Fundamentals of Economics, Microeconomics and Macroeconomics and Types of Economies: Caiib Paper 1 (Module A), Unit 1
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So, here we are providing “Unit 1: Fundamentals of Economics, Microeconomics and Macroeconomics and Types of Economies” of “Module A: Economic Analysis” from “Paper 1: Advanced Bank Management (ABM)”.
The Article is Caiib Economic Analysi Unit 1: Fundamentals of Economics, Microeconomics and Macroeconomics and Types of Economies
Economics
Economics deal with thee production, allocation and use of goods and services.
Adam Smith’s (Father of Modern Economics)
- An Enquiry into the Nature and causes of the wealth of Nations (in 1776).
- Define Economics as “study of wealth” also known as Wealth Definition.
Marshall’s Definition: (Known as Welfare Definition)
- By Prof. Alfred Marshall.
- “Economics is study of mankind in the ordinary business life.”
- More important given to Study of Man.
Robbins Definition: (Known as Scarcity Definition)
- “Economics is the science which studies human behaviour as a relationship between end and scarce means which have alternative uses.”
- By Lionel Robbins.
- Economics= Study of means and ends.
Analysis of Definition :
- Man has unlimited wants.
- The means to satisfy human wants are limited.
- Resources are not only limited but have alternative use.
- Man has to make choice.
Microeconomics Vs Macroeconomics
| Microeconomics | Macroeconomics |
| Concerned with the behaviours of Individual entities such as Markets, Firm and Households. | Concerned with the overall Performance of the Economy. |
| It studies “how households and firms make decision to allocate limited resources, typically in markets where goods or services are being bought and sold. | It study aggregated indication such as GDP, Unemployment rates and price indices to understand “how the whole economy function.” |
| Microeconomics analyses the market behaviour of individual consumers and firms in an attempt to understand the decision making process of firms and household. | It deals with performance, Structure and behaviour of national or regional economy as whole. |
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