ECONOMICS

It is study of how people-individuals, households, firms and nations-maximize their gains from their limited resources and opportunities. It is also social science, which studies human behaviour in relation to optimizing allocations of available resources to achieve the given ends.

PROBLEMS OF ECONOMICS What to produce How to produce Where to produce For whom to produce When to produce In what qty to produce

ECONOMICS POLICY Economics policy means rules and regulations prepared or set by RBI(Reserve Bank Of India) or by government.

MICROECONOMICS Study of individual or single person.Examples- per capita income, individuals problems, supply, demand etc.

MACROECONOMICS Study of all sums or aggregate.Examples-GDP,NDP,Rate of interest, aggregate demand, aggregate supply etc.

FACTORS OF PRODUCTIONS /FACTORS OF INPUTS Land -------- Rents Labour ------- Salary or Wages Capital ------- Interest Entrepreneurship -------- Profits

OPEN ECONOMY Open economy is an economy where import and export activities takes place.

CLOSE ECONOMY Closed economy is an economy where import and export activities does not takes place.

THREE MAJOR TYPES OF ECONOMICS PLANNED / GOVERNMENT CONTROL ECONOMY FREE MARKET ECONOMYMIXED ECONOMY

PLANNED / GOVERNMENT CONTROL ECONOMY Centrally planned economy is based on government control and social welfare motive.Today, no country of the world is purely a centrally planned economy.

FEATURES Public ownership of property.No freedom of enterprise.Social welfare motive.No competition.Absence of consumers sovereignty.Restriction on freedom of occupation.Reduce inequality of income.Complete role of government .

FREE MARKET ECONOMY Free market economy is based on private property and private profit. There is no control of government in this economy but it is run as per the demand and supply. It exist in Japan, UK, US, Australia etc.

FEATURES Private property.Freedom of enterprise.Profit motive.Existence of competition.Consumers are sovereignty.Unequal distribution of incomes.No role of government.

PROBLEMS OF FREE MARKET ECONOMY Monopoly (ex-Railways).Unhealthy competition.Anti social activities.Exportation of consumers.Gap between the rich and poor.

MIXED ECONOMYMixed economy is an economy which is based on government control and as well as private control.

FEATURES Controlled by both private and public sector.Freedom of enterprises in private but not in public.Private sector produces with profit motive and public sector produces with welfare motive.Competition exists but in private sector. Consumers sovereignty exists.Freedom of occupations exists.Full role of government or public sector and limited role of private sector in mixed economy.