Category: 2nd PUC

Karnataka 2nd PUC Business Studies Notes Chapter 1 Nature and Significance of Management

→ Management is an art of getting things done through others to achieve the specific goal with available resources.

→ Management is a distinct process consisting of Planning, Organizing, Actuating, Controlling & Accomplishing the objectives of the organization by the use of people & resources.

→ Features: Continuous process, Universal process, Goal oriented, Multi dimensional, Multi disciplinary, Integrating Process

→ Objectives: Organizational Objectives -Profit, Growth & Expansion, Personal Objectives Job security, Fair salary & Training to workers, Social Objectives-Quality Goods, Protect & conserve natural resources

→ Importance: Achievement of organizational goal, Reduce cost of production, Survival & growth of organization, Achieving personal objective, Prosperity of the society

→ Management as a science: It is a systematic body of knowledge, concept & Principle. Management is a social science not pure science.

→ Management as Profession: It renders specialized & expert services to client. As profession, management aims at profit maximization & also serves the society.

→ Management as an Art: Management applies certain knowledge & skill while dealing with
people. It deals with attitude & behavior of the people at work.

→ Levels of Management: Top Level – Directors/CEO (Formulating Policies & Planning) Middle Level – Managers (Implementation) Low Level – Foremen / Supervisors (Execution)

→ Functions of Management:

• Planning,
• Organizing,
• Staffing,
• Directing,
• Controlling.

→ Coordination: The process of integrating the activities of different departments.

→ Features of Coordination: Integrating group efforts, Deliberate function, Continuous process, Unity of action, Responsibility of a Manager.

2nd PUC Business Studies Notes

Karnataka 2nd PUC Statistics Notes

• Chapter 1 Vital Statistics Notes
• Chapter 2 Index Numbers Notes
• Chapter 3 Time Series Notes
• Chapter 4 Interpolation and Extrapolation Notes
• Chapter 5 Theoretical Distribution Notes
• Chapter 6 Statistical Inference Notes
• Chapter 7 Statistical Quality Control Notes
• Chapter 8 Operations Research

Karnataka 2nd PUC Business Studies Notes

• Chapter 1 Nature and Significance of Management Notes
• Chapter 2 Principles of Management Notes
• Chapter 3 Business Environment Notes
• Chapter 4 Planning Notes
• Chapter 5 Organising Notes
• Chapter 6 Staffing Notes
• Chapter 7 Directing Notes
• Chapter 8 Controlling Notes
• Chapter 9 Financial Management Notes
• Chapter 10 Financial Market Notes
• Chapter 11 Marketing Management Notes
• Chapter 12 Consumer Protection Notes
• Chapter 13 Entrepreneurship Development Notes

Karnataka 2nd PUC Economics Notes Chapter 12 Open Economy

→ Closed economy: A closed economy is that which does any trade links with other countries of the world. It completely prohibits the import and export trade.

→ Open economy: An open economy is that economy which has all kinds of economic relations with other countries of the world. It allows exports and import trade.

→ Balance of Trade: Balance of Trade refers to the difference between the value of visible items of exports and imports, during a particular period of time.

Differences between Closed and Open Economies.

Closed Economy	Open Economy
A closed economy is that which does not have any trade links with other countries of the world.	An open economy is that economy which has all kinds of economic relations with other countries of the world.
It completely prohibits import and export trade.	It allows for export and import trade.
It is policy of protection which is in effect discrimination between domestic and. foreign goods.	It is free trade policy and allows the inflow and outflow of foreign direct investment. (FDI)

→ Multilateral trade: The multilateral trade refers to that type of trade in which three or more groups of countries involve in trade. Trade activities take place among the nations without any discrimination. Here all the countries are treated equally.

Differences between balance of Trade and Balance of Payments.

Balance of Trade	Balance of Payments
It refers to the difference between the value of exports and imports of only visible items, during a particular period of time.	It refers to difference between the value of exports and imports of both visible and invisible items, during a particular of time.
It is a narrow concept.	It is a broader concept.
It may not show the international economic position of an economy.	It shows the international economic position of the country.
It gives partial picture of international transactions.	It gives the complete picture of international transactions.

Differences between Nominal and Real Exchange rates.

