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economics sba raj > 1 types of economy, rule of demand and supply > Flashcards

1 types of economy, rule of demand and supply Flashcards

1
Q

which economy supports equality, and which liberty

A

equality comm
liberty cap

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2
Q

which economy tends to incline more towards dictatorship

A

comm

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3
Q

in communism, resources are to be distributed equally, what is the difference in capitalism

A

in cap, they should be distributed on the basis of merit

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4
Q

what are the two classes communism divides

A

exploiter and exploited

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5
Q

religion is compared to what in communism

A

opium

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6
Q

who is the main thinker of communism

A

karl marx

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7
Q

what is the main book of karl marx

A

the communist menifesto

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8
Q

who is the main thinker of capitalism

A

adam smith

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9
Q

which book did adam smith write?

A

wealth of the nations in 1776

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10
Q

when did the communist revolution take place in russia

A

in 1917

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11
Q

when lenin died, who took the charge of the communist revolution in russia

A

stalin

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12
Q

when did the communist revolution took place in china

A

1 oct, 1949

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13
Q

when did the china accept the economic reforms

A

aka “reform and opening up” policy was in 1979

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14
Q

when did the communist revolution in cube take place

A

1959

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15
Q

who was the main leader of communist reform of cuba

A

fidel castro

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16
Q

what kind of economic model is used in india

A

mixed
capitalism+socialism

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17
Q

when did the indian economy move away from socialism to capitalism

A

1991 economic crises

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18
Q

what are the two economic forces in economy

A

demand and supply

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19
Q

which factors we see affected when there is an imbalance between demand and supply

A

prices
inflation
profit
investment
regular income
living standard

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20
Q

what happens to factors individually when demand is more than supply

A

prices
inflation
profit
investment
regular income
living standard

all increase

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21
Q

what happens to factors individually when supply is more than the demand

A

prices
inflation
profit
investment
regular income
living standard

all decrease

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22
Q

as we see when demand is more than supply, everything increases including the living standard. what happens when there is in excessive imbalance?

A

some inflation is necessary but if inflation increases excessively, then value of currency decreases and the currency system might collapse

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23
Q

when demand is more than supply for a long time, what is it called? what happens in it? what is the extreme version of it?

A

it is called recession
economy slows down, if this situation continues for a longer period, it is called depression

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24
Q

which market force sees an effort to increase it? what is it related to?

A

supply. as it is related to production, there is always an effort to increase it

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25
Q

what results in inflation

A

when there is a high demand, that means there is more currency in market, then it means the liquidity is high, it results in inflation

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26
Q

what does the RBI do to control inflation?

A

reduce liquidity through monetary policy

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27
Q

when is the fiscal policy used

A

when there is an economic recession, government increases expenditure so that demand could increase, for this, fiscal policy is used

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28
Q

what is the target of inflation in india

A

4%±2%

29
Q

what is the relation between prince and demand in the rule of demand

A

negative i.e. prices are high, demands reduces

30
Q

what is the relation between price and supply in the rule of supply

A

positive i.e. since prices are high, supply increases to make sellers and producers more profit

31
Q

which force indicates which view point

A

rule of demand in the view point of the consumer
rule of supply, producer

32
Q

what is the equilibrium price

A

at the point where the buyer and seller agree, this point determines the price

we see the supply and demand graphs intersect

33
Q

what are the factors affecting the demand. MAINS 2 marks

A

price
income
population
related goods (complementary and substitute)
choice of interest of consumer
future price expectation
government policies
advertisment

34
Q

what are complementary goods

A

goods which go together with other goods. bread and butter, peanut butter and jam, car tires and cars

35
Q

what are substitute goods

A

goods that can be used as a substitute to other goods. eg: if price of mutton increases, meat eaters would switch to chicken, if prices of taxi increases people would switch to ride sharing or public transport. if price of paper increases, people would substitute with online writing tools

36
Q

what are the types of demands

A

7 types
direct
indirect
individual
market
joint
competitive
composite

37
Q

what is direct demand

A

demand unrelated to any other products
like food and medicine or cars or clothings

38
Q

what is indirect demand

A

when demand changes of any product depending on another product
these are also known as intermediate goods
eg: if cars increase, demand for tires and fuel increase

39
Q

what is individual demand

A

a single consumer’s demand of a product or group of related products at a given price for a given period of time

40
Q

what is the importance of individual demand

A

how consumer makes decisions and how they respond to changes in price, income and availability of substitutes

41
Q

what is market demand

A

total demand of a good or service within a given market in given time

42
Q

what is joint demand

A

when 2 or more goods that go together
example bread and butter

43
Q

what is competitive demand

A

when a product, within a market characterised by many buyers and sellers, they have low influence as the price is mostly determined by supply and demand interaction

44
Q

what is composite demand

A

similar to indirect or joint demand, but of a composite nature, i.e. one thing dependent on more than one thing
eg steel is dependent on all the industries that use steel as a raw material like automobiles and infrastructure

45
Q

what are the factors affecting supply

A

price
future price expectations
availability of raw material
cost of production
means of transportation
climatic conditions/natural disasters
nature of goods
technology
government policies

46
Q

what are the types of supply

A

market
short term
long term
joint
composite

47
Q

what is market supply

A

supply of total quantity of particular good that is available for sale at a given price in a market

48
Q

in which type of supply it is easy to make changes to production to meet the demands

A

short term

harder in long term as it needs an overhaul and research

49
Q

what are the exceptions to rule of demand

A

essential goods, giffen goods and veblen goods

50
Q

how are essential goods an exception to rule of demand

A

essential goods such as life saving drugs, salt, water, grains etc do not see a major change with price as they are basic need of survival

51
Q

what are giffen goods

A

when the price of higher quality goods increase, then people demand low quality goods increase. due to this, even if the prices of giffen goods increase, their demands do not decline.

this has been disputed by many economists like alfred marshall

52
Q

what are veblen goods

A

goods which are associated with social prestige like fashionable goods or liquor products

53
Q

what kind of demand and price relation graph is exhibited by veblen goods

A

upward sloping positive

54
Q

in which book and by whom were veblen goods mentioned first

A

theory of leisure class by thorstein veblen in 1899

55
Q

who gave its name to giffen goods

A

robert giffen

56
Q

what are the exceptions to the rule of supply

A

competition
change in business
monopoly over market
if government has banned the good
natural disasters/calamities

57
Q

what is the factor cost of land

A

rent

58
Q

what is the factor cost of labour

A

wages

59
Q

what is the factor cost of capital

A

interest

60
Q

what is the factor cost of entrepreneurship

A

profit

61
Q

how is overall factor cost calculated

A

raw material+labour+capital

eg rent+wages+interest+profit

62
Q

how is market price calculated using factor cost

A

factor cost+indirect tax-subsidy

63
Q

which goods are in the primary sector of economy

A

goods which are related to natural resources eg agriculture, fishing, dairy, forestry

64
Q

which goods are in the secondary sector of economy

A

constructions and manufacturing eg motor vehicles, textile industries, furniture etc

65
Q

in india, mining is in which sector of economy

A

secondary

66
Q

which goods are in the tertiary sector of economy

A

services
eg hotel, tourism, telecommunication etc

67
Q

which goods are in the Quaternary sector of economy

A

knowledge based services like research and development

68
Q

which goods are in the quinary sector of economy

A

decision making services like bureaucracy and politics

69
Q

which sector has the maximum contribution in the indian economy

A

service

economics sba raj (2 decks)

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