Page 120 - Understanding Economics for Class 10

II. Assertion-reasoning Based Questions
In the question given below, there are two statements marked as Assertion (A) and reason
(r). read the statements and choose the correct option.
(a) Both A and r are true and r is the correct explanation of A.
Goyal Brothers Prakashan
(b) Both A and r are true but r is not the correct explanation of A.
(c) A is correct but r is wrong.
(d) A is wrong but r is correct.

1. Assertion (A): The NEP came in the year 1991 in India.
Reason (R): The flaws of Government policies in 4 decades prior to 1991 pushed the
introduction of LPG in India.
Ans. (a) Both A and r are true and r is the correct explanation of A.
2. Assertion (A): MNC’s are having its branches across all over the globe.
Reason (R): The money spent by MNC’s on purchase of assets is called as Investment.
Ans. (b) Both A and r are true but r is not the correct explanation of A.

3. Assertion (A): Outsourcing has provided loads of employment opportunities in developing
countries.
Reason (R): Outsourcing is the result of New Economic Policy.
Ans. (b) Both A and r are true but r is not the correct explanation of A.

III. case study Based Questions
Read the extract given below and answer the questions that follows:
1. Foreign trade creates an opportunity for the producers to reach beyond the domestic markets,
i.e., markets of their own countries. Producers can sell their produce not only in markets
located within the country but can also compete in markets located in other countries of
the world. Similarly, for the buyers, import of goods produced in another country is one
way of expanding the choice of goods beyond what is domestically produced. In general,
with the opening of trade, goods travel from one market to another. Choice of goods in
the markets rises. Prices of similar goods in the two markets tend to become equal. And,
producers in the two countries now closely compete against each other even though they
are separated by thousands of miles! Foreign trade thus results in connecting the markets
or integration of markets in different countries.
(i) What do you mean by opening of trade and how it is beneficial for consumers?
Ans. Opening of trade means goods can travel freely across countries. Import and export
of goods freely in the international market is opening of trade.
It is beneficial for consumers in following ways:
(i) More choices of goods are available to consumers
(ii) Goods are of better quality now.
(iii) Competition has made goods comparatively cheaper for consumers.
(ii) How does foreign trade become a main channel in connecting countries?
Ans. Foreign trade created an opportunity for the producers and consumers to reach beyond
the domestic markets through import and export of goods and services. Producers can
sell their goods in international markets whereas buyers can also buy products produced
outside their own country. They get more choices.

E-106 Economics Class X