Sample Material of Our Online Coaching Programme
Subject: Economic & Social Development
Topic: Economics : An Introduction
Ques. 1 : What are the definitions of economics?
Ans. Economics as a word comes from the Greek: oikos
means ‘family, household, or estate’, and nomos stands for ‘custom, law’ etc.
Thus, “household management” or manage-ment of scarce resources is the essential
meaning of economics. Economics encom-passes production, distribution, trade and
consumption of goods and services. Economic logic is applied to any problem that
involves choice under scarcity.
Ques. 2 : Evolution of the subject.
Ans. Initially, economics focused on “wealth” and
later “welfare”. Still later, in recent years, it has given sufficient attention
to the study of trade offs- giving up one to gain another. The focus on
tradeoffs arises from the traditional assumption that resources are scarce and
that it is necessary to choose between competing alternatives. Choosing one
benefit implies forgoing another alternative the opportunity cost (cost of
foregoing an Opportunity).
Ques. 3 : Who is known as the father of Economics & suggest Some definition
put fourth by earlier economist.
Ans. Adam Smith, generally regarded as the Father of
Economics, author of 'An Inquiry into the Nature' and Causes of the Wealth of
Nations (generally known as The Wealth of Nations) defines economics as “The
science of wealth.” Smith offered another definition, “The Science relating to
the laws of production, distribution and exchange.”
Definitions in terms of wealth emphasize production and
consumption, and do not deal with the economic activities of those not
significantly involved in these two processes, for example, children and old
people. The belief is that non-productive activity is a cost on society. It
meant that man was relegated to the secondary position and wealth was placed
Thus arose the shift in the focus to welfare economics study of man and of
human welfare, not of money alone. Economics involves social action connected
with the attainment of human well being.
Ques. 4 : Discuss the different branches of economics.
Ans. Economics is usually divided into two main branches:
Microeconomics which examines the economic behavior of individual actors such as
consumers, businesses, households etc. to understand how decisions are made in
the face of scarcity and what effects they have.
Macroeconomics, which studies the economy as a whole and its features like
national income, employment ,poverty, balance of payments and inflation.
The two are linked closely as the behavior of a firm or consumer or household
depends upon the state of the national and global economy.