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Gaurav Seth 6 years, 7 months ago
An economy is generally classified into the following four sectors:
(i) Household sector It engaged in the consumption of goods and services.
(ii) Producing sector It engaged in the production of goods and services.
(iii) Government sector It engaged in such activities which are related to taxation and subsidies as well as consumption and production.
(iv) Rest of the world It engaged in exports and imports.
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Yogita Ingle 6 years, 7 months ago
- Inflation is basically a rise in prices.
- A more exact definition of inflation is a situation of a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise.
- Inflation leads to a decline in the value of money. “Inflation means that your money won’t buy as much today as you could yesterday.”
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Yogita Ingle 6 years, 7 months ago
Gross Domestic Product (GDP) is essentially an indicator of aggregate economic activity. In addition to that it is also frequently used to describe social welfare. The idea behind this is that GDP tends to correlate with consumption, which in turn is commonly used as a proxy for welfare. In other words, the more people consume, the happier they are supposed to be.
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Yogita Ingle 6 years, 7 months ago
(i) At the time of independence, there were two i aspects of the Indian economy. The Britishers introduced a new type of hand tenure system in India which gave birth to two classes- zamindars or landlords and landless tenants or cultivators.
(ii) The landlords were very cruel to the cultivators. They used to charge very high rate i of rent and land revenue. That’s why feudal relations (landlord-tenant relations) appeared in this system.
(iii) In the middle of 19th century, capital investment was made in many new sectors like cotton textile, jute, sugar, tea, rubber and coffee plantation, etc. This created two classes- ; capitalists and labourers. So, at the time of independence, features of both (feudal and capitalist) appeared in this system
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Yogita Ingle 6 years, 7 months ago
Causes of shift. Following are two main reasons for rightward shift of PP curve :
(i) When resources of an economy increase. It may be in the form of discovery of new natural resources, availability of new machinery through saving and investment, and increase in skilled and unskilled labour through population growth. As a result more of two goods can be produced causing rightward shift of PPC.
(ii) When there is improvement in technology. It happens as a result of work of scientists, engineers and inventors over a long period. Then more of two goods can be produced with the given amount of resources causing shift of PPC to the right.
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Yogita Ingle 6 years, 7 months ago
Mc curve is U shape due to operation of law of variable proportion according to which MP first rises, reaches its maximum and then declines. Since increasing returns means diminishing cost and diminishing returns imply increasing cost, therefore, MC first falls because of increasing returns, reaches its minimum and then rises due to operation of diminishing returns. As a result MC curve becomes U-shaped.

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Tulsi Kumar 6 years, 7 months ago
1Thank You