CBSE 12th Economics Question Paper 2022 (Set 1)

Any two precautions while estimating National Income by Income Method are: 1. Only factor incomes earned within the domestic territory should be included. 2. Transfer incomes like gifts, pensions, unemployment allowance, charity, etc. should not be included. Other precautions may include excluding windfall gains, capital gains, and payments for sale of second-hand goods, as these are not earned current incomes.

Worker-population ratio is the ratio of the total number of workers to the total population, expressed as a percentage. It is useful because it shows the proportion of people actually engaged in productive work in the economy. A higher worker-population ratio indicates greater utilisation of human resources and a lower dependency burden.

According to Keynesian economics, full employment is an essential condition because Keynes explained the determination of income and employment mainly in a situation where the economy may be below full employment. He argued that unemployment can exist due to deficiency of aggregate demand. Thus, Keynesian theory is particularly concerned with analysing how equilibrium may be established even when full employment is not reached.

In a two-sector economy, one important component of aggregate demand is consumption expenditure. Consumption expenditure refers to the spending by households on goods and services for current satisfaction. It depends mainly on income, and in a two-sector economy, aggregate demand is given by $AD = C + I$, where $C$ is consumption and $I$ is investment.

One important component of Aggregate Demand in a two-sector economy is consumption expenditure. Consumption expenditure refers to the total expenditure on goods and services by households to satisfy their wants. It depends mainly on disposable income, tastes, habits, and the price level. In the two-sector economy, aggregate demand is given by $AD = C + I$, where $C$ is consumption expenditure and $I$ is investment expenditure.