Definition of Economics :-
Adam Smith (father of Modern Economics ) was a Scottish philosopher,
widely considered as the first modern economist. Smith
defined economics as “an inquiry into the nature and causes of the wealth of nations.”
Lionel Robbins
defined economics as. “the science
which studies human behaviour as a relationship between ends and scarce means which
have alternative uses’’
Samuelson's Definition (Modern
Definition of Economics) According to Samuelson, 'Economics is a social science
concerned chiefly with the way society chooses to employ its resources, which
have alternative uses, to produce goods and services for present and future
consumption'.
A.J.Brown, Economy is
a system by which people get a livelihood & satisfy their wants.’
CONCEPT
OF ECONOMICS:-
Economics is a
science as well as art. As science, the nature of economics can be studied with
respect to following two concepts:-
1. POSITIVE SCIENCE
2. NORMATIVE SCIENCE
|
Positive Science
|
Normative science
|
|
·
It is
confined to stating causes & effect relationship between two related
variables
·
Based on data
& facts
·
Descriptive
·
Describes
economic issues
·
Statements
can be tested Or proved
|
·
It is about
viewpoint & decisions/opinions whether certain economic events are desirable or
not
·
Based on
opinions & values
·
Narrow
·
Provides
solutions based on value
·
Statements
Can’t be tested
|
|
Asks - What are the causes of unemployment?
|
Asks – How can unemployment be reduced in the country?
|
|
Why prices are
rising?
Verifiable facts /figures
|
How
can be prices be controlled?
Was demonetization justified?
What
should be….
What
ought to be …
Facts not verified at all.
|
SUBJECT
MATTERS OF ECONOMICS:-
Subject matter
of economics is broadly divided into two categories:-
i)
Microeconomics & ii) Macroeconomics
Microeconomics is the study of individuals and business decisions,
while macroeconomics analyzes the decisions made by countries and
governments. While these two branches of economics appear
to be different, they are actually interdependent and complement one another.
Many overlapping issues exist between the two fields.
Variables:-
|
Microeconomics
|
Macroeconomics
|
|
Individual
markets
|
Whole
economy(GDP)
|
|
Effect
on price of a good
|
National
income
|
|
Individual
labour market
|
Inflation
& deflation
|
|
Individual
consumer behaviour
|
Employment
/unemployment
|
|
Supply
of good Also known as Price theory Father :- Adam Smith
|
Aggregate
demand & Supply; production & consumption Also known as Theory of income & employment. Father:- JM Kenyes
|
Vital theories or
principles of Economics :-
MICROECONOMICS
- Theory of Consumer behavoiur & producer behaviour
- Theory of price
MACROECONOMICS
- Theory of multiplier
- Theory related to equilibrium level of output & employment
- Theory related to inflation & deflation
- People face trade-offs
- The cost of something is what you give up to get it
- Rational people think at the margin
- People respond to incentives
- Trade can make everyone better off
- Markets are usually a good way to organize economic activity
- Governments can sometimes improve market outcomes
- A country’s standard of living depends on its ability to produce goods and services
- Prices rise when the government prints too much money
- Society faces a short-run tradeoff
between Inflation and unemployment.
Types of Economy :-
- Capitalist Economy :- Where
prices are determined by demand & supply. It is associated with the term
‘Laissez –faire’
- Mixed Economy:- Where public
& private sector exists together in national economy
- Closed Economy:- Where a country
having no imports & exports
- Socialist Economy or Planned Economy:-
A socialist economy is a
system of production where goods and services are produced directly for use
- Parallel Or Block Economy:- makes
the monetary policies less effective
- Dual Economy:- is a mixture
of traditional agriculture sector & modern industrial sector.
Facts about Indian ECONOMY_
·
The Indian Economy is characterized
by predominance of agriculture, low per capita income & massive
unemployment.
·
It is developing market economy. India has
labour surplus economy
- GDP = $ 3.202 trillion (nominal 2020 est.)- 5th Rank
- = $ 11.321 trillion (PPP, 2020 est.)- 3rd Rank
- GDP PER CAPITA = $ 2,333(nominal , 2020 est)
- = $ 9027(PPP, 2020 est.)
- GDP SECTOR WISE :- AGRI( 15.4%) , Industry ( 23%) , Services( 61.5%) - est. 2017
- Ease of doing business rank = 63rd ( 2020)
- Human Development Index= 129th (2018)
- Per capita income :- 139th rank by GDP(nominal ) & 118th rank by GDP(PPP) in 2018 .
- GDP Growth rate :- 2014-2018= 6-7%
:- 2019-20f =
4.2 %
Important Facts :-
·
Dadabhai Naoroji was the exponent of
the theory of “ Economic Drain’ of India during British rule.In 1867 , he put
forward the ‘ Drain of wealth ‘ . He mentioned the theory in his book “ Poverty
& unBritish rule in India’
·
Ch.Charan Singh – Wrote the famous
book – Indian Economy : A Gandhian Blue print.
Economic Nightmare of India-its causes & cure
Co-operative farming X-rayed
·
Amartya Sen :- ( Ist Indian who won
Nobel prize in 1988 for his contribution for welfare economics, awarded Bharat
ratna )
Wrote
books :- Idea of Justice &
Development as freedom
·
Nobel prize in economics established in 1968 ,
Presented by Royal Swedish Academy of Sciences , Stockholm , Sweden
FIRST NOBEL
price : 1969 Ragner Frisch(Norway) & Jan Tinbergan( Netherlands)
2019 Nobel
prize - Michael Kremer(American) ,
Abhijit Banerjee( Americian-indian origin)
& Esther Duflo (American )
2021 Nobel Prize :-
David Card
“for his empirical contributions to labour economics”
and the other half jointly to
Joshua D. Angrist & Guido W. Imbens
“for their methodological contributions to the analysis of causal relationships
