Mix Information

Analysis against Foreign Aid

2010-03-18T05:58:00.000-07:00

Increases Debt Burden:

Foreign aid increases the debt burden on the economy. With more debt, a country is not viewed stable by the external world. Moreover, it increases the risk of default.

Increases Corruption:

In a developing country, if the government is not honest, then there is extreme possibility of corruption and wastage of resources. Corruption in foreign aid worsens the situation for any developing country which is already in need of finance.

Increases Inflation:

To retire debt and to pay interest on debt, the government increases money supply which increases inflation in the economy.

Increases Non-Development Expenditure:

The expenditure on retiring debt and paying interest on debt come under the bracket of non-development expenditure. A high non-development expenditure leaves little for expenditure on development.

Political Dependency:

A borrowing country will not only be indebted with money but also with political favors which it is supposed to provide for the loan providing country. Therefore, the foreign policy of a country remains in the hand of those loan providers and we remain at the mercy of their intentions.

Increases Stagnation:

Foreign aid increases stagnation. It decreases the desire and motivation to become independent. If a country becomes addicted to the foreign air, then it is very likely that in the long run, it will become dependent.

Idle Resources

2010-03-14T11:38:00.000-07:00

Most of Countries has a lot of idle resources which are mot utilized for various reasons. With no water available in certain lands, they remain un utilized. Disputed lands also remain un utilized. Natural resources can't be extracted due to lack of advance technology. Due to unemployment, human resources remain un utilized.

Contract Of Affreightment

2010-03-14T11:30:00.000-07:00

A contract of carriage of goods by sea is called as contract of affreightment. It is a contract by which a shipowner under takes to carry the goods of another in consideration of a price called "Freight". A contract of affreighment may take the form of charter party; or a bill of lading. The rights and liabilities of powers to such a contract are ground by the carriage of goods by Sea Act 1995 and the Bill of Lading Act 1856.

To Achieve Balanced Growth

2010-03-13T13:32:00.000-08:00

Pakistan is historically an agricultural country. About 50% of the population is connected with agriculture. Historically, agriculture sector has had a dominant share in GDP. One major objective of economic planning is to achieve balanced growth in the economy by achieving growth in all sectors of the economy.

Money is a Store of Value

2010-03-13T13:29:00.000-08:00

Money is a medium of exchange as well as a store of value. People not only demanded money to buy, they also demand money to save. In other words, all money is not used as a medium of exchange, some is also used as a store of value. While money is used with two different characteristics, it can never bring an exact proportional effect on prices.

Inefficient Debt Management

2010-03-13T13:24:00.000-08:00

Debt Management is one of the most important function in the banking industry. But, in nationalized banks, there was no set criterion and mechanism through which loan was granted. This led to a huge increase in bad debt in the loan portfolio of these banks.

Consumers Suffers:
Consumers suffer from the hands of public sector monopoly. They don't have choices and substitutes and they have to remain satisfied with whatever quality they are provided and whatever price they are charged with against goods and services.

Insecurity of Job

2010-03-08T12:30:00.000-08:00

Employees always live under the fear that they can be fired anytime. They have no security to the tenure of job. Moreover, with the recent privatization policy, employees are having a lot of uncertainties going into their minds.

Expenditure of PSDP

2010-03-08T12:28:00.000-08:00

PSDP stands for Public Sector Development Program. Under this program, government allocates about 20% to 25% of the budget to PSDP for improving infrastructure, rural development, more health facilities etc.

Foster Competition

2010-03-08T12:26:00.001-08:00

Privatization is undertaken with an objective to increase competition by giving private sector an equal opportunity to compete with due the public sector. This will reduce the monopoly power that rests with public sector units.

Increase in Oil Prices

2010-03-08T12:23:00.000-08:00

The recent oil shock which saw oil prices touching $70 per barrel has put a huge pressure on the imports. The value of imports has rapidly increased due to increase in oil prices. This has created adverse balance of payment situation for the country.

Resistance to Change

2010-03-04T08:37:00.000-08:00

Unions always resists change whether it is good or bad change. It hs become a culture to appose everything without making an appropriate evaluation of the process. It an employer wants to introduce any technological advancement in the production process. the union members will always see it as n indication of forthcoming downsizing.