Nominal Exchange rate	Real Exchange rate
It is expressed in terms of money.	It is the ratio of foreign prices to domestic prices.
It is the amount of domestic currency paid to purchase one unit of foreign currency.	It is expressed in terms of purchasing power of both the currencies.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 11 Government Budget and the Economy

→ Budget: Budget is a financial statement. It is a statement which shows the estimated future incomes and expenditures of Government. The estimated and anticipated revenue and expenditure of the Government for a financial year is called as budget.

→ Deficit budget: When the anticipated income or revenue is less than its expenditure, it is known as deficit budget (Total Revenue is less than Total Expenditure). As in most of the state Government budgets, we find that its expenditure is more than its income.

→ Fiscal Policy: According to Arther Smithies, “Fiscal policy is a policy under which the Government uses its expenditure and revenue programmes to produce desirable effects and to avoid undesirable effects on the national income, output and employment.

→ Progressive tax: When the tax is imposed according to the income of people, it is called Progressive tax. A progressive tax is a tax system in which the rate of tax increases as the income increases. Higher the income higher will be the tax and vice versa.

Objectives of Government Budget:
The major objectives of Government Budget are as follows:

• To re-allocate the resources for better socio-economic progress’.
• To redistribute the income and wealth and thereby to reduce inequalities through various social security’ schemes, public works, economic subsidies etc.
• To prevent economic fluctuations for maintaining economic stability.
• To manage public enterprises efficiently and to have control over monopoly firms and to attain social welfare.

Differences between surplus budget and deficit budget.

Surplus Budget	Deficit Budget
If the anticipated revenue of the Government exceeds ita anticipated expenditure in a year, it is known an surplus budget.	If the anticipated expenditure of the Government exceeds its anticipated revenue in a year, it is known as deficit budget.
Government of developed countries usually plan for a surplus budget.	Government of developed countries usually plan for a deficit budget.
It indicates the financial soundness of the economy	It indicates that the economy is not that healthy.
This implies that the government is giving preference to creating wealth from resources intead of spending for the welfare of the people.	This indicates a deliberate excessive expenditure by the government to set the economy on the path of progress and growth, keeping in mind the welfare of the people.

The differences between direct and indirect tax.

Direct Tax	Indirect Tax
The Direct tax is the tqx which is imposed by the Government on individuals and companies and which cannot be shifted to others.	The Indirect tax is that tax which can be shifted to other persons by a person on whom it is imposed.
Here the incidence and impact of taxation falls on same person.	Here the incidence and impact of tax will be on two different parties.
Example-Income tax, Wealth tax, corporate tax etc.	Example central excise duties (tax), customs duties, service tax, value added tax etc.

Objectives of fiscal policy.

The major objectives of fiscal policy are as follows:

• To mobilize the resources for development projects.
• To achieve equality in distribution of income and wealth.
• To encourage saving and investment.
• To reduce regional disparities, poverty and unemployment.
• For optimum utilisation of resources to attain full employment.

Balanced budget / Unbalanced Budget:

Balanced Budget: Here when the revenues from tax are equal with expenditure of the Government, it is balanced budget. (Total Revenue = Total Expenditure).

Unbalanced Budget: Here the Total anticipated Revenue is not equal to Total anticipated Expenditure. It could be a Surplus or a Deficit Budget.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 10 Consumption and Investment Function

Consumption function:

→ The consumption function also called as propensity to consume refers to income consumption relationship. It is a functional relationship between Total consumption and Gross national income. The consumption function may be represented as follows:

→ C = f (Y). where C is consumption, Y is income and f is the functional relationship.

→ In fact, consumption function is a schedule ofthe various amounts of consumption expenditure corresponding to different levels of income.

Investment function:

→ Generally, investment means buying shares, stocks, bonds, securities existing in stock market. According to J.M.Keynes, investment refers to real investment which adds to capital stock. It leads to increase in level of income and production by increasing the investment.

Equality between Saving and Investment:

→ The equality between saving and investment is through the mechanism of rate of interest. If the saving is more than investment, the rate of interest falls, investment increases and savings comes down. When the saving is less than investment, rate of interest increases and investment comes down and the savings gets increased to the level of investment.

→ According to Keynes, Y = C + S and Y = C + I, therefore C + S = C + I, so S = I

• Y-income,
• C-consumption,
• S-savings,
• I-investment.

