts of the government. [1]
Or
Dividends received from Public Sector Undertakings (PSUs) are a part of the government’s
____. (Choose the correct alternative)
(a) Non-tax Revenue receipts
(b) Tax Receipts
(c) Capital Receipts
(d) Capital Expenditure
Answer:
Interest and dividends are two examples of non-tax revenue receipts of the government.
Or
(a) Non-tax Revenue receipts

Question 3.
State the role played by the central bank as the “lender of last resort”. [1]
Answer:
When commercial banks fail to meet their financial requirements from other sources, they approach the central bank to give loans and advances as lender of the last resort.

Question 4.
Suppose you are a member of the “Advisory Committee to the Finance Minister of India”. The Finance Minister is concerned about the rising Revenue Deficit in the budget. [1]
Suggest any one measure to control the rising Revenue Deficit of the government.
Answer:
Government can bring down its revenue deficit by cutting down its productive capital expenditure or welfare expenditure.

Question 5.
What will be change in income if MPC = 0.8 and change in investment is ₹1000 crore? (Choose the correct alternative) [1]
(a) ₹8,000 crores
(b) ₹5,000 crores
(c) ₹3,000 crores
(d) ₹2,000 crores
Answer:
(b) ₹5,000 crores

Question 6.
Read the following dialogue between two people:
Sita : I want 1 kg of potatoes.
Rani : What will you give in exchange?
Sita : I can give you 2 liters of milk in return for the potatoes.
Rani : I don’t need milk. I want a pair of shoes.
Which of the following problem is being faced by Sita and Rani in their exchange process? [1]
(a) Lack of double coincidence of wants
(b) Absence of common units of value
(c) Lack of store of value
(d) Lack of standard of deferred payment
Answer:
(a) Lack of double coincidence of wants

Question 7.
Define Average Propensity to Consume. [1]
Answer:
The ratio of total consumption expenditure (C) to total income (Y) is called Average Propensity to Consume (APC).
In short, APC = \(\frac{C}{Y}\) …where[C = Consumption expenditure; Y = Total Income

Question 8.
What is a fixed exchange rate? [1]
Answer:
The exchange rate which is fixed by the Government/Central Bank is known as fixed exchange rate.

Question 9.
The balance of trade shows a deficit of ₹600 crores, the value of exports is ₹1000 crore. What is the value of imports? [1]
Answer:
Balance of trade = Exports – Imports
-600 = 1000 – Imports
∴ Imports = 1000 + 600 = ₹1,600 crores

Question 10.
Define deficient demand in macroeconomics. [1]
Answer:
Deficient demand refers to a situation where aggregate demand in the economy falls short of aggregate supply of goods and services at full employment.

Question 11.
The consumption function of an economy is: C = 40 + 0.8Y (amount in ₹ crores). Determine that level of income where average propensity to consume will be one. [3]
Or
Which of the two, average propensity to consume or average propensity to save, can be negative and why?
Answer:
Given: APC = 1
Average Propensity Consume (APC) = \(\frac{C}{\bar{Y}}\) = 1 ⇒ C = Y …..(i)
We have, C = 40 + 0.8Y
Y = 40 + 0.8Y …[using (i)
⇒ Y – 0.8Y = 40
0.2Y = 40 ⇒ Y = \(\frac{40}{0.2}\) = 200
Therefore, at income level of ₹200 crore, APC will be one.

Or

Average Propensity to Consume (APC) is the ratio of total consumption to total income. Average Propensity to Save (APS) on the other hand is the ratio of total savings to total income. The sum of APC and APS is equal to one because income is either consumed or saved. Out of the two, APC can never be negative but APS can be negative when autonomous consumption is greater than Marginal Propensity to Save (MPS). In other words, APS can be negative when saving is negative. This happens when consumption exceeds income.

Question 12.
Explain the ‘Unit of Account’ function of money. [3]
Answer:
Money,measures the value of various goods and services which are produced in an economy. In other words, money works as unit of value or unit of account. In a barter economy it was very difficult to decide as to how much volume of goods should be given in exchange of a given quantity of a commodity. Money, by performing the function of common measure of value, has saved the society from this difficulty.

