1. Economics is the study of how individuals, businesses, and governments allocate scarce resources to satisfy their needs and wants.
  2. It examines the production, distribution, and consumption of goods and services.
  3. Originates from the Greek words "oikos" (household) and "nomos" (management), meaning household management.
  4. Defined by Adam Smith as the study of wealth creation and distribution.
  5. Modern definition by Lionel Robbins: Economics is the study of human behavior as a relationship between ends and scarce means.

Microeconomics

  1. Microeconomics focuses on the behavior of individual economic units like households, firms, and markets.
  2. Studies concepts such as demand, supply, price determination, and elasticity.
  3. Analyzes how consumers make choices to maximize utility and how firms aim to maximize profits.
  4. Explores the allocation of resources at a smaller scale.
  5. Examples include the study of market structures like monopoly, oligopoly, and perfect competition.

Macroeconomics

  1. Macroeconomics examines the economy as a whole, focusing on aggregate indicators like GDP, inflation, unemployment, and fiscal policies.
  2. Explores the interrelationships between national income, savings, and investments.
  3. Analyzes the role of government and monetary authorities in stabilizing the economy.
  4. Deals with large-scale economic phenomena such as economic growth, recession, and trade.
  5. Examples include studying the effects of monetary policies set by central banks like the RBI.

Comparison between Microeconomics and Macroeconomics

  1. Microeconomics focuses on individual units, while macroeconomics looks at the broader economy.
  2. Microeconomics studies price and quantity in specific markets, while macroeconomics analyzes aggregate demand and supply.
  3. Microeconomics assumes other factors constant, whereas macroeconomics accounts for interdependencies.
  4. Both are interrelated and help in understanding the overall economic framework.

Importance of Economics

  1. Helps in resource allocation and achieving economic efficiency.
  2. Provides insights for policy-making to enhance economic growth and stability.
  3. Guides businesses in understanding market dynamics.
  4. Enables individuals to make informed financial and investment decisions.
  5. Plays a vital role in addressing issues like poverty, unemployment, and inequality.

Category

Questions

  1. What does economics primarily study?
  2. Who is regarded as the father of modern economics?
  3. What does the term 'microeconomics' focus on?
  4. Which branch of economics studies aggregate variables like GDP and inflation?
  5. Which concept explains the best alternative foregone when a choice is made?
  6. The law of demand states that, ceteris paribus, as price decreases:
  7. What does the term 'ceteris paribus' mean in economics?
  8. Which economic system is characterized by private ownership and profit motive?
  9. GDP measures the total value of:
  10. Who introduced the concept of 'invisible hand' in economics?
  11. Which economic theory focuses on government intervention to stabilize the economy?
  12. What does the production possibilities curve (PPC) illustrate?
  13. In microeconomics, what does elasticity measure?
  14. Which type of market structure has many buyers and sellers, and homogeneous products?
  15. In macroeconomics, inflation refers to:
  16. The concept of marginal utility is associated with:
  17. Fiscal policy involves changes in:
  18. Who developed the concept of 'comparative advantage'?
  19. Which is not a characteristic of a command economy?
  20. The term 'laissez-faire' is associated with:
  21. The total market value of final goods and services produced annually within a country is:
  22. The difference between GNP and GDP is:
  23. Which branch of economics studies consumer behavior and firms’ production decisions?
  24. An increase in aggregate demand typically leads to:
  25. What is the primary tool of monetary policy?
  26. Which type of unemployment is caused by technological advancements?
  27. What is the term for a sustained decline in the general price level?
  28. In perfect competition, firms are:
  29. What does the Phillips Curve illustrate?
  30. Which term refers to the additional cost of producing one more unit?
  31. The business cycle consists of:
  32. The equilibrium price in a market is determined by:
  33. Public goods are characterized by:
  34. Which factor is considered in calculating Human Development Index (HDI)?
  35. What is the primary goal of a firm in a capitalist economy?
  36. Which policy aims to reduce income inequality?
  37. The trade balance refers to:
  38. Which economic indicator measures income distribution inequality?
  39. What is a primary function of money?
  40. In economics, which of the following is considered a factor of production?
  41. The study of national income and aggregate demand is part of:
  42. A tax where the rate increases as income increases is called:
  43. The circular flow of income includes:
  44. A situation where market equilibrium leads to inefficient allocation is known as:
  45. What type of policy is used to control inflation?
  46. Which economic theory supports minimal government interference in markets?
  47. What is the main focus of macroeconomic policies?
  48. A monopolist sets the price by considering: