ICSE Economics Class 10 (2025-26) – Full Notes
Chapter 1 – Productive Mechanism
Meaning of Production
Production = creation of utility (usefulness), not just
making goods.
Three types of utility created:
o Form Utility – Changing form (cotton → cloth).
o Place Utility – Transporting goods to where
needed.
o Time Utility – Storing goods for future use.
Types of Production
1. Primary Production – Direct use of natural resources
(farming, fishing, mining).
2. Secondary Production – Manufacturing (raw material
→ finished goods).
3. Tertiary Production – Services supporting production
(banking, transport, trade).
Factors of Production
Land → natural resources; reward = Rent.
Labour → human effort; reward = Wages.
Capital → man-made assets; reward = Interest.
Entrepreneur → organizer, innovator, risk-taker;
reward = Profit.
Capital Formation
Steps: Savings → Investment → Capital formation.
Importance: raises productivity, jobs, and long-term
growth.
Public Finance
Study of govt. income & spending.
Includes: Revenue (taxes), Expenditure (welfare),
Debt (loans).
Role: economic stability, growth, redistribution of
income.
Chapter 2 – Demand and Supply
Demand
Definition: Quantity of a commodity a consumer is
willing & able to buy at a given price in a given time.
Law of Demand
"Other things being equal, demand increases when price
falls and decreases when price rises."
Example: Ice cream demand rises in summer if price
drops.
Exceptions
Giffen goods – Poor quality staples, bought more at
higher prices.
Prestige goods – Luxury items (diamonds, Rolex).
Necessities – Salt, medicines.
Future expectations – Buying more now if prices
expected to rise.
Determinants of Demand
Price of commodity
Income of consumer
Price of related goods (substitutes, complements)
Tastes and preferences
Population
Supply
Definition: Quantity of a commodity producers are
willing to sell at a given price in a given period.
Law of Supply
"Other things being equal, supply increases when price
rises and decreases when price falls."
Determinants of Supply
Price of the commodity
Cost of production
Technology
Government policy (taxes, subsidies)
Number of sellers
Chapter 3 – Market
Meaning
Market is not just a place, but any arrangement where
buyers & sellers exchange goods/services.
Types of Market
1. Perfect Competition
o Large number of buyers & sellers.
o Homogeneous products (identical goods).
o No single seller can influence price (price takers).
2. Monopoly
o Single seller controls the market.
o No close substitutes.
o High entry barriers.
o Price maker. Example: Indian Railways.
3. Monopolistic Competition
o Many sellers, but products are slightly different
(differentiated).
o Example: soap brands, toothpaste.
o Non-price competition (advertising important).
4. Oligopoly
o Few large firms dominate the market.
o Example: car industry, telecom industry.
o Firms are interdependent.
Price Mechanism
Interaction of demand & supply determines price in the
market.
Chapter 4 – Banking
Functions of Commercial Banks
1. Accepting Deposits – Savings, fixed, current accounts.
2. Lending Loans – Short-term & long-term credit.
3. Agency Functions – Collecting cheques, paying bills.
4. General Utility Functions – Safe lockers, foreign
exchange, credit cards.
Central Bank (RBI)
Controls money supply & supervises banks.
Functions:
o Issues currency.
o Controls credit through CRR, SLR, Repo rate.
o Acts as govt’s banker.
o Maintains price stability.
Importance of Banking
Encourages savings.
Provides loans for investment.
Supports trade & commerce.
Promotes economic development.
Chapter 5 – Public Finance (Detailed)
Public Revenue
Sources:
o Tax Revenue – Direct taxes (income tax, wealth
tax), indirect taxes (GST, customs).
o Non-Tax Revenue – Fees, fines, interest, profits
from govt enterprises.
Public Expenditure
Categories:
o Developmental – Education, health, infrastructure.
o Non-developmental – Defense, law & order,
administration.
Public Debt
Govt borrows when expenditure > revenue.
Internal debt (within country) & external debt (from
abroad).
Importance
Helps redistribute wealth.
Provides public goods (roads, schools).
Stabilizes economy during inflation/deflation.
Chapter 6 – Inflation
Meaning
Inflation = continuous rise in general price level of goods
& services.
Measured by CPI (Consumer Price Index) or WPI
(Wholesale Price Index).
Types of Inflation
1. Creeping Inflation – Slow, under 3% per year.
2. Walking Inflation – Moderate, around 3–10%.
3. Running Inflation – Rapid rise, 10–20%.
4. Hyperinflation – Extremely high, money loses value.
Causes
Demand-pull inflation – Excess demand over supply.
Cost-push inflation – Higher cost of production.
Monetary causes – Excess money supply.
Imported inflation – Rise in import prices.
Effects
On Consumers – Reduces purchasing power.
On Producers – Higher profits in short term.
On Fixed Income Groups – Worst affected (pensioners,
salaried).
On Economy – Encourages black money, discourages
savings.
Control of Inflation
Monetary Measures – RBI increases interest rates,
CRR, SLR.
Fiscal Measures – Govt reduces expenditure, raises
taxes.
Other Measures – Import goods, rationing, price
control.