Easy to Manage and Administer

2010-03-04T08:33:00.000-08:00

Cottage and small scale industries are short in size. They are easy to manage due to the following reasons:

Not many people are involved.
Not a very large premise of work.
People involved are usually trusted friends or family members.

Collective Bargaining

2010-03-04T08:29:00.000-08:00

Government made it necessary that every factory must have a trade union which elects a CBA (Collective Bargaining Agent). Collective Bargaining Agent puts forward the stand and concerns of workers to the employers and it tries ti bridge the communication gap between employer and workers. The presence of CBA enables workers to have their say.

Providing Microfinance

2010-03-04T08:27:00.000-08:00

Government is also providing micro finance facility to farmers and low income group so that can earn their livelihood respectably. Micro finance schemes are very popular around the world and it is hoped it will prove useful in poor countries is well.

Low Efficiency Level

2010-03-04T08:18:00.000-08:00

Efficiency levels in nationalized industries is very low. it is a repeatedly proven fact that we take less interest in any activity in which we have no stake than in activities in which we have a stake. The employees in the public sector units have no stake in the affairs of the business and hence their efficiency level is very low. Privatization promises to increase the efficiency level automatically because the management will have a stake in the business.

Lack of Communication

2010-03-04T08:16:00.001-08:00

Farmers living in the villages and less privileged areas have very little knowledge of the level of demand in the market for a particular product at a given time. Therefore, if they bring in more quantity of a good than what is demanded, they will have to sell at a lower price because of the perishable nature of agriculture goods.

Reduces Inequality of Income

2010-03-04T08:15:00.001-08:00

In a developing economy, even the government has insufficient resources. Therefore, any change in the economic redistribution of resources can only be made through more production. Foreign aid facilitates a developing economy to increase its production and reduce income inequality.

Providing Industrial Finance

2010-03-03T08:49:00.000-08:00

In establishing any industry, one needs a huge amount of finance. Large industrialist can get finance for establishing another industry, but a middle class person will find it very difficult to acquire a loan for establishing a small industry. Therefore, government has to make sure that every prospective industrialist foes not fail to establish an industry due to lack of finance.

Population Growth and labor force

2010-03-03T08:46:00.000-08:00

If the rate of population of growth and the growth in labor force is equal or is close to equal, then population growth is not much of a problem. This will suggest that dependent population is not very high and the number of people willing and capable of work are also increasing.

Dispute Over Land

2010-03-03T08:37:00.000-08:00

There are a lot of dispute over land in the rural areas due to which the ownership of the land remains undecided. During the dispute, the land remains un utilized and it is complete waste of land resource. Moreover, dispute also arise between the heirs for the just distribution of inheritance.

Improve supply chain Cycle

2010-03-03T06:43:00.000-08:00

Due to use in technology, various processes are expedited and thge amount of time used in a particular activity decrease. Moreover, the work is not stuck somewhere if there is a problem in natural conditions. For example, if there is not tain in a given season, water from other fields and areas can be brought in through tube wells.

Steps to Increase Capital Formation

2010-03-02T11:50:00.000-08:00

Following steps are suggested for expediting the process of capital formation in Country.

Developing Capital Market
Increasing people's trust in capital markets.
High imports duty on luxurious items
Offering high rate of return on saving schemes
Increasing FDI in Country
Utilization the labor in productive activities
Increasing high rates of return on money market instruments.

Involuntary Savings

2010-03-02T09:57:00.000-08:00

Involuntary are savings affected indirectly by the actions of the government. If government increase the rate on saving schemes, it will increase the involuntary savings. If the government increases the GS or other taxes on luxurious goods, it will decrease their consumption and increase savings.

Food Provision

2010-03-02T09:53:00.000-08:00

We, being the agricultural country, are compelled to import food gains from other countries. The countries from where we import food gains exploit our weakness. If agricultural sector develops, Pakistan and India can be sufficient in food supply and we would be free economic slavery of other developed countries.

Supplier or Labor

2010-03-02T09:48:00.000-08:00

Agriculture sector supplies the labor also to the different sectors of the economy because the dominant portion of the total population is settled in the rural areas. Since the agriculture sector is not capable to absorb the available total supply of workers therefore it faces problem of unemployment. The problem of over population can be controlled by transferring this surplus labor of rural areas can be transferred to the manufacturing sector. The transfer of surplus labor would also cater the need of labor in the industrial sector.