Now the value of all goods and services are expressed in terms of money such as ₹20 per metre, ₹10 per kilogram etc. In this way, money works as a common measure of value or account by expressing value of all goods and services in terms of money in the exchange market. By working as a unit of value, money has facilitated modern business and trade.

Question 13.
Explain, using a numerical example, how an increase in reserve deposit ratio affects the credit creation power of the banking system. [4]
Answer:
Reserve deposit ratio refers to the minimum amount of reserves that a bank should hold at a given time. It is normally set as a percentage at which the ratio has to be maintained. In other words, reserve deposit ratio is the percentage of deposits which commercial banks are required to keep as per the directions of the central bank. It is an important tool of the monetary policy of an economy and plays an essential role in regulating the money supply. Increase in reserve deposit ratio reduces the lending capacity of commercial banks. Central bank usually increases the reserve deposit ratio during the times of inflation in order to cut down the credit creation power of commercial banks.

For example, if a bank has ₹100 crores deposit as total deposits and the Central Bank has recommended to keep 6% reserve ratio, then a bank should keep ₹6 crores (i.e., 6% of ₹100 crores) as cash. Here cash means either as vault cash or as deposits with the central bank. Now, if the central bank increases the reserve ratio to 10%, then a bank is bound to keep ₹10 crores (i.e., 10% of ₹100 crores) as cash. Thus, earlier its lending capacity was around ₹4 crores (₹10 crore – ₹6 crore) which has now been brought down to ₹90 crores (₹100 crores – ₹10 crores) due to increase of 4% in the reserve deposit ratio. Hence increase in reserve deposit ratio reduces the lending capacity of commercial banks.

Question 14.
How is Real Gross Domestic Product (GDP) different from Nominal Gross Domestic Product (GDP)? Explain using a numerical example. [4]
Or
Explain the circular flow of income.
Answer:
The aggregate market value of the economic output produced in a year within the boundaries of the country is known as Nominal GDP. It is expressed in current year prices and is considered as GDP without the effect of inflation.

Real GDP, on the other hand, refers to the value of economic output produced in a given period adjusted according to the changes in the general price level. It is inflation adjusted GDP and is expressed in base year prices or constant prices.

Real GDP is always considered as a better indicator of economic growth.

For example, an economy produces only one commodity say rice and it produced 20 kg of rice in year 2018 (base year). Suppose price of rice is ₹20/kg in 2018. So GDP of 2018 is ₹400 (i.e., 20 kg × ₹20). Thus nominal as well as real GDP of 2018 at current and constant prices is the same in 2018. Now, due to inflation the price of rice goes upto ₹25 kg in 2019 and economy produces same amount of rice, i.e., 20 kg, Now, Nominal GDP has increased from ₹400 to ₹500 in 2019 but since the economy is producing same amount of rice, i.e., 20 kg, it does not reflect growth.

In order to ascertain growth, real GDP of 2019 needs to be estimated. For this value of rice
produced in 2019 at base year price, i.e., price of rice in 2018 should be calculated.
Production of rice in 2019 = 20 kg
Price of rice in base year, i.e., 2018 = ₹20/kg
Hence there is no growth.

Now suppose rice production in 2019 increases to 30 kg, then
Nominal GDP = 25 × 30 = 750
and Real GDP = 30 × 20 = ₹600
Growth Rate = \(\frac{600-400}{400}\) × 100 = \(\frac{200}{400}\) × 100 = 50%

Or

The flow of production, income generation and expenditure involving different sectors of the economy is known as circular flow of income. Circular flow of income refers to continuous’ circular movement of aggregate value of goods and services between households and firms, either as factor payments, or as expenditure on goods and services.

In an economy, money keeps on flowing in the form of income and expenditure among the different sectors of the economy. The movement of factor payments from production units to households and that of payment for goods and services from households to firms is called money flow as shown by the outer loop in the given diagram.
The flow of factor services from households to firms and flow of goods and services from firms to households is called real flow.