MPC-Marginal Propensity to Consume:

→ MPC (Marginal Propensity to Consume) refers to the ratio of change in consumption to the change in income. MPC = \(\frac{\Delta \mathrm{c}}{\Delta \mathrm{y}}\) where Δc refers to change in consumption and Δy refers to change in the income of consumer.

Multiplier:

→ Multiplier is the ratio of the total change in income to the initial change in investment. It expresses the quantitative relationship between increase in income and increase in investment.

APC-Average Propensity to Consumer :

→ APC-Average Propensity to Consumer is the ratio of consumption expenditure to income in a given period of time. APC = C/Y where C is consumption and Y is income.

MPS-Marginal Propensity to Save:

→ The Marginal Propensity to save (MPS) is obtained as follows:
MPS = 1 – MPC.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 9 Money and Banking

→ Exchange of goods for goods is called as Barter System.

→ Money is anything which is commonly accepted as a medium of exchange for good’s and services and acts as a measure of value.

→ According to F. A. Walker “Money is what money does”.

→ The two primary functions of Money are -Accepting deposits and lending loans.

→ High powered money refers to that money which is held by the public, demand deposits of banks and other deposits held by the Reserve Bank of India.

→ The demand for money includes the sum of transactionary demand for money, precautionary demand for money and speculative demand for money.

→ The supply of money refers to the total currency notes and coins held by the people in the country at a particular point of time. In other words, it refers to the aggregate stock of money.

Narrow money:

→ The money which is fully liquid and available whenever people need is called narrow money.

Broad money:

→ Broad money refers to the money held by the public in the form of savings and Net Time Deposits apart from the currency and demand deposits.

→ When a bank accepts cash from the customer and opens an account in the name of that customer, it is called Primary Deposit.

→ Bank rate is the rate of interest charged by the Reserve Bank of India while lending loans and advances to commercial banks.

→ Overdraft is a facility provided by a bank to its current account holders to overdraw their accounts upto a certain limit.

→ The CRR is a certain percentage of bank deposits which commercial banks are required to keep with the RBI in the form of reserve funds.

Statutory Liquidity Ratio (SLR)?

→ There is an RBI directive to commercial banks to maintain a certain percentage of their total demand and time deposits with themselves, in the form of liquid assets like cash, precious metals or approved securities like bonds. The ratio of the liquid assets to time and demand liquidities is termed as SLR which is 22.5% at present.

Precautionary motive of money:

→ The demand for money to meet the unforeseen and unexpected expenses is known as precautionary demand for money.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 8 National Income Accounting

→ Gross Domestic Product (GDP): GDP is the aggregate of the final goods and services produced in the domestic territory of a country during an accounting year.

→ Net Domestic Product (NDP): NDP refers to the market value of all final goods and services turned out in an economy during a given period of time after making allowance for depreciation charges. It is obtained by subtracting depreciation from GDP.

→ Gross National Product (GNP): It is the most important concept in National Income accounting. It is a National concept. GNP is defined as the total market value of all final goods and services produced in a country during a year.

→ Net National Product (NNP): Net national product is the market value of the net output of final goods and services produced by the country during the relevant income period.
NNP = GNP – Depreciation.

→ Personal Income (PI): The concept of personal income refers to the sum of all the incomes actually received by the individual and households in a country during one year. It is the amount available to. them for spending, paying taxes and saving purposes. P I is less than NI because several deductions are made out of it.

→ Personal income = National income – undistributed profit – social security contribution + transfer payment.
The concept of PI helps us to know the potential purchasing power of people.

→ Disposable personal Income: The entire PI accounting to individual or house hold in not available for consumption purpose. A part of PI has to be paid to the Government by way of personal direct tax. Hence, that part of the personal direct taxes is called as disposable personal income.

→ Nominal and Real National Income: When the national income is expressed in the prices prevailing in the year in which it is calculate it is called nominal national income. For example; if the national income of the year 2014-15 is calculated as per the prices of 2014-15, it becomes nominal national income.

→ Per Capita Income: Per capita income refers to the income of individual person. It is the average income of the people of a country. The per capita income is calculated by dividing the national income by population.

→ Product method or output method: Under this method, a census of all goods and services are conducted to get the correct picture of total national production.

While calculating total volume of goods and service, the following four items are to be included.
a. All kinds of consumption goods and services.
b. Gross domestic investment, which includes inventories, capital formation, construction of houses etc.
c. Production in the public sector.
d. Export minus imports.