Low Employment Generation

2010-03-01T04:53:00.000-08:00

Since nationalized economy doesn't allow private sector to come and compete, the level of employment doesn't increase much. With the increase in capital investment through privatization more and more industries will be set up and this will definitely increase the level of employment in country.

Increase in Velocity of Money is Ignored

2010-03-01T04:50:00.000-08:00

This theory ignores any increase in velocity of money altogether. If velocity of money in circulation is 5 and quantity of money is 100. It means that 100 Rupees change 5 hands and 100 Rupees creates 500 Rupees worth of transactions in the economy. Now, if quantity of money increase to 200, both the velocity and amount of money transactions should increase.

Income Effect on Price

2010-03-01T04:46:00.000-08:00

Price Increase due to a lot of factors. It doesn't only increase with the increase in quantity of money. In the time of great depression in America, people had low incomes. The increase in quantity of money didn't increase prices because of the low income of the people. Therefore, prices are also affected with the level of incomes because it determines the purchasing power of people.

Increase In disparity Between Rich and Poor Countries

2010-03-01T04:43:00.000-08:00

International trade widens the gap between rich and poor countries. Poor countries merely become markets for the products of rich countries. Poor countries export very little and have to import more goods than very export. Therefore, they almost always face adverse balance of payments.

Comparative Loss

2010-03-01T04:39:00.000-08:00

Comparative advantage rests with developed and industrial countries who are usually rich in resources. Rich countries have access to technology and adept labor which can produce a good cheaper than people working on old methods in developing counties. This furthers the difference between rich and poor countries.

Provides Industrial Inputs

2010-02-28T11:45:00.001-08:00

Agriculture sector provides inputs for industrial production. A piece of cloth made in a textile industry will not be produced until cotton is not grown and is available for production. Increase in agriculture production will make available necessary inputs for industrial production.

Increases Productivity Gains

2010-02-28T11:32:00.000-08:00

If agriculture production grows, the cost of raw materials will decrease and their quantity demanded will increase. Industrialists will take advantage of the economical raw material to produce on a large scale. This large scale production will decrease the unit cost of production and increase the efficiency of industry. Therefore, for large scale industrial production, it is necessary that agriculture sector must also grow.

Market for Industrial Production

2010-02-28T11:28:00.001-08:00

Industrial production includes a lot of products which are consumed by the agriculture sector. Fertilizer, tractor, chemicals are industrial products which are used by agriculture sector. Therefore, if agriculture production will grow, there will be more demand for tractors, fertilizers and chemicals and hence industrial production will also grow. This will benefit both the sectors.

Budget

2010-02-28T11:22:00.001-08:00

Budget is a document which summarize the revenues and expenditures of the past year and sets targets for the next year and gives a detailed plan for achieving the targets. It also gives detail from which sources the revenue will come and what will be the respective heads of the expenditure both the current and non-current expenditure. It also gives detail to the sources of funds from which the deficit would be finance.

Population Growth and Labor Force

2010-02-27T06:37:00.000-08:00

If the rate of population of growth and the growth in labor force is equal or is close then population growth is not much of a problem. This will suggest that dependent population is not very high and the number of people willing and capable of work is also increasing.

Population Growth and Resources

2010-02-27T06:32:00.000-08:00

If population growth is high and resources are also expanding, then population growth is not a problem. If a country is experiencing expansion and boom in the economy, it needs more labor to fuel its growth. Therefore, population growth is not a problem in the periods of expansion in the economy.

Poor Health And Education Facilities

2010-02-27T06:24:00.000-08:00

Most of the country in world globe, the health facilities are very poor.Child death rate is very high. There is one doctor for 1500 people. In rural areas, there are few dispensaries and maternity homes. Similarly, education facilities are also very poor. There are thousands of ghost schools and there are villages in which there is no school at all. It has not hard to imagine why the literacy rate is as low as 35%.

Importance of Households

2010-02-27T06:04:00.000-08:00

The life has eased out state of the art the electronic items. Development in electronics has made a luxury of yesterday a comfort of today. With the advancement in technology, electronic products have matured in quality and their cost has decreased. Now even a middle class family can have access to computer, microwave over, refrigerator etc. All of these products are run on power resources.

Dispute Over Land

2010-02-27T06:00:00.000-08:00

There are a lot of dispute over land in the rural areas due to which the ownership of the land remains undecided. During the dispute, the land remains utilized and it is complete waste of land resources. Moreover, dispute also arise between the heirs for the just distribution of inheritance.

