Notes-Class 9-Geography-Chapter-8-Introduction to Economics-Maharashtra Board

Introduction to Economics

Maharashtra Board-Class 9-Geography-Chapter-8

Notes

Topics to be Learn :

  • Introduction
  • Understanding of Economics
  • Definition and scope of economics
  • Types of Economy
  • Functions of an Economy
  • Globalisation of economy

Introduction :

  • Management of individual or family finances is mainly related to income and expenditure i.e. economic factors. This led to the birth of economics.
  • The word ‘economics’ comes from the Greek word ‘oikonomia’ which means ‘family management’.
  • There is a lot of similarity between family management and economics.

Understanding of Economics :

  • We learn from economics, how to use time, money, labour and land efficiently.
  • Economics is an important social science. We use economics in agriculture, trade, finance, administration, law and in our day-to-day life.
  • Economics is of paramount importance in the process of social development.
  • How to satisfy the infinite needs of the people using various resources is the study matter of economics.

Definition and scope of economics :

Definition and scope of economics :

  • Adam Smith is known as the father of economics. In his book, ‘Wealth of Nations’, published in 1776, he has defined economics as ‘the science of wealth’.
  • According to Lionel Robbins, ‘Economics is a science which studies human behaviour as a relationship between unlimited ends (wants) and scarce means which have alternative uses.
  • As per management of the finances in family, economic management is a need for, villages/cities, states, countries and world also.

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Economy:

In geographical terms, economy is an enterprise related to the production, distribution and consumption of goods and services in a specific region.

Factors affecting an economy:

Following are the main components of economy.

  • Geographical area, with well-defined boundaries
  • Population, i.e. the people living within that geographical area and undertaking various economic activities.
  • Natural resources to undertake economic activities.
  • Political sovereignty that exercises control over the economy.

Types of Economy :

Types of Economy :

On a global level, there are three types of economies.

(i) Capitalist economy :

  • The ownership and control of means of production is in the hands of the private individuals in the capitalist economy.
  • There is no control of the government over economic activities in their ‘Free Market Economy’.
  • The main aim is to earn maximum profit.
  • Capitalist economy exists in Germany, Japan and the USA.

 (ii) Socialist economy :

  • In the quest to earn maximum profit the capitalists ignored social Welfare.
  • As a reaction to this, the socialist economy emerged.
  • There is no private ownership of means of production as these belong to the society as a whole.
  • There is total control of the State over economy.
  • The objective of the economic activities is fulfilment of social needs (social welfare).
  • Socialist economy exists in Russia and China.

(iii) Mixed economy :

  • There is co-existence of private and public sectors.
  • A balance between profit and social welfare is obtained.
  • India, Sweden, and the UK have Mixed economy.

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Functions of an Economy :

Every country has a different economy but the main functions of the economy are similar for the all countries.

Some of the main functions of the economy are as follows :

  • To decide the product and quantity of its production.
  • To decide for whom the goods will be produced.
  • To minimise the production costs as much as possible.
  • To distribute national income to achieve social and economic justice.
  • To make appropriate provisions for the economic needs of the future generations.
  • Thus, an economy strives to create a balance between limited resources and unlimited needs.

Globalisation of economy :

Globalisation of economy :

  • The recent economic policies of the Government of India are taking the economy towards globalisation.
  • Globalisation means aligning the country's economy with the world economy.
  • There is free trade and all restrictions on foreign direct investments are set aside.
  • There is free flow of natural resources, profit, services, capital, labour and technology across the world.
  • The endeavour is to establish a borderless economy.
  • The recent economic policies of the government are leading the economy towards globalization -world economy.

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