For CDS-1 2023 Exam

Lecture – 01
Introduction of
Economic Types &
Sectors of Economy
(Economics)
PRATHMESH SIR
 1. Basics of Economy

Topics To 2. Factors

Be 3. Types

Covered 4. Sectors
 Syllabus

➢ Basics Of Economics ➢ Inflation, unemployment, Poverty

➢ National Income ➢ Taxation in India

➢ Planning & Development of Indian ➢ Financial Market

Economy
➢ International Institutions & BOP
➢ Fiscal Policy & Budget

➢ Monetary policy & Banking

 What Is Economics?
➢ Economics is a social science concerned with the production,
distribution and consumption of goods and services.

➢ In simple terms economics is the study of how society uses its

limited resources.

Economy is the social activity where people come together to produce, stock,
distribute, trade and facilitate consumption of goods and services. The entire
activity is meant for the market, that is, for buying and selling.
 Consumption

Goods Services
Factors Of Production
 Factors Of Production
1.Land as a Factor of Production

➢ By land, we mean all that is given to us free by nature

➢ This includes not just land, but anything that comes from the land

➢ Most of the natural resources like soil, water, forests, minerals,

petroleum, sunlight, wind etc come under the category of land – the
first factor of production.

➢ The income that the owners of the land earn in return for land
resources is called rent.
 Factors Of Production
Labour (Human Resources)

➢ includes all efforts of human beings used for the production of

goods and services.

➢ Labour include physical and mental labour

➢ The income earned by labour resources is called wages

 Factors Of Production
Capital as a Factor of Production

➢ Capital includes all the man-made resources used for producing

goods and services like buildings, machines, equipment, vehicles,
stock of materials etc.

➢ Physical capital can be broadly divided into two categories – Fixed

Capital and Working Capital.

➢ The income earned by owners of capital resources is interest.

 Factors Of Production
Entrepreneurship as a Factor of Production

➢ Entrepreneurship as a factor of production is a combination of the

other three factors.

➢ Entrepreneurs use land, labour, and capital in order to produce a

good or service for consumers

➢ The income accruing to the entrepreneur is termed as profit.

Factors Of Production
Economic Non Economic
Activity Activity
Types Of Economics

Microeconomics Macroeconomics
Microeconomics
 Macroeconomics
▪ Macroeconomics is the branch of economics that studies the
behavior and performance of an economy as a whole. It focuses on
the aggregate changes in the economy such as unemployment,
growth rate, gross domestic product and inflation.
Macroeconomics
Types Of Economy

Types Of Economy

Capitalist Socialist Mixed

Economy Economy Economy
Capitalist Economy
 Capitalist Economy
➢ Wealth of Nations 1776 (Adam Smith)

➢ Private ownership (Capitalist )

➢ Prices are determined by the market forces of demand and supply (Invisible Hand)

➢ Profit motive

➢ Distribution of income is VERY UNEQUAL

➢ No direct government intervention

➢ known as a market economy, Unplanned economy.

➢ Laissez - faire policy

 Socialist Economy
➢ Karl Marx had introduced this idea in his
“communist manifesto".

➢ Also called “Command Economy “

➢ In such an economy the factors of production

are all state-owned.

➢ All the factories, machinery, plants , capital,

etc. is owned by a community in control of
the State.
 Socialist Economy
➢ Public ownership

➢ The central planning authority determines prices

➢ Social welfare is Main Aim, not Profit

➢ Government Has complete Ownership

➢ No Competition
Mixed Economy
 Mixed Economy
➢ Both private and public ownership

➢ The central planning authority, as well as demand and supply,

determine prices.

➢ Government has Full role in the public sector and limited role in the
private sector

➢ Considerable inequalities exist

Mixed Economy
Sectors Of Economy
 Primary Sector
➢ Primary activities are directly dependent on the
environment as these refer to utilization of earth’s
resources such as land, water, vegetation, building
materials and minerals.

➢ includes hunting and gathering, pastoral activities,

fishing, forestry, agriculture, and mining and
quarrying.

➢ People engaged in primary activities are called red -

collar workers due to the outdoor nature of their
work.
 Secondary Sector
➢ It includes the industries where finished products are
made from natural materials produced in the
primary sector.

➢ Its also called industrial sector or Manufacturing

Sector.

➢ The major examples that fall under this category are

Production and manufacturing.
➢ People engaged in secondary activities are called
blue - collar workers.

➢ Eight Core Industries are Electricity, steel, refinery

products, crude oil, coal, cement, natural gas and
fertilizers.
 Tertiary Sector/Service Sector
➢ This sector’s activities help in the development of the
primary and secondary sectors. By itself, economic
activities in tertiary sector do not produce a goods but
they are an aid or a support for the production.

➢ The example of this sector is all service sectors which

IT services, consulting, insurance, banking etc.

➢ Trade, Transportation, Communication.

➢ White caller workers.

 Quaternary Activities

➢ These are specialized tertiary activities in the ‘Knowledge Sector’ which

demands a separate classification.

➢ Personnel working in office buildings, elementary schools and university

classrooms, hospitals and doctors’ offices, theatres, accounting and
brokerage firms all belong to this category of services.

Quinary Activities

➢ top-level decisions are made.

➢ Gold Caller profession.

 Organized Sector
➢ employment terms are fixed and regular,
employees get assured work and social
security.

➢ which is registered with the government and a

number of acts apply to the enterprises

➢ work only a fixed number of hours

Unorganized Sector
VANDE MAATRAM