Change In Reserve Ratio

2010-02-27T05:43:00.001-08:00

Every schedule bank has to put in reserve a certain ratio of the deposit with a central bank. This is called the required reserve ratio. If the government increases this ratio, banks will have less money to give on credit due to which money supply decreases. Conversely, if the government decreases this ratio, banks will have more money to give on credit due to which money supply increase.

Save Now

Lack of Communication

2010-02-25T08:54:00.000-08:00

Farmer living in the villages and less privileged areas have very little knowledge of the level of demand in the market for a particular product at a given time. Therefore, if they bring in more quantity of a good than what is demanded, they will have to sell at alower price because of the perishable nature of agricultural goods.

Reducing Excessive Documentation

2010-02-25T08:23:00.000-08:00

There is a lot of documentation involved when one wants to establish an industry. An investor has to pay bribery at various instances for the people in charge of documentation. This discourages an investor and new incumbents. Therefore, Government has to make this process simpler and more industrial friendlier and provide one window operation to the industrialists.

Low Quality Products

2010-02-25T08:19:00.000-08:00

With the dearth in finance, people in cottage industries find it very difficult to make quality products in the available finance they have. Moreover they lack of ability to produce high quality products. They usually produce things manually or by using traditional machines which does not bring in the same quality than giant competitors.

Contract of Affreightment

2010-02-25T08:15:00.000-08:00

Lay Days and demurrage

2010-02-25T08:09:00.000-08:00

Lay days are a certain number of days allowed by the charter party to the character for the purpose of loading and unloading the cargo. The lay days begin to run from the time that the the character has received notice of the ship's arrival at the stated port and her readiness to load and unload. These days may be either Running Days, in which case they are counted from mid-night to mid night including any intervening holidays or working days, which are the days on which the work is normally done i.e excluding holidays. It is essential that the moves of loading and unloading must be completed within the stipulated lay days and where no time is fixed then the work must be completed within the reasonable time, regard being had to the existing circumstances and the custom of the port.

Resistance to Change

2010-02-24T13:28:00.000-08:00

Unions always resist change whether it is good or bad change. It has become a culture to oppose everything without making an approprite evaluation of the process. If an empolyer wants to introduce any technological advancement in the production process, the union members will always see it as an indication of forthcoming downsizing.

Efficient Utilization of Savings

2010-02-23T05:31:00.000-08:00

The rate of saving is low with respect to the rate of investment. Moreover, this low saving goes to stock market and real estate which are unproductive sectors. Therefore, savings are not utilized to their best use. With the growth industrial sector and reforms and measure to facilitate industrilists, more and more money will come into industries and savings will be utilized for productive use.

Total Disablement

2010-02-23T05:12:00.000-08:00

Total Disablement means such disablements, whether of a temporary or permanent nature, as in capacities a workmen for all work which he has capable of performaing at the time ofaccident resultinh in such disablement. Provided that permanent total disablement shall be deemed to result from every injury specified in part of Table or form any combination of injuries.

Partial Disablement

2010-02-23T05:04:00.000-08:00

Partial Disablement means, where the disablement is of a temporary nature, such disablement as reduces his earning capacity in any employment in which he was engaged at the time of the accident resulting in the disablement as reduces his earning capacity in every employement which he has capable of under taking at that time.

Partial Disablement may be of two types:-

Temporary Partial Disablement
Permanent Partial Disablement

Monopsony

2010-02-23T04:56:00.000-08:00

Monopsony means "monopoly of buyers". If farmers bring in more quantity of a good than what is demanded, they have to settle for alower price because of the perishable nature of agricultural products. This creates a lot of frustation and disappoinment to the farmer who worked day in and day out to produce a particular good and than gets less than what he deserves.

Reducing Poverty

2010-02-23T04:53:00.000-08:00

Many of the countries, more than 30% people live below the line of poverty. The poor people find difficulty in survival. Moreover, they lack in education and generally never beocme capable of doing anything which can improve their economic conditions. Therefore, the vicious circle of poverty passes to generations after generations. For economic development, poverty reduction is a basic prerequisite.

Organization

2010-02-22T12:53:00.000-08:00

Organizations are the inventive social arrangements of our age and of civilization. It is a marvel to know that ten of thousand of people with highly individualized backgrounds, skill and interest are coordinated in various enterprises to pursue common instituionalized goals.

