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12 Economics

Economics is one of the social sciences, which has great influence on every human being. As economic life and the economy go through changes, the need to ground education becomes essential. While doing so, it is imperative to provide them opportunities to acquire analytical skills to observe and understand the economic realities.

At senior secondary stage, the learners are in a position to understand abstract ideas, exercise the power of thinking and to develop their own perception. It is at this stage, the learners are exposed to the rigour of the discipline of economics in a systematic way.

The economics courses are introduced in such a way that in the initial stage, the learners are introduced to the economic realities that the nation is facing today along with some basic statistical tools to understand these broader economic realities. In the later stage, the learners are introduced to economics as a theory of abstraction.

The economics courses also contain many projects and activities. These will provide opportunities for the learners to explore various economic issues both from their day-to-day life and also from issues, which are broader and invisible in nature. The academic skills that they learn in these courses would help to develop the projects and activities. The syllabus is also expected to provide opportunities to use information and communication technologies to facilitate their learning process.

We, at NNE have tried to bring under one umbrella, all the resources that a student might need for his preparations for the CBSE Class 12 Economics exam, including sample papers and CBSE HOT (Higher Order Thinking) questions provided by the Kendriya Vidyalaya Sangathan.


CBSE Economics Syllabus for class 12


Unit-wise allocation of marks of CBSE Class 12 Economics:

 Unit No.

 Unit Name






 Consumer Equilibrium and Demand



 Producer Behaviour and Supply



 Forms of Market and Price Determination



 National Income and related aggregates



 Money and Banking



 Determination of Income and Employment



 Government Budget and the Economy



 Balance of Payments


Part A : Introductory Microeconomics

Unit 1: Introduction

Meaning of microeconomics and macroeconomics,
What is an economy? Central problems of an economy : what, how and for whom to produce; concepts,
of production possibility frontier and opportunity cost,
(Non-evaluative topics: Some basic tools in the study of economics - equation of a line, slope of a
line, slope of a curve.)

Unit 2: Consumer Equilibrium and Demand

Consumer's equilibrium – meaning of utility, marginal utility, law of diminishing marginal utility, conditions
of consumer's equilibrium using marginal utility analysis.
Indifference curve analysis of consumer's equilibrium-the consumer's budget (budget set and budget
line), preferences of the consumer (indifference curve, indifference map) and conditions of consumer's
Demand, market demand, determinants of demand, demand schedule, demand curve, movement
along and shifts in the demand curve; price elasticity of demand - factors affecting price elasticity of
demand; measurement of price elasticity of demand – (a) percentage-change method and (b) geometric
method (linear demand curve); relationship between price elasticity of demand and total expenditure.

Unit 3: Producer Behaviour and Supply

Production function: Total Product, Average Product and Marginal Product.
Returns to a Factor.
Cost and Revenue: Short run costs - total cost, total fixed cost, total variable cost; Average fixed cost,
average variable cost and marginal cost-meaning and their relationship.
Revenue - total, average and marginal revenue.
Producer's equilibrium-meaning and its conditions in terms of marginal revenue-marginal cost.
Supply, market supply, determinants of supply, supply schedule, supply curve, movements along and
shifts in supply curve, price elasticity of supply; measurement of price elasticity of supply – (a) percentagechange
method and (b) geometric method.

Unit 4: Forms of Market and Price Determination

Perfect competition - Features; Determination of market equilibrium and effects of shifts in demand
and supply.
Other Market Forms - monopoly, monopolistic competition, oligopoly - their meaning and features.

Unit 5: Simple applications of Tools of demand and supply (not to be examined)

Part B : Introductory Macroeconomics

Unit 6: National Income and related aggregates

Some basic concepts: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation.
Circular flow of income; Methods of calculating National Income – Value Added or Product method, Expenditure method, Income method.
Aggregates related to National Income: Gross National Product (GNP), Net National Product (NNP), Gross and Net Domestic Product (GDP and NDP) - at market price, at factor cost; National Disposable Income (gross and net)
Private Income, Personal Income and Personal Disposable Income; Real and Nominal GDP.
GDP and Welfare

Unit 7: Money and Banking

Money – its meaning and functions.
Supply of money – Currency held by the public and net demand deposits held by commercial banks.
Money creation by the commercial banking system.
Central bank and its functions (example of the Reserve Bank of India).

Unit 8: Determination of Income and Employment

Aggregate demand and its components.
Propensity to consume and propensity to save (average and marginal).
Short–run equilibrium output; investment multiplier and its mechanism.
Meaning of full employment and involuntary unemployment.
Problems of excess demand and deficient demand; measures to correct them - change in government spending, availability of credit.

Unit 9: Government Budget and the Economy

Government budget - meaning, objectives and components.
Classification of receipts - revenue receipts and capital receipts; classification of expenditure - revenue expenditure and capital expenditure.
Measures of government deficit - revenue deficit, fiscal deficit, primary deficit:their meaning.
Fiscal Policy and its role (non evaluative topic)

Unit 10: Balance of Payments

Balance of payments account - meaning and components; balance of payments deficit-meaning.
Foreign exchange rate – meaning of fixed and flexible rates and managed floating.
Determination of exchange rate in a free market.