Question 15.
(a) State any two factors responsible for inflow of foreign currency. [4]
(b) State on which side of capital account/current account will the following transactions be recorded and why:
(i) Interest on loan received from Nepal
(ii) Import of mobile phones from China
Answer:
(a) Two factors that are responsible for inflow of foreign currency:

1. Flow of foreign currency into the economy due to currency dealers and speculators.
2. Investment made by foreigners in the home country on purchasing domestic goods

(b)

1. Interest on loan received form Nepal will be recorded in the credit side of the current account of balance of payment as it is income received from abroad. All types of investment income in the form of interest, rent and profits are recorded in the credit side of the current account.
2. Import of mobile phones from China is a part of country’s visible trade. Hence it will be recorded in the debit or negative side of the current account of balance of payment. Payment for import of goods is always written on the negative or debit side of the balance of payment account.

Question 16.
What is meant by the “Effective Demand Principle” in Keynesian theory of employment? Discuss using a schedule or a diagram. [6]
Answer:
Effective demand refers to the willingness and ability of consumers to purchase goods at different prices. As per the Keynes’ effective demand principle, effective demand refers to the point of equilibrium where aggregate demand is equal to aggregate supply. Aggregate Demand means total expenditure which is incurred on consumption and investment. By adding up consumption and investment at each level of income, aggregate demand is obtained.

Aggregate Supply, on the other hand, represents the total available production of goods and services. In other words, aggregate supply price is the total amount which entrepreneurs must accept as cost of production and is equal to national income or national output.

Effective demand is determined at the point of equilibrium where aggregate demand is equal to aggregate supply. This is clear from the given schedule and diagram.

In the given diagram, point E is the equilibrium point where aggregate demand is equal to aggregate supply. Thus point E represents effective demand. As per the principle of effective demand, the effective demand is determined at the point where aggregate demand function intersects aggregate supply function.

Question 17.
(a) Define ‘net factor income from abroad’. How is it different from ‘net exports’?
(b) Calculate the value of “Rent” from the following data: [6]

Or

(a) Define ‘value of output’. How is it different from ‘value addition’?
(b) Calculate the value of “Mixed Income of Self-employed” from the following data:

Answer:
(a) Net Factor Income From Abroad (NFIA) is the difference of what factors of a given country earned from abroad and what factors of other countries earn from that given country. It is included in the national product and not in the domestic product.
Net Exports, on the other hand, refers to the difference between country’s exports and imports.
The major difference between net factor income from abroad and net exports is that net exports is a domestic concept while NFIA is a national concept. Net exports includes non¬factor services as well while NFIA includes only factor services.

(b) Given: GDP_MP = ₹18,000 crores
NDP_FC = GDP_MP – Indirect Tax + Subsidies – Consumption of fixed capital = ₹18,000 – ₹2,000 + ₹250 – ₹1,000 = ₹16,000 – ₹750 = ₹15,250 crores
Now,
NDP_FC = Compensation of Employees + Interest + Rent + Profit + Mixed income of self employed
₹15,250 = ₹6,000 + ₹800 + Rent + ₹975 + ₹7,000
Rent = ₹15,250 – ₹14,775
∴ Rent = ₹475 crores

Or

(a) The value of all goods and services produced during an accounting year is known as value of output. This includes value of intermediate and final goods both. Alternatively, it is equal to the sum of sales and change in stock (closing stock-opening stock) during the year. Value addition, on the other hand, is the difference between value of output and intermediate consumption. It is equal to the contribution of factors of production during the production process.

