Economic Systems and Microeconomics Overview

Traditional, command, market, and mixed economies.

Supply and demand interact to set the price and quantity of goods in the market, achieving equilibrium when the quantity supplied matches the quantity demanded.

GDP measures the total value of goods and services produced within a country's borders over a specific time period.

<p>Unemployment is the percentage of the labor force that is jobless but actively seeking work, indicating the health of the economy.</p> Signup and view all the answers

<p>An increase in consumer demand typically leads to a rise in the price of the product due to limited supply.</p> Signup and view all the answers

<p>Inflation is the general increase in prices over time, reflecting the decreasing purchasing power of money.</p> Signup and view all the answers

<p>Microeconomics studies consumer behavior through concepts like utility and preferences under budget constraints.</p> Signup and view all the answers

<p>The law of diminishing marginal utility states that as a person consumes more units of a good, the added satisfaction (utility) from each additional unit decreases.</p> Signup and view all the answers

<p>Governments use fiscal policy through taxation and government spending, while central banks utilize monetary policy to control the money supply and interest rates.</p> Signup and view all the answers

<p>Externalities result in unintended effects on third parties, which can lead to inefficient resource allocation in markets, forming the basis of market failures.</p> Signup and view all the answers

<p>Firms consider costs of production (labor, materials, overhead), production technologies, and market competition when making decisions.</p> Signup and view all the answers

<p>Global trade and exchange rates influence national economies by shaping trade balances, impacting domestic industries, and affecting economic growth.</p> Signup and view all the answers

<p>Microeconomics classifies markets into structures like perfect competition, monopoly, monopolistic competition, and oligopoly based on the degree of competition.</p> Signup and view all the answers

<p>Income distribution is significant as it examines issues of inequality and poverty within a society, impacting overall economic health.</p> Signup and view all the answers

<p>Elasticity measures the responsiveness of quantity demanded or supplied to changes in price or income.</p> Signup and view all the answers

<p>Monopolistic competition in the smartphone market is characterized by multiple firms offering differentiated products (various brands and models) while having some degree of market power.</p> Signup and view all the answers

<p>NDP represents the value of goods and services produced after subtracting depreciation from Gross Domestic Product (GDP).</p> Signup and view all the answers

<p>NNI is derived from NDP by adjusting for taxes, subsidies, and accounting for income earned by residents, regardless of where it is generated.</p> Signup and view all the answers

<p>Per Capita Income is important as it provides an average measure of income per individual and is often used to assess the standard of living.</p> Signup and view all the answers

<p>National income data help identify which sectors of the economy are thriving or struggling, guiding investments towards areas that need attention.</p> Signup and view all the answers

<p>Strong national income figures enhance a country's credibility, impacting its trade relationships and borrowing ability on a global scale.</p> Signup and view all the answers

<p>Comparing national income data before and after policy changes allows policymakers to evaluate the effectiveness of those policies.</p> Signup and view all the answers

<p>Net Income from Abroad adds to the national income, as it accounts for income generated by a country's residents outside its borders.</p> Signup and view all the answers

<p>National income data are essential for long-term development planning as they indicate areas for growth and resource allocation.</p> Signup and view all the answers

<p>Non-factor income is not earned through productive activity.</p> Signup and view all the answers

<p>Operating surplus is the income earned by businesses after covering all costs, including labor and materials.</p> Signup and view all the answers

<p>Interest on savings accounts and dividends from investments.</p> Signup and view all the answers

<p>Property income is earned from assets like land, capital, and financial instruments.</p> Signup and view all the answers

<p>Net taxes represent the difference between taxes paid by businesses and government subsidies received.</p> Signup and view all the answers

<p>Gifts and inheritances are considered non-factor incomes because they are received without engaging in productive efforts.</p> Signup and view all the answers

<p>Lottery winnings are categorized as non-factor incomes.</p> Signup and view all the answers

<p>The value of compensation of employees was ₹53.14 trillion.</p> Signup and view all the answers

<p>Market Price represents the price consumers pay for goods and services, including production costs, indirect taxes, and any subsidies.</p> Signup and view all the answers

<p>Current price data might not reflect changes in economic performance because they do not adjust for inflation over time.</p> Signup and view all the answers

<p>Inflation typically causes current prices to increase over time, leading to differences when comparing economic data across periods.</p> Signup and view all the answers

<p>If indirect taxes are present, Market Price is higher than Factor Cost, reflecting these added taxes in the production cost.</p> Signup and view all the answers

<p>Market Price would be lower than Factor Cost in the presence of subsidies, which reduce the final price consumers pay.</p> Signup and view all the answers

<p>The difference represents the impact of indirect taxes added to the cost of production or subsidies subtracted from it.</p> Signup and view all the answers

<p>Adjusting for inflation is important because it allows for a more accurate comparison of economic performance over different time periods.</p> Signup and view all the answers

<p>For example, a nominal GDP of $1,000 in Year 1 does not account for inflation and may indicate an inflated economic condition.</p> Signup and view all the answers

<p>Per capita income is the average income earned by each individual in a nation, calculated by dividing total income by the population. It is significant as it gauges economic well-being and living standards.</p> Signup and view all the answers

<p>Per capita income is calculated using the formula: Per Capita Income = Total Income (e.g., GDP) / Population.</p> Signup and view all the answers

<p>The growth of India's per capita income is driven by economic growth, an expanding workforce, and rising worker productivity.</p> Signup and view all the answers

<p>Increased per capita income is leading to higher living standards, increased consumption, and investments in education and healthcare.</p> Signup and view all the answers

<p>Per capita income assists policymakers and economists in assessing standard of living, comparing living standards across countries, and making international economic comparisons.</p> Signup and view all the answers

<p>India's per capita income is relatively low compared to other countries, but it is expected to rise significantly due to rapid economic growth.</p> Signup and view all the answers

<p>Monitoring changes in per capita income is important to assess economic prosperity, wealth distribution, and the standard of living over time.</p> Signup and view all the answers

<p>Rising worker productivity contributes to per capita income growth by increasing the total output produced by each worker, thereby boosting overall income.</p> Signup and view all the answers