Income method:
Y = (r + w + i + p) + (X – M) + (R – P), where

• r – rent,
• w – wages,
• I – interest,
• p – profit,
• X – exports,
• M – imports,
• R – receipts,
• P – payments.

→ Expenditure method: Incomes earned by factor inputs are spent on buying different goods and services. If we add- the total expenditure incurred by all people in a years’ time, then we get total income of the people. Income determines the expenditures. All kinds of expenditures are to be taken into account while calculating the national income of a country. They are

• Personal consumption expenditures of all people on all kinds of goods and services.
• Gross domestic investment or investment expenditures made by all businessmen in a year.
• Gross Governments’ expenditure on all kinds of goods and services.
• Net foreign investment, exports – imports.

This method may be represented with the help of the following equation.
Y = (C + I + G) + (X – M) + (R – P), where,

• C – Consumption,
• I – Investment,
• G – Government’s Investment,
• X – exports,
• M – Imports,
• R – Receipts, and
• P – Payments.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 6 Imperfect Competitive Markets

Imperfect market is a market where we see either less competition or no competition. The forms of imperfectly competitive market are Monopoly, Duopoly, Oligopoly and Monopolistic.

Monopoly	Competitive Firm
Existence of single seller.	Existence of a large number of sellers.
No close substitutes.	Existence of close substitutes.
Control over market price.	No control over market price.
Super-normal profit.	Normal profit.

Selling costs: Selling costs are those expenses of the producer incurred on marketing of goods produced. The main objective of selling cost is to attach particular consumer to particular brand.

The demand curve of monopolistic competitive firm is more elastic than monopoly market because of the presence of close substitutes in monopolistic competition. In monopoly market there are no close substitutes.

Duopoly: Duopoly is the market situation where there are only two sellers or firms in the market. Example, Private firm and public firm.

2nd PUC Economics Notes

Karnataka 2nd PUC Economics Notes Chapter 5 The Theory of the Firm and Perfect Competition

Generally, the term market is a market place where goods are sold and bought. But in Economics, by market we mean a commodity whose buyers and sellers are in direct contact with one another. According to Prof.J.C.Edwards, “A market is that mechanism by which buyers and sellers are brought together. It is not necessarily a fixed place”.

Market is classified as follows:
A. On the basis of Size

• Local Market
• Regional market
• National Market
• International Market

B. On the basis of Time

• Very Short Period Market
• Short Period Market
• Long Period Market

C. On the basis of Competition

• Perfect Competition
• Imperfect Competition

Imperfect Competition is further classified as follows:

• Monopoly
• Duopoly
• Oligopoly
• Monopolistic Competition

Perfect Competition:

→ It is a form of market in which there are a large number of buyers and sellers.

→ They sell homogeneous goods. A firm produces only a small portion of the total output produced by the whole industry. An industry is a group of different firms producing the same product. A single firm cannot affect the price by its individual efforts.

Meaning of market:
Generally, the term market is a market place where goods are sold and bought. But in Economics, by market we mean a commodity whose buyers and sellers are in direct contact with one another. According to Prof.J.C.Edwards “A market is that mechanism by which buyers and sellers are brought together”.

Revenue:
Revenue refers to the money income received by a firm or producer or seller after the sale of commodities.

Calculation of AR:
The Average Revenue can be obtained by dividing the Total Revenue by the number of units sold i.e., AR = TR/Q

Supply:
The supply in economics refers to the quantity of a product which the sellers or producers offer for sale at a particular level of price and particular period of time.

→ Price Elasticity of Supply: To calculate Price Elasticity of Supply, the following formula is used.
PED = \(\frac{\Delta q}{\Delta p} \times \frac{p}{q}\) where Δq is change in quantities supplied, Δp is change in price, ‘P’ is original price and ‘q’ is original quantity

→ Marginal Revenue: It is an additional revenue from additional unit of output sold. It is obtained by MR = TR_n – TR_{n – 1}

Price mechanism:
The process of determination of price of goods and services through market forces viz., demand and supply is called ‘Price Mechanism’

Meaning of equilibrium:
Equilibrium refers to a position of rest. It is a position from which the producer or a firm has no tendency to move or change.

Equilibrium Price:
The equilibrium price is that level of price which is determined at the point where the demand and supply intersect (i.e., when supply and demand become equal).

2nd PUC Economics Notes