Legal Environment of Business

2010-02-22T12:44:00.000-08:00

Every Business is surrounding by somemakes regulations and correct decisions. Some regulations are framed to help the determination of limitation of business. It is decided as to what can be done under it and what not. Some makes are the benefits of workers and customers, while some others are for the safeguards of business or trade agreements. Thus business regulations appear necessary for smooth running of business.

Price Mechanism and Government Directive

2010-02-22T12:38:00.000-08:00

The allocation of economic resouces different industries and trading in the private sector is allowed to be made through in the private sector is allowed to be made through the operation of the price mechanism. All decision regarding investment, output , and policies are allowed to be made by the price mechanism so for as the private sector is concerned.

So far as public sector concerned, all decisions with regard to investment, output and pricing, etc, are made by the control economic authority or the planning commsion which is invested with full powers to manage, control and run production within the public sector.

Investment Banking

2010-02-22T12:31:00.000-08:00

This is highly specialized work to deal in investment and the poor investor lack knowledge usually are guided investment banking in this field. They specialized in the marketing of new issues of stock and bonds. They sell these stocks and bonds to general public or institution. Usually investment banks underwrite a coporations's new security issues. They in the capacity of securities and bonds guarantee the sale of the company's securities and deliver a cheque to it for these new securities. They make their profit by charging a commission. The securities of investment banks are useful not only to the company or the promoters but also to the investors.

Piece Rate Wage System

2010-02-22T12:22:00.000-08:00

Piece wages method may be individual piece wage method or group piece work method. The former is particularly applicable ro repetitive work and the work due by each man can be wasily measured, operations performed by individuals and products/ standard by them can easily be inspected, counted and credited after each operations

Advantages:

The division of daily wage by the average daily production for ascertaining the cost per unit is a simple matter.
Varying efficiency of the worker is recognized. The efficient workers get more wgaes as compared with their less efficient fellow workers.
The workers are encourged to exert their best energies of work that they can turn out.

Disadvantages:

When the employer thinks the workers are earning too much, the rates arbitrarily cut.
This system is else regarded as a method of speeding up work without adequate remunerations.
The hard work may lead to a reduction of the amount of available employment.

Routine Procedure

2010-02-19T05:44:00.000-08:00

Computers perform all routine work more quickly than experienced clerks. They prepare pay rolls, keep track of inventories, bill customers. Computers must be supervised otherwise they will make the same mistakes over and over unless they are given the correct instructions. The computer cal also store and up to date an employee's personal file, catalog his promotions and job transfers and even keep track of the the he has clocked in late.

Accounting and Billing

2010-02-19T05:29:00.000-08:00

Computer easily accurately and quickly records all transactions and prepare all sorts of sales accounts, bills and invoices. It can address the envelops and send reminders when payments is delayed. The computer can also name the items sold and dispatched, this information to the warehouse. In retail stores, the cash register tape is the first step at a unified composition controlled system. The cash register tape is fed into a memory input which not only records the amount of sale and tax connected, but kept track of inventory and send orders for replacement.

Routing

2010-02-19T05:24:00.000-08:00

Routing may be defined as the selecting of routes over which each pile is to travel in transformed from raw material to the finished products. The object of routing is to determine the best and cheapest sequence of operations and to ensure that this sequence is followed. Foremen or engineers in advance factional production, how work is to be processed and which machines are to be used. It may be noted that routing is automatic in continuous industries.

Planning

2010-02-19T05:21:00.000-08:00

This is the first step of production management. Productions is planned according to the regular and casual demands of the product. When an order from customers is received, the production manager breaks it down into a complete list of necessary material and processes to manager compare the list of requirements with the machinery in any department is made good and production is about to begin.

Guidance of Poloticians

2010-02-19T05:16:00.000-08:00

Economics is called "Political Economy" also because Economics and politics are closely related. Political decisions influence economics while Economic decision influence political attitude. Study of economics enables a political to understand the economic problems of the people and to adopt the right policies to solve them. A successful and good politician is a good economist also.

Understanding the Other Subjects

2010-02-19T05:13:00.000-08:00

Since economics is a social science therefore it has link with other subjects being studied in the society like history, geography, psychology, mathematics etc. When the comparative study of economics is launched, we come to know about subjects also.
Practical Importance:
Studying economics is advantageous theoretically only but is commands practical importance.

