LECTURE 01 BY- SAGAR GUPTA
INDIAN ECONOMY
INTRODUCTION TO
ECONOMICS
ECONOMICS
• It is the study of how people allocate scarce resources for production,
distribution, and consumption. It is about the study of scarcity and
choice.
• It finds ways of reconciling unlimited wants with limited resources.
• Father of Economics Adam Smith
• “Wealth of Nations” 1776
ECONOMICS
MICROECONOMICS MACROECONOMICS
Micro & Macro economics
term were coined by Ragnar
Fiscer
MICROECONOMICS MACROECONOMICS
Small Picture Big Picture
Study of individual economic units Study of economy as a whole
Major determinant is Price Price Major determinant is Income
Theory Income Theory
Depends on Individual demand & Depends on aggregate demand &
Individual supply aggregate supply.
MICROECONOMICS MACROECONOMICS
Microeconomics deals with Macroeconomics deals with
various issues like demand, various issues like national
supply, factor pricing, income, distribution,
product pricing, economic employment, general price
welfare, production, level, inflation , money, and
consumption, and more. more.
Father of Macroeconomics
John Maynard Keynes
LIQUIDITY PREFERENCE THEORY
PEOPLE KEEP MONEY IN LIQUID FORM WITH
THEM FOR THREE MOTIVES :
1. Transaction motive
2. Precautionary motive
3. Speculative motive.
NCERT CLASS 12
The General Theory of Employment,
Interest and Money, 1936
SOCIALIST /
COMMAND
ECONOMY
ECONOMIC
SYSTEMS
CAPITALIST /
MARKET MIXED
ECONOMY ECONOMY
CAPITALIST / MARKET ECONOMY
Features :
• All means of Production & Distribution Privately owned.
• Motive of Production Profit
• Prices are determined by market forces of Supply & Demand.
• EX- USA , JAPAN , UK etc.
CAPITALIST / MARKET ECONOMY
ADVANTAGES:
• High Competition Better quality Innovation Better Prices Benefit for
consumers.
CAPITALIST / MARKET ECONOMY
ADVANTAGES:
• Minimal or no intervention from the government.
• More efficiency products produced according to the demand of the consumers
• More consumption & production employment development of infrastructure
GDP growth
CAPITALIST / MARKET ECONOMY
DISADVANTAGES:
• Inequalities in income.
• Against the idea of inclusive development.
• Exploitation of working class Hire & fire policy.
SOCIALIST / COMMAND ECONOMY
Features :
• All means of Production & Distribution Government owned.
• Motive of Production Inclusive growth Social welfare
• Prices are determined by Government.
• Socialist economy is planned economy.
• Cuba , China , North korea etc.
SOCIALIST / COMMAND ECONOMY
ADVANTAGES:
• Balanced development of society.
• Absence of market forces.
• Administrative price mechanism.
SOCIALIST / COMMAND ECONOMY
Disadvantages:
• Lack of Competition Low quality Not beneficial for consumers.
• Average production Average growth
MIXED ECONOMY
Features :
• Mixture of Capitalism & Socialism
• Means of Production & Distribution Both public & private ownership.
• Motive of Production Fast growth with inclusive development.
• Mixed price mechanism
• India , Pakistan , Bhutan etc.
MIXED ECONOMY
Note :
No any economy of the world is purely capitalist or socialist .
PRACTICE QUESTIONS
Q.1 Price theory is also known as (SSC CGL 1st Sit. 2010)
(a) Macro Economics
(b) Development Economics
(c) Public Economics
(d) Micro Economics
Q.2 The terms 'Micro Economics' and "Macro Economics" were coined by (SSC
CGL 2nd Sit. 2010)
(a) Alfred Marshall
(b) Ragner Nurkse
(c) Ragner Frisch
(d) J.M. Keynes
Q.3 In the national context which of the following indicates Macro Approach ?
(SSC CGL 1st Sit. 2015)
(a) Sales of Bata Shoe Company
(b) Exports of Mangoes to U.K.
(c) Income from Railways
(d) Inflation in India
Q.4 A ‘Market Economy’ is one which (SSC CGL 1st Sit. 2016)
(a) is controlled by the Government
(b) is free from the Government control
(c) in influenced by international market forces
(d) All of these
Q.5 Economic planning is an essential feature of (SSC CGL 1st Sit. 2012)
(a) Socialist economy
(b) Capitalist economy
(c) Mixed economy
(d) Dual economy
PRACTICE QUESTIONS ANSWERS
1. D) Microeconomics
2. C) Ragner Frisch
3. D) Inflation in India
4. B) Free from govt. control
5. A) Socialist economy.