(b) Given:, GDP_MP = ₹727,500 crores
NDP_FC = GDP_MP – Indirect taxes + Subsidies – Consumption of fixed Capital
NDP_FC = 727,500 – 72,100 + 7750 – 71,100 – 725,050
NDP_FC = Compensation of Employees + Interest + Profits + Rent + Mixed income of self employed
₹25,050 = ₹17,300 + ₹1,200 + ₹1,800 + ₹2,000 + Mixed income of self employed
Mixed income of self-employed = ₹25,050 – ₹17,300 – ₹1,200 – ₹1,800 – ₹2000
∴ Mixed Income of self-employed = ₹2,750 crores

Section B: Indian Economic Development

Question 18.
In which year was the World Trade Organisation (WTO) founded? (Choose the correct alternative) [1]
(a) 1990
(b) 1995
(c) 1992
(d) 1998
Answer:
(b) 1995

Question 19.
Define disinvestment. [1]
Answer:
Disinvestment means privatisation of the public sector enterprises by selling off part of the equity of PSEs to the public.

Question 20.
In which year was the planning commission set up? (Choose the correct alternative) [1]
(a) 1948
(b) 1956
(c) 1950
(d) 1958
Answer:
(c) 1950

Question 21.
Define economic growth. [1]
Answer:
Economic growth refers to increase in the country’s ability to produce the output of goods and services within the country.

Question 22.
DIRECTION: Read the following statements—Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion: Micro-credit can help empower women and make them financially independent. Reason: Micro-credit involves small loans provided at reasonable interest rates that can help people start their own ventures. [1]
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).

Question 23.
What do you understand by casualisation of workforce? [1]
Or
What does worker population ratio indicate?
Answer:
Casualisation of workforce refers to the process of moving from self employment and regular salaried employment to casual wages.
Or
Worker population ratio is used for the purpose of analysing the employment situation in the country. It indicates the proportion of population that is actively contributing to the production of goods and services of a country.

Question 24.
In order to be considered as a formal sector establishment it is necessary to hire ……… or more workers. (Choose the correct alternative) [1]
(a) 15
(b) 10
(c) 5
(d) 20
Answer:
(b) 10

Question 25.
Which of the following is the CORRECT difference between physical and human capital? [1]
(a) Physical capital can be sold but human capital cannot be sold.
(b) Physical capital cannot be separated from its owner while human capital can.
(c) Physical capital provides both private and social benefits while human capital provides only social benefits.
(d) The depreciation of physical capital can be arrested with more investment while human capital will continue to deplete.
Answer:
(a) Physical capital can be sold but human capital cannot be sold.

Question 26.
Which of the following is an abiotic element of environment? [1]
(a) Air
(b) Plants
(c) Animals
(d) Forests
Answer:
(a) Air

Question 27.
What do you understand by Rural development? [1]
Answer:
Rural development refers to the action for the development of those areas which are lagging behind in the overall development of the village economy of the country.

Question 28.
Organic farming promotes sustainable development of agriculture and also helps in generating more employment. Explain the statement. [3]
Or
Write a brief note on global warming.
Answer:
Organic farming helps in sustainable development of agriculture as the output is pesticide- free which is produced in an environmentally sustainable way using organic or chemical- free fertilisers. It also helps in generating more employment since organic farming requires more labour than the conventional farming.

Or

Global warming refers to a gradual increase in the average temperature of the earth’s lower atmosphere as a result of the increase in greenhouse gases since the industrial revolution, It is believed that a recent rise in global warming is due to human activities. It is caused due to man-made increase in carbon dioxide and other greenhouse gases through the burning of fpisii fuels and deforestation. Burning of coal and petroleum products also increases the amount ofcarbon dioxide in the atmosphere.

Question 29.
Why is fiscal deficit not considered good for the health of an economy? [3]
Answer:
Fiscal deficit is a measure of the total borrowing requirements of the government due to its excess expenditure over its revenue during the year, It shows the extent of dependence of the government on borrowings to meet its budget expenditure. It, thus, measures the current health of the economy.
A high fiscal deficit may imply the following:

1. Vicious circle of borrowings. Payment of interest on borrowing increases revenue expenditure which in turn increases the deficit. This may lead to more borrowings and more interest payments.
2. Inflationary pressure. An important source of government borrowings is the borrowing from RBI, This implies deficit financing, i.e., printing of currency notes to meet the deficit requirements of the government which increases the money supply in the economy and causes inflation.
3. Increases foreign dependence. Government also borrows from the rest of the world to meet its deficit needs. This increases dependence on other countries as foreign borrowings often lead to economic and political interference by the lender countries.
4. Economic burden for future generations. Borrowings imply build-up of economic burden for the future generations as they will have to repay loans as well as the interest liabilities.

