| EEONOMY ToDo—_——____HOTS 2 —___— Beonomic problem tht led 10 the emergence of economics. “The subjoct mntter of economies revolves around the cote proler of rational sranagernent of routes. “eowomis deals with how limited resources ae etionaliy manged (or copsenly wis tthe miro a well a ceo lee. What does rational management of resources meas? Ar the micro Jed, means dae an incviden) conauner ics it rewutces (come or weal) ina manner tha he maximises his satan; an Hodvidl producer Coe fam) es his resources ina manne: that he waimiss his prot. Ac che macro kel it tear tate coun ss ie resousces (ntioal weal) in amar thacit amie ite oF GDP greet as wel soci] wel ‘With his balgrund in mind we can sow define econorkes as under fire to tntod wants) oa nar sch ut te eo lel a a | Cosine ae mace Me fasion end en utduat prods abe te ‘Rorinbehi profiad tthe rola covey abt achive ihe paste COP [potion ghee sot wefan iy, ne on tte thavecoom thesealy fon ust ofthe nc rr a mane seb tha he aa ge ‘atin tthe lie adsl gn sd the el f ‘onenlts sa abject io ah erator nanapeent nia sans suet fcimcreleanowicpeter tata eth eae: sunrises efi Seitgens poolmttheslecrotieewaraenna! actos the poe etal menses Settee tinh he eet eran Pr os fj eouc see sed fesutar ove aerate, td mean tonal marae feu? RES cron of rues nDles cpt meta ofcescuees hey cate eatin of Fare Sarthe mic eve tear an dbl emer wes Nereus m9 are at he (etic hs sn, rd od peer wanes sees ns rea hat he mines ERD he maven couse trots norms that hee DF (Pen semanie, sedi sosivnteeeraumied Microeconomics and Macroeconomics Teonomics is broadly divided into wo parte () Mictosconomis, nd ip Macrosconomic, Following i a brief desedpon of ico and wc ‘onceps of ecoomics Microeconomics ‘Micro means sl Micoecomoris dels wih economies elated to small economic wots: () a0 fnvidval consumes, (i) am individ prodcc- (i) an individ! frm, Go) an indies! iadusery, and (9) an indvial mask ‘A consumes is am importers economic unit io the conte of rmirogconemic. He fees the problem of choice (te problem of rato arr: of ror He Bw me bs is done) on he mihi tor ae Lede Gooey commie Gol ee ssl pug ensue tou! rete oe Bee pte oman utente he lon ote Heke ae eel etc och ne me ne Se end oer pees 2 Senin ay 2 urls pine aceceeeee ae Seo Re fede am ae “fen weigh heya Dende nae sani tal hl Se ae Se Ses eset ei yo me ie se byes a Far Sey Meccan le eps ogee ed oT Sic Oana teas da on ee Sette ae a ics Teen Ss cul uw am wp hee compre wooo nde Vital Components of Microeconomics (1) Theory of Consumee Beaviour: rns haw a consumer aces istnome 1 dfeent ero chache masiies his stseton (2) Theory of Producer Behaviour carlyct wa produce decide what 1 produce and how euch, he produce focuses on che masimisaton fro. (9) Theory of Price estas how pues of gous ae evened inthe saarket OF thes he cheony oF ple I the mee inportan soraponent Cf mlccaanomics. So much, tat the economist often heat nctoeconorsics with the Teor of Pies ‘Macroeconomics Mz means ge Te eonorsie ge’ meas the economy aa wile Macossonomics dee with economic ses slated eo the ecomomy 23 viol The basic issues preblere svded bythe economists a te act) Teel a lke the prblens of employment, GDP growth, end scone sbi, Macevconomics so dale with—money auply (and ctdie revion), government budget, exchonge sve Cond Ba), monesty snd Fal plies. ‘Vial components of microsonimi ors unde: Vital Components of Macroeconames (1) Thea tclatcd to Eqilibam Lev of Output and Eoplaymient tule ton eqtibrm itackwoe SCAB(2) Theory elated‘o Inflationary snd Deflationary Ic stules how depareure from fall employment eles ourpat ‘ter inftionary ap of dellasanaty gap. (9) Fiscal and Monetary Policies: These rela o budgetary messes and monecary meanines,respectivey 9 comet ee tuations of infaionary and dflionary ep, Money Supply and Credit Creation: Ie sudies the components of money supply and how commercial banks add to money sappy dough credircretton (6) Government Budgets I focus on the measurement and impact of budgetary dec inthe economy. (6) Bechange Rate and BoP (Balance of Payments): It analyses how ‘achange ates deermined and how BoP impact she level of eanonsc svi in the domestic economy. dy ~Aeressea ad Macrae ROR (0 ered sal cmon ar| aca te el of he anya ‘tai niin] we | (0) Merooonomis is toi concrnd| (4) Macreconomes & bast coneered "The Thoory of Pri ™“ te whole, According toe c | (ly Seaty of microconaice sumer ta | (4 Sey of macroeconomic asus et conan and Ezenary Read th fllowing observations cael: (W On the eve of independence, poverty in Tndla fected lvger percentage of population an nv (i fan observation rested to the pas) (G9 22% of popution i India is abeoiely poor (below povery line) Gris an obvervaton elated to the resend) (i If population in india continues to grow atthe existing rae the percentage of populacon blow porery ine will exeed 2296 he your 2000 Gr isan observation elated othe Future Al sheseobservionsltarerents ate cements of postive economics. “These oberon highligh dhe nae of poverty inthe past, present and she facut. Ths, positive economics the economics of what was, wha and ‘what would be Characteristics of Positive Statements ‘Obveraion/Staremeat eared eo postive economies show che following characteristic CO Those statement highlghe the nature and extent of economic problems or analyse the economic behaviour of dhe people reled fo pet present o irre, (i) These satemencs are based on facts and Sigues reed 0 pst preset or Fue (Gi) These sateen are veable for wuth (Fics an figures can be veted), and () These statements do noe lect any vale judgement oF opinion of the economists hich ould be mater of debate) Generminton of rie the ndbiua!|theleelfGDPIn the coor ir ] | thee steer erable frtrth Examples Somebody mig tate that he perce consumption (1 mnaplconpones otro] (Pine cmeonmemacexsans| Ser) may of come Bo | ” re ayradarntonl| ‘hoop 9 Boone: | of pat Eon ery (2) mcry arbre | mtd infty and Deion) | Gap ne teen) foe ol | bance Seg | Grief on Bae | i dB a | | 3. Positive and Normative Economics Positive Economics Positive sconemic deals with economic asc or economic beavis) reared to pss, present Fe. eels wit such conomiesiuations which an be said by using Fs and figures. (losin Ind as roe overtime Ti cra apo atement at ths Biccan very Normative Economics ‘Noimatve economics i the sconomics of what oughe so be Ie deals with ‘opinion? of the economies relate to economic sues ot ennomle problems, Different economists mayofe diferent opinions onthe solution to an economie problem. Opinions involve vale judgemens, Read he flowing sstement cael () MGNREGA (Mahatma Gandhi Navomal Rural Employment Goarance Ac) will one day bring an end co the problem of pana in the country. IREGA sus prgramime financial adv the uacrplored poop in rural Inds, J will make dhe people paras and if Fong anpeedctve. eon