Reasoning Power

2010-02-19T05:10:00.000-08:00

Study of economics develops reasoning power because this study creates the quality of crating relationship between the cause and effect. Whenever he says anything, it is supported by convincing reasons. If any statement is made supported by reason, it can't be refuse to accept.

Synchronization With Economic Situation

2010-02-19T05:07:00.001-08:00

The modern society keeps every now and then, if we do not study, we would not be capable to adjust over selves with the rapidly changing conditions. For synchronization with the economic situations, it is necessary that we must be aware about inflation, balance of payment, unemployment, tax system, agriculture, industry, Fiscal Policy etc.

Thrifting Attitude

2010-02-19T05:04:00.000-08:00

Through the study of theory of consumption, it is revealed that how one can increase in his individual satisfaction? In other words, it depends on austerity which increase savings and saving is the basic condition for investment and economic development.

Widening Mental Spectrum

2010-02-19T05:01:00.000-08:00

The man, with the help of economic study, can understand the economic realities of life like what is relationship between savings and investments , what meant by price level and how fare this concept near to the reality, what advantages can be cultivated by promoting exports and restricting imports etc. The understanding of these topic widens the mental horizon and reasoning power.

Sense of Responsibility

2010-02-19T04:59:00.001-08:00

Study of economics creates the sense of responsibility towards the society. The society needs goods and services therefore, economic study creates the sense that how to synchronize the human activities with the material resources so that the consumption need of the society can be fulfilled.

Importance for Bureaucrats

2010-02-19T04:55:00.000-08:00

The basic problem of the under developed countries is that the head ship of economic institutions is assigned to those who does not know 'e' of economics. Consequently, their departments do not work properly due to which economic development and growth retards. The study of economics for the Government Officers, therefore, is of paramount importance.

Solution of Economic Problem

2010-02-19T04:51:00.000-08:00

We are fully aware of that the economy of every country has been facing many economic problem like inflation, industrial backwardness, general poverty, foreign indebtedness, adverse balance of payments etc. The study of Applied Economics highlights the causes of these problems and suggests remedial measures to the Government of every country.

How to Create Awarness in Citizens and Voters

2010-02-19T04:46:00.000-08:00

Studying national income makes us better and well informed citizens. If the national income increases, Government gas more money to spend. Therefore, we can demand higher wages, Studying national income help us evaluate the performance of the Government and we can hold Government responsible if the promised growth and its benefits are not transferred at the micro level to the lower and middle class citizens.

Theory of National Income And Employment

2010-02-19T04:43:00.000-08:00

The aspects of the economy of this reference discussed under Macro-economics includes the determinants of national income and the determinants of the determinants of equilibrium level of national income and employment etc. The alternate name of this theory, In fact, is the Macro-economics.

Theory of International Trade

2010-02-19T04:41:00.000-08:00

Under Macro-economics that foreign trade position of a country analyzed in the sense what are the exports and imports of a country, what is the position of Balance of Payment and Balance of Trade etc.

Theory of Trade Cycle

2010-02-19T04:38:00.000-08:00

Trade Cycles refer to the fluctuations in the level of national income. National income fluctuates from time to time. In other words, some time the economy is in the grip of boom but next time in the grip of slump. It is analyzed under Macro-economics that what is the nature, causes and effects of Trade Cycle.

Political Stability

2010-02-19T04:33:00.000-08:00

If a country is not stable politically, the dream of economic development can't be culminated into reality, because if the Government makes a plant of development to be completed in 5 years but it is forced to leave power just after 2 years of assumption of power, whatever investment has been made in two years, would be wasted because the new Government would implement its own policy abandoning the old plan. The Government can succeed in implementing the programmed which satisfy the people and the Government can complete its tenure. Economic stability, therefore, is necessary for political stability which is possible through the study of economics only.

Planning of Development

2010-02-19T04:29:00.000-08:00

The developing countries of the world do face the shortage of resources but they also allocate resources wrongly making the problem more serious. One of the important and modern branch of economics is Economics of Development which reveals that in which sectors the scare resources would be preferred to allocated so that maximum advantage can be cultivated. Economic Planning, therefore, is common in all countries.