Question 30.
Write a brief note on human capital formation. [4]
Or
What is human capital formation? State three ways of developing human resources.
Answer:
Human capital formation means the development of abilities and skills among the population of the country. It is the process of acquiring and increasing the number of persons who have the skills, education and experience which are critical for the economic and political development of the country.

Human capital formation is thus associated with investment in man and his development as a creative and productive resource. Thus, human capital formation is the process of transforming the people in a country into workers who are capable of producing goods and services. It is the process of adding to stock of human capital overtime.

Or

Human capital formation implies the development of abilities and skills among the population of the country.
Following three ways can prove to be helpful in developing human resources:

1. Providing good health facilities and services in order to increase the life expectancy, strength, stamina and vitality of the people living in a country.
2. Providing on-the-job training to increase the skills, knowledge and productivity of the country’s workforce.
3. Providing formally organised education at the elementary, secondary and higher levels to the people of the country.

Question 31.
Write short notes on the following:
(i) Prime Minister’s Rozgar Yojana (PMRY).
(ii) Swama Jay anti Shahari Rozgar Yojana (SJSRY). [4]
Answer:
(i) Prime Minister’s Rozgar Yojana (PMRY) was introduced to provide self employment
opportunities to educated unemployed youth located in urban areas of the country, It was designed to provide employment to more than a million people by setting up of 7 lakhs Micro enterprises by the educated unemployed youth.

(ii) Swama fay anti ShahaH Rozgar Yojana (SJSRY) was introduced to provide gainful employment to the urban unemployed and underemployed poor through encouraging the setting up of self employment ventures or provision of wage employment. It was implemented on a cost sharing basis between the centre and the states in the ratio of 75 : 25.

Question 32.
‘In November 2016, the Indian government withdrew all ₹500 and ₹1000 banknotes of the Mahatma Gandhi series from circulation.’
Identify the concept discussed in the given statement. State its objectives. [4]
Answer:
The concept discussed in the given statement is ‘Demonetisation’. Demonetisation is the act of stripping a currency unit of its status as legal tender. In other words, it is an act of canceling the legal tender status of a currency unit in circulation. Under demonetisation, the current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins.

Following are the main objectives of demonetisation:

(a) To curb illegal and unethical business activities like black marketing, food adulteration, marketing of spurious goods, human trafficking, smuggling of gold and drugs.
(b) To track fake currency and to cut-off the supply of money, arms and ammunition to terror funding.
(c) To deal with the problem of black money and corruption in the country. After demonetisation, the large sums of black money hoarded by people in the form of cash becomes useless.
Thus, demonetisation effectively fights the problem of black money and corruption.

Question 33.
Discuss the Great Leap Forward campaign initiated by China. What were its objectives. Why was the Great Leap Forward a failure? [6]
Answer:
Great Leap Forward Campaign of China is a campaign initiated by the Chinese communists between 1958 and early 1960s to organise its vast population especially in rural communities, to meet China’s industrial and agricultural problems. The Chinese aimed at developing labour intensive methods of industrialisation, which would emphasize manpower rather than machines and capital expenditure. It was an effort made by the Communist Party of China to transform China into a society capable of competing with other western industrialised nations within a short time period. The Great Leap

Forward campaign also focused on an ideological shift in economic policy that would continue industrialisation but move China towards agricultural collection.

Thus there were two main objectives of the Great Leap Forward campaign of China:

1. To create an industrialised economy in order to catch up with the west.
2. To transform China into a collectivised society, where socialist principles define work, production and people’s levels.

