Question

what are the two types of economics and what are the 4 economic systems

Answer 1

Ans) Economics is the study of scarcity and how to allocate the limited resources. There are two branches of economics ÷

1) Microeconomics ÷ it deals with decisions made by individuals and firms. It deals with single individual, or individual firm or indivisual industry etc.Eg- how you allocate your pocket money, how supply of Volkswagen cars affects its price, how demand of iphone affects its price etc.

2) Macroeconomics ÷ macroeconomics deals with economy as whole. It is not sector specific rather it deals with problems which affects economy as whole. It is comparatively younger branch of economics. Eg- inflation, unemployment etc.

Economic system is method of allocating available resources. It is mainly of four types ÷

1) Traditional ÷ it is based on eatablished trends. It mainly relies upon the thinking and belief of people. It is very primitive type of system.

2) Command ÷ here, central authority (usually government) controls the factors of production. It decides what, how and how much to produce. Eg- China.

3) Market economic system ÷ this type of economic system is based on free market i.e laissez faire. Where the factors of production are controlled by private institutions and those goods are produced which are demanded more by the consumers. Here price plays a decisive role. Government interference is minimum or absent. Eg- New Zealand

4) Mixed ÷ both command and market economic system have their own pros and cons. Mixed economic system attempts to combine the best of both worlds. Here both public and private enterprises coexist. Eg- India