Maximum Use of the Resources

2010-02-19T04:25:00.000-08:00

Every country faces the problem of scarcity of resources therefore, leaving the known resources unexploited means nothing but the waste of resources. The resources lie idle in the developing countries due to which they remain under developed. The study of Economics of Development and Growth teaches that how to acquire maximum benefit from the available resources. Maximum utilization of resources guarantees the improvement in the living standard of the masses.

Sources of Illegal Income

2010-02-19T04:21:00.000-08:00

Illegal Sources of income in a country includes income from Smuggling, hoarding, bribery, Prostitution, black marketing etc, because they are not earned incomes, when we compute the national income of a country, these incomes are excluded from the computation. Economic study, therefore, encourages the earning from these illegal sources.

Changes In Social Values

2010-02-19T04:14:00.000-08:00

The people of underdeveloped countries are the followers of orthodox lines of action. They follow the superfluous customers and traditions which cause the waste of scare and precious resources. They consume lavishly on the occasions of various festivals, marriages and deaths. Waste of resources keeps the economy backward and retard economic development. Study of economics reveals that which expenditure is necessary and which is unnecessary. Avoiding unnecessary expenditure may be the guarantee of economic success and development. Economic study, in this way, changes the social values.

Centralized Economy

2010-02-19T04:10:00.000-08:00

All the decision making authority rests with the Government. No one else is given the authority to make the economic decision even for oneself. Everyone has to follow the commands of the Government and everyone is treated like an employee of the Government.

Planned Economy

2010-02-19T04:08:00.000-08:00

The Government in its own wisdom solves the central problems of the economy. Decision like what to produce? How to Produce? When to Produce? For whom to Produce? and how much to produce? are all taken by the Government. All the economic planning and policy making rests with the Government.

Significance of Businessmen

2010-02-18T11:29:00.000-08:00

A businessmen or the producer can't earn maximum profit so long he knows the art of optimum combination of the factors of production. Similarly, he should know the adjustment of supply with the market demand, should know the causes of boom and slumps in the business, should have knowledge about the import and export policies of the Government. The same are the secrets of business success which are exposed by the study of economics.

Distribution of Wealth

2010-02-18T11:24:00.000-08:00

The economies which are working on Capitalistic or Free Enterprise System, have the serve problem of inequitable distribution of wealth. The rich, in these economies, are very rich while the poor are extremely poor. Minority if rich over the majority of poor. Consequently, the society is bifurcated into two classes, rich and poor, due to which class conflict creates clashes destroying the whole of economic structure. The study of science of Public Finance teaches how to transfer wealth from rich to poor class making distribution of wealth equitable.

Micro Financing

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Most of the country is a developing country and it is also suffering from the chronic problem of poverty. if the poor people are provided with finance, they have enough motivation to become self-employed and start cottage industries. This will supplement the large scale industries and other sectors of the economy. The example of Bangladesh in using micro finance to solve unemployment and poverty is a recent example.

The Availability of Substitutes

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This is probably the most important factor influencing the elasticity of a good or service. In general, the more substitutes, the more elastic the demand will be. For example, if the price of a cup of coffee went up by $0.25, consumers could replace their morning caffeine with a cup of tea. This means that coffee is an elastic good because a raise in price will cause a large decrease in demand as consumers start buying more tea instead of coffee.

Marginal Rate of Subtitution

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A consumer tries ti maximize his utility by consuming a combination of goods as permitted by his income. For consuming more one good, he has to forgo some units of the other good. For example, if a customer can spend his income on ice cream and snacks. For consuming more snacks, the customer will have to forgo some ice cream.
Marginal rate of substitution captures the rate of substitution between goods from one point to another as the customer modifies his consumption pattern to maximize utility.

Deficit Financing

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Government is continually facing fiscal deficit, current account deficit and adverse balance of payment situation. To finance this, government borrows and pays interest. To finance this expenditure, government increase money supply and this creates inflation.

Change in Reserve Ratio

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Every schedule bank has to put in reserve a certain ratio of its deposits with the central bank. This is called the required reserve ratio. If the government increases this ratio, banks will have less money to give on credit due to which money supply decrease. Conversely, if the government decreases this ratio, banks will have more money to give on credit due to which money supply increases which causes inflation.

Concept of Reserve Price

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The buyers want to buy the good and services at the cheapest prices. The sellers want to sell their goods and services at the highest prices. The interaction of these forces in the market comes at equilibrium prices. Sometimes, in the market sellers get lower prices for goods and sometimes they get higher prices of their goods. The minimum price at which are willing to sell serve as a benchmark for them and is referred to as " Reserve Price". Therefore, reserve price is not the market price but is a price where sellers will not want to exhaust their supply. It is sometimes equal to market price and sometimes it is not equal to market price.

