NEB Class 12 Management Economics (NEB Released Items) Question Paper 2081 (Set A) Nepal

A progressive tax system helps reduce inequality because:

1. It is based on the taxable capacity of the taxpayer - higher-income earners are taxed at higher rates, so the rich contribute proportionately more, narrowing the gap between rich and poor.
2. It is transparent and simple - the rising rate structure is clear and the revenue collected can be redistributed to lower-income groups through public services and welfare programmes.

Plot the given quantity-TR pairs on a graph with Quantity ($Q$) on the X-axis and Total Revenue ($TR$) on the Y-axis, then join the points to obtain the TR curve.

Points to plot: $(1,10), (2,18), (3,24), (4,28), (5,30)$.

The TR curve rises throughout but at a decreasing rate (the successive increments are $8, 6, 4, 2$), so the curve is concave from above (slopes upward and gradually flattens). This shape indicates that marginal revenue is positive but falling as output increases.

In economics, choice is the selection of resources to satisfy the most important want from a list or bundle of wants. Because resources are scarce and wants are unlimited, individuals and societies must decide which wants to fulfil first, and this act of selecting among alternatives is called choice.

Formula (Laspeyre's price index):

Calculation table (base-year quantities $q_0$):

Substituting:

Interpretation: There has been an increase of $157.2 - 100 = 57.2\%$ in the price of commodities (price level) in 2081 compared to 2080.

Unemployment in Nepal can be minimised through the following measures:

1. Agricultural development - modernising farming according to the possibility of different areas (e.g. commercial vegetable farming in the hills) creates seasonal and full-time rural employment.
2. Industrial development - establishing agro-based and manufacturing industries (e.g. cement, garment and food-processing plants) generates large-scale jobs.
3. Investment in infrastructure - building roads, hydropower and irrigation in economically potential areas creates direct construction jobs and supports other businesses.
4. Skill-development training - providing vocational and technical training as per market need (e.g. CTEVT courses in electrician, plumbing, IT) makes the workforce employable and self-reliant.
5. Extension of product markets - expanding markets for Nepali products up to the international level (e.g. exporting tea, cardamom, handicrafts) raises production and the demand for labour.

(Other valid measures include launching awareness programmes and promoting self-employment/entrepreneurship.)

Definition: Banking refers to the business activities conducted by financial institutions, primarily banks, which involve accepting deposits from the public, granting loans, and offering a wide range of financial services. Banks act as intermediaries, channelling funds from savers to borrowers and facilitating economic activities.

Seven roles of the banking system in the Nepalese economy:

1. Mobilization of savings and capital formation - Banks encourage individuals and businesses to deposit surplus funds by offering attractive interest rates and secure savings options, accumulating resources that can be invested across sectors and supporting capital formation and growth.
2. Provision of credit to various sectors - Nepalese banks provide credit to agriculture, industry, trade and services; for example, concessional loans to farmers and SMEs improve productivity, expand small businesses and boost employment and income.
3. Facilitating trade and commerce - Through trade credit, letters of credit and foreign-exchange services, banks promote domestic and international trade, assist import-export activities and contribute to the country's foreign-exchange earnings.
4. Promoting financial inclusion - By extending services to rural and remote areas through branches, mobile banking and digital platforms, banks empower individuals and small businesses to save, invest and borrow.
5. Supporting government policies and programs - Banks operate in alignment with the government's monetary and fiscal policies, participating in concessional-loan schemes and helping implement programmes aimed at reducing poverty and promoting sustainable development.
6. Employment generation - As significant employers in both urban and rural areas, banks create direct and indirect employment through their operations and branch expansion, supporting economic stability.
7. Encouraging investment in infrastructure - Nepalese banks finance infrastructure projects such as hydropower, transportation and communication, contributing to infrastructure development essential for long-term economic growth.