The Great Leap Forward campaign aimed at industrialising the country on a massive scale. People were encouraged to set up industries in their backyards. It also initiated the commune system in which people collectively cultivated lands.

However, the Great Leap Forward campaign of China was not a great success as there was a lack of central planning by the Chinese government. In industry, the government created unobtainable quotas and in order to meet the quotas, workers started producing faster without caring for quality. Moreover, government management of industry promoted inexperienced and unskilled people to higher job positions. It resulted in inefficient use of labour, resources and equipment.

Under commune system all forms were put under the control of the state. In agricultural sector also, the inexperienced people were given leadership. Workers lacked incentive to meet the quotas as they did not share or get the profit from their extra efforts. This resulted in famine that caused havoc in China killing – around 30 million people.

Question 34.
What is meant by organic farming. Discuss its benefits. [6]
Or
Discuss any three causes of unemployment in India. State the most common types of unemployment found in India.
Answer:
Organic farming is a system of farming that will rely upon the use of organic inputs for cultivation which largely include animal manures and composts. It has done away with the use of chemical inputs like chemical fertilizers, insecticides and pesticides.
Benefits of Organic farming include:

1. Cheaper system of cultivation. Organic farming offers a means to substitute costlier ‘agricultural inputs such as HYV seeds, chemical fertilizers, pesticides etc. with locally produced organic inputs which are cheaper.
2. Labour intensive. Since organic farming requires more labour and less of capital, it is better suited for Indian conditions.
3. Sustainable agriculture. The path of conventional agriculture is unsustainable. Organic farming is a natural way of farming which is environment friendly and maintains long term fertility of the soil and is, thus, sustainable.
4. Increase in farmer’s income. Demand for organic food is on the rise in domestic and international markets. Hence, organic farming has resulted in increase in farmer’s income and inflow of foreign exchange due to rise in exports.
5. Provides healthy food. Organically grown food is considered healthy as it has more nutritional value than food grown through chemical farming.

Or

The three main causes of unemployment in India:

(i) Caste system. Caste system is still the very basis on which the entire social and economic structure of the country stands. Caste system in the country is a major factor responsible for unemployment. In certain rural and backward areas of the country, certain kind of work is still prohibited for members of particular castes. Thus work is often given to a certain community rather than allocating it on the basis of knowledge, skill and experience. This results in massive unemployment.

(ii) Increased population growth. India is a massively populated country. The country’s overall population is more than 1.3 billion people. It-is believed that by 2024 India will exceed China in terms of population. Massive population creates great pressure on the country’s resources and the country finds it difficult to maintain a balance between population growth and economic growth. This resulted in larger share of society being unemployed.

(iii) Seasonality of agricultural occupations. For decades agriculture has been the major factor providing employment to a large number of people within the country. It is responsible for offering employment for a large segment of the population. But Indian agriculture by. nature is seasonal. Thus for a considerable portion of the year, many agricultural workers lack needed income and employment.

The most common types of unemployment found in India:

(i) Disguised unemployment. Disguised or hidden unemployment is associated with the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity. It implies that if such people are removed from the employment, the level of total output remains the same. Thus it is a kind of unemployment where some people seem to be employed but are actually not. It is very commonly found in the agricultural sector operating in the rural areas of the country. For example, when 8 members of a farmer’s family are employed on a small farm plot when 4 are enough. Thus those extra 4 members are actually unemployed rather than being employed.

(ii) Seasonal unemployment. Such unemployment occurs when people are unemployed at a certain time of the year, as they work in industries where they are not required throughout the year. Thus when demand for workers changes with the change in the season, seasonal unemployment occurs. It is very commonly found in those industries which are engaged in seasonal production activities. For example, in agricultural sector, demand for workers is more during harvesting season as compared to other months in a year.

(iii) Open unemployment. It is a condition in which people have no work to do, although they are willing and able to do work at the prevailing wage rate. In simple words, when a country’s labour does not get opportunities for adequate employment, the situation is called open unemployment. Such unemployment is called open as it can be seen and counted in terms of the number of unemployed people.