Economy of a country includes all production, distribution or economic activities that relate with people and determines the standard of living. On the eve of independence Indian economy was in very bad shape due to the presence of British...
Economic Planning: Means utilisation of country's resources in different development activities in accordance with national priorities. Goals of Planning in India Long Term Goals(To be achieved over a period of 20 years) Short Term Goals(To be...
Economic reforms or structural adjustment is a long term multi dimensional package of various policies (Liberalisation, privatisation and globalisation) and programme for the speedy growth, efficiency in production and make a competitive...
Poverty is the inability to fulfill the minimum requirement of life like food, clothing, housing education and health facilities etc. Relative poverty refers to poverty of people in comparison to other people in different region or nations....
Human capital refers to the stock of skill, ability, expertise, education and knowledge in a nation at a point of time. Physical capital refers to assets which themselves have been manufactured and are used for production of other goods and...
Rural development is a comprehensive term which essentially focuses on action for the development of area which is lagging behind in overall development of village economy. Objectives of rural development: 1. Increasing productivity of...
Work plays an important role in our lives as an individual and as members of society. A worker is an individual, who is involved in some productive activity, to earn a living. An economic activity refers to the activity performed by people to...
Infrastructure refers to all such services and facilities, which are needed to provide different kinds of services in an economy and which are essential in raising the place of economic growth of a country. It contributes to economic development...
Environment is defined as the total planetary inheritance and the totality of all resources. It includes all the biotic and abiotic elements that influence each other. All living elements-the birds, animals and plants, forests, fisheries etc. are...
All the three countries started their development path at the same time. India and Pakistan got independence in 1947 and people's Republic of China was established in 1949. All the three countries had started planning their development strategies...
Goods :In economics a goods is defined as any physical object, manmade, that could command a price in the market and these are the materials that satisfy human wants and provide utility. Consumption Goods : Those final goods which satisfy human...
Money: Money may be defined as anything which is generally acceptable as a medium of exchange and at the same time acts as a measure, store of value and standard of deferred payment. Functions of Money: Primary Functions Medium of exchang Common...
Aggregate Demand refers to total value of all final goods and services that are planned to buy by all the sectors of the economy at a given level of income during a period of time. AD represents the total expenditure on goods and services in an...
Budget is a financial statement showing the expected receipt and expenditure of Govt. for the coming fiscal or financial year. Main objectives of budget are: (i) Reallocation of resources. (ii) Redistribution of income and wealth (iii) Economic...
The balance of payment is a comprehensive and systematic records of all economic transaction between normal residents of a country and rest of the world during an accounting year. Accounts of Balance of Payments: 1. Current Account: The current...
Macroeconomics is the part of economic theory that studies the economy as a whole, such as national income, aggregate employment, general price level, aggregate consumption, aggregate investment, etc. Its main instruments are aggregate demand and...
The difference between micro and macro economicsis simple. Microeconomics is the study ofeconomics at an individual, group or company level.Macroeconomics, on the other hand, is the study of a national economy as a whole. Microeconomicsfocuses on...
Demand is also effective demand. Desire becomes demand only when it is backed bypurchasing power and willingness to spend. Demand is always at a certain price. Demand becomes meaningless unless stated in terms ofprice. Therefore, demand is...
Theory of Consumer Behaviour (Indifference-Curves) Rationality: The consumer is assumed to be rational he aims at the maximization of his utility, given his income and market prices. It is assumed he has full knowledge (certainty) of all relevant...
Demand elasticity refers to how sensitive the demand for a good is to changes in other economic variables, such as the prices and consumer income. Demand elasticity is calculated by taking the percent change in quantity of a good demanded and...
Price Elasticity of Supply is the responsiveness of quantity supplied when the price of the good changes. ... Price Elasticity of Supply is always positive because the Law of Supply says that quantity supplied increases with an increase in price.
A situation in which the supply of an item is exactly equal to its demand. Since there is neither surplus nor shortage in the market, price tends to remain stable in this situation. this is where the quantity demanded and quantity supplied are...
The three alternative methods used for measuring national income are as follows: 1. Value Added Method 2. Income Method 3. Expenditure Method. Since factor incomes arise from the production of goods and services, and since incomes are spent on...
Returns to a factor and returns to scale are two important laws of production. Both laws explain the relation between inputs and output. ... On the other hand, returns to scale relate to the long period production function when a firm changes its...
In an economy, various goods and services are produced by different productive units during a period of one year. Such goods and services cannot be added together in terms of quantity (as we cannot add 5,000 tonnes of wheat + 10,000 mobile phones...
The break-even point for a product or service occurs when revenue generated by the product equals thecosts incurred in producing, selling and delivering the product. Break-even analysis blends cost and revenue analysis to help companies determine...
The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit...
In economics, market structure (also known as market form) describes the state of a market with respect to competition. Most market forms given below talk about a homogeneous product. This simply means that they all make the same . They simply...
The budget is an avenue to ensure the country's economic growth. The government makes provisions to increase budgetary spending and promote savings. It aims toaccelerate the country's economic growth. ... If there is deflation, the government...
Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it has no inclination to expand or to contract its output. This state either reflects maximum profits or minimum losses. There...
Fiscal Policy: meaning and instruments of fiscal policy.Meaning and instruments of fiscal policy – Public Revenue: Meaning, taxes (Meaning and types), difference between direct and indirect taxes; Public Expenditure: Meaning and importance;...
In perfect competition, the price of a product is determined at a point at which the demand and supply curve intersect each other. This point is known as equilibrium point as well as the price is known as equilibrium price. In addition, at this...
Balance of Payment – meaning, components; foreign exchange – meaning, determination ofexchange rate (Flexible). Balance of Payment - Meaning and components; Causes of disequilibrium and how the disequilibrium can be corrected; Foreign Exchange...
In perfect competition, the price of a product is determined at a point at which the demand and supply curve intersect each other. This point is known as equilibrium point as well as the price is known as equilibrium price. In addition, at this...
A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a...
Money is a concept which we all understand but which is difficult to define in exact terms.
Money is anything serving as a medium of exchange. Most definitions of money take ‘functions of money’ as their starting point. ‘Money is that which...
IGCSE Solutions for Class 12 Economics Subject chapters
A small insight into what is economics, before we start off: "Economics is the social science that describes the factors that determine the production, distribution and consumption of goods and services." Resources: are the inputs available for...
In a market system, price is used as a tool to clear the market. Market system is often called free market system. In a market economic system, producers and consumers decide what, how and for whom to produce based on price signals. Some...
Since we already know that individuals are concerned about satisfying their wants. Let us see the example of Ahmed who works as a farmer. He works at the farm, grows crops and sells the produce in the market – He is doing production,...
Economics is the study of how human beings satisfy their unlimited wants by using the limited resources they have. Production in Economics is any activity that is done to satisfy people's wants. Production also involves giving services. It is...
Monetary policy is exercised by the Federal Reserve System ("the Fed"), which is empowered to take various actions that decrease or increase the money supply and raise or lower short-term interest rates, making it harder or easier to borrow...
Economic development indicators. To assess the economic development of a country, geographers use economic indicators including: Gross Domestic Product(GDP) is the total value of goods and services produced by a country in a year.
There are different factors that determine whether a country is developed or developing. A country is often developed when it has a very good macroeconomic indicators, such as a high GDP a high GDP per capita, a high GNI, a high GNI per capita, a...
Fixed Exchange Rate A fixed exchange rate system refers to the case where the exchange rate is set and maintained at same level by the government irrespective of the market forces. Floating Exchange Rate Floating exchange rate system means that...
