📍 ECONOMICS AND THE ECONOMY
The relation between economics and the economy, simply saying, is that of theory and practice.While the former is a discipline studying economic behaviour of human beings, the latter is a still-frame picture of it.
Economics will come out with theories of market, employment, etc., and an economy is the real picture of the things which emerges after the application of those theories.
● Important points :-
💡Economics has less diversity than the Economies.
💡There will not be any exaggeration
if we say that no two economies of the world are exactly the same .
📍CHALLENGES OF THE ECONOMIES
The main challenge of any economy is to fulfil the needs of its population. Every population needs to be supplied with some goods and services for its survival and well-beings.
These goods might include basic needs such as food, shelter, garments, etc., while it might also consist of refrigerators,air conditioners, cars, medicines, computers, etc.
● Important points :-
💡The process of fulflling the needs of the population becomes a never ending phenomenon.
💡The standard of living of one set of
population varies from another.
📍DISTRIBUTION NETWORKS MODELS
In the arena of distribution network,we have three historically existing models—state, market and state-market mix.
In the first type of distribution system, the state (i.e., the government) takes the sole responsibility of supplying goods and services required by the population with no payments being done by the consume .
In second system, goods and services
are made available in the market and on the basis of their demand and supply, their prices are determined in the open market and fnally they get distributed to the population.
The third and the most prevalent mode of distribution, the state-market mix, developed out of the experiences of the former two systems.
● Prelims points :-
💡The former Soviet Union and Communist China being the best example of State Network.
💡Market Network was the distribution system of the capitalist economies— the whole of Euro-America .
WASHINGTON CONSENSUS
The term 'Washington Consensus was coined by the US economist John Williamson 7 (in 1989) under which he had suggested a set of policy reforms which most of the offcial in Washington thought would be good for the crisis-driven Latin American countries of the time
● Important points
The policy reforms included ten proposition
💡 Fiscal discipline
💡 A redirection of public expenditure priorities toward felds ofering bot
high economic returns and th
potential to improve income distribution
💡 Tax reform
💡 Interest rate liberalisation
💡 A competitive exchange rat
💡 Trade liberalisation
💡 Liberalisation of FDI infow
💡 Privatisatio
💡 Deregulation
💡Secure property rig
💡Secure property rights.
📍SECTORS OF AN ECONOMY
The economic activities are broadly
classifed into three broad categories -
1. Primary Sector
This sector includes all those economic activities where there is the direct use of natural resources .
2. Secondary Sector
This sector is rightly called the manufacturing sector, which uses the produce of the primary sector .
3. Tertiary Sector
This sector includes all economic activities where diferent 'services’ are produced .
● Important Points :-
💡Primary sector is the case in India.
💡Since manufacturing is done by the industries, secondary sector is also called the industrial sector .
💡Tertiary sector is also known as the services sector.
📍TYPES OF ECONOMIES
There are following 3 Types of Economies-
1. Agrarian Economy
An economy is called agrarian if its share of the primary sector is 50 per cent or more in the total output (the GDP) of the economy.
2. Industrial Economy
If the secondary sector contributes 50 per cent or more to the total produce value of an economy, it is an industrial economy.
3. Service Economy
An economy where 50 per cent or more of the produced value comes from the tertiary sector is known as the service economy.
● Important Points :
💡 Service economy with the primary sector's contribution falling to almost 18 per cent .
💡In the last decade (2003–04 to 2012–13), growth has increasingly come from the services sector .