Promotion of Private Sector

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Even though the Government intervenes in the need of hour, it sill provides incentive to the private sector and a level playing field to compete with the public sector. In industries where public sector and private sector coexist, government let the market forces work and does not crowd out the private sector.

Public Sector and Social Objectives

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Usually the Public Sector is responsible to provide transport, communication, defense, currency management, utilities like telephone water, gas electricity etc. Government provides huge subsides to public enterprises so that these enterprises do not increase their prices to cover their losses. Government sometimes bears losses to avoid public displeasure in the form of inflation.

Optimum Factor Combination

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A producer always tries ti achieve largest volume of output from a given outlay on factors such that these factors are combined in an optimal or most efficient way. The producer maximizes his profits and produces a given level of output with at least cost combination of factors. This level of least cost combination of factors will be optimum for him.

Social and Psychological Factors

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Psychological factors and the nature of people also affect their consumption patterns. Due to the motive of precaution against future, people decrease the level of consumption in the present. Some people decrease their current consumption in a hope for a higher consumption in future. Some people decrease their current consumption because they have certain obligations to perform in the future which require money like performing some religious activities , marriage of their sons and daughters. Some people due to their generous nature consume all of their income in excess of personal consumption in the way of God.

Technical Economies

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Advancement in technology is the single most important tool to reduce cost of production and increase productivity. But, technological breakthroughs are achieved after extensive spending on research and development. A large scale producer can afford research and development spending and achieve increase in productivity.

Perfect Competition on Long Run

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In the long period, the firm reaches the equilibrium in the long period also when its marginal Cost becomes equal to marginal revenue. But in the long period, the firms marginal cost becomes equal to price and the price becomes equal to average cost. If the price is higher than normal profit due to which new firms would enter the industry. Entry of the new firms would increase the supply due to which price would decrease to average cost. In this way, so long even one firm is earning more than normal profit, the new firm would continue so much so profits of all the firms are converted into normal.

Imperfect Market

2010-02-18T10:07:00.000-08:00

the Imperfect Market could be defined as:
Imperfect Market is the situation of the market when a single buyer or seller or limited group of the buyers or sellers is capable to purchase or sale of a commodity in such a manner that it could influence the price of the market.

Kinds of Imperfect Market:

Duopoly
Oligopoly
Monopolistic Competition

Perfect Market

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Perfect Market or Perfect Competition is the kind of market which comes into being due to the competition. This is the market where the competition is perfect and perfect competition prevails due to the following reasons:

Unlimited Sellers
Unlimited Buyers
Single Commodity
Perfect Knowledge of the Market
Open Market
Mobile Factors
No Transport Cost
Rule of one price

Classification of Market

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A market is classified or given a particular name on the basis of following grounds:

On the basis of AREA like Local Market, national market or international market.
On the basis of Time like very short period market short period market, long period market or secular market.
On the basis of nature of Competition like competitive market or non competitive market.

The kind and nature of a market depends on the intensity of the competition prevailing in the market while the competition, in the broader sense, can be classified into two, Perfect Competition and imperfect Competition.

Time

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The third influential factor is time. If the price of cigarettes goes up $2 per pack, a smoker with very few available substitutes will most likely continue buying his or her daily cigarettes. This means that tobacco is inelastic because the change in price will not have a significant influence on the quantity demanded. However, if that smoker finds that he or she cannot afford to spend the extra $2 per day and begins to kick the habit over a period of time, the price elasticity of cigarettes for that consumer becomes elastic in the long run.

Monetary Economics

2010-02-18T06:23:00.000-08:00

Every economy, if the money supply is not according to the monetary needs of the country, may be the victims of problems of inflation or deflation. Inflation when money supply exceeds the demand for money and deflation would prevail on other wise situation. Money therefore, plays a crucial role. Demand and supply of money and the determination of the value are discussed under Macroeconomics.

Store Division

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Store Division keeps the record of goods available for sale on all the departments of the stores. If the goods fall short at any department, the store division is informed which provides the required supply. Every department sands its requisite to this division which is catered by this division. As a result of proper organization, available stock of the goods in any department does not go below a particular level.