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CAIIB Super Notes: If you are preparing for CAIIB- these are a must-have. Visit http://sirfbusiness.blogspot.com for more info.
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CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Fundamentals of Economics, Microeconomics and Macroeconomics and Type of Economies
Module A: Economic Analysis
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
CAIIB – SUPER NOTES
Advanced Bank Management: Fundamentals of Economics,
Microeconomics and Macroeconomics and Type of Economies
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Contents
Coverage:
1. Economics – An
Introduction
2. Microeconomics and
Macroeconomics
3. Problem of an Economic
Organisation
4. Types of Economies
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
ECONOMICS- AN INTRODUCTION
1.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Economics
Economics Economics
A Study of Wealth
A Study of Wealth
Science of Human Welfare
Science of Human Welfare
A Study of ‘Means’
and ‘Ends’
A Study of ‘Means’
and ‘Ends’
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
A Study of Wealth
• Adam Smith’s Definition: The subject matter of economics is
the study of how wealth is produced and consumed.
• Also known as the ‘wealth definition’
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Science of Human Welfare
• Prof. Alfred Marshall’s Definition: ‘Economics is a study of
mankind in the ordinary business of life. It is on one side, the
study of wealth and more important side, a part of the study
of man.’
• The ultimate purpose of Economics is to promote well-being
or welfare.
• Also known as the ‘welfare definition’
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
A Study of ‘Means’ and ‘Ends’
• Lionel Robbins’ Definition: ‘Economics is the science which studies
human behaviour as a relationship between ends and scarce
means which has alternative uses.’
• Also known as the ‘scarcity definition’
• Important aspects:
– Man has unlimited wants
– The means to satisfy human wants are limited
– Resources are not only limited but have alternative uses
– Man has to make a choice. Economics is the science of choice.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
MICROECONOMICS AND MACROECONOMICS
2.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Microeconomics and Macroeconomics
• Microeconomics is a branch of economics that studies how
households and firms make decisions to allocate limited
resources, typically in markets where goods or services are
being bought and sold. Focused on individual agents.
• Macroeconomics deals with the performance, structure and
behaviour of a national or regional economy as a whole.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
PROBLEM OF AN ECONOMIC ORGANISATION
3.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
3 Problems of an Economic Organisation
What is to be produced? What is to be produced?
How are the goods to be produced? How are the goods to be produced?
For whom are they produced? For whom are they produced?
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
TYPES OF ECONOMIES
4.
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Types of Economies
Market Economy/ Capitalistic Economy
Market Economy/ Capitalistic Economy
• Individuals and Private Firms make the major decisions about production and consumption.
• Firms produce the commodities that yield the highest profits (What) by the techniques of production that are least costly (How) for those who have the means and are willing to spend (Whom)
• ‘Laissez Faire Economy’ – Extreme case of a market economy
Command Economy/ Socialistic Economy
Command Economy/ Socialistic Economy
• Govt. makes all the important decisions
• The govt. addresses the major questions by virtue of its ownership of resources and power to enforce decisions.
• Ex: Former Soviet Union
Mixed Economy Mixed Economy
• Has elements of both Market and Command Economy.
• All modern day economies fall under this category.
• Ex: India
CAIIB – Super-Notes © M S Ahluwalia Sirf Business
Do you have any questions or queries or some feedback to give?
Just mark an email to [email protected]
CAIIB – Super-Notes © M S Ahluwalia Sirf Business For more Super-Notes: Click Here
M S Ahluwalia, amongst other things, is a visual artist, blogger,
blog designer and of course an MBA and Banker from New
Delhi, India.
To know more about him you may visit his blog-site: Estudiante De La Vida
