Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 1 Introduction to Macro Economics Notes
→ Macroeconomics studies the behavior and performance of an economy as a whole.
→ It covers the functioning, performance and growth of an economy.
→ It examines the macro aspects such as employment, national income, inflation, business cycle, poverty, inequality, disparity, investment and saving, capital formation, infrastructure development, banking, public finance, international trade, balance of trade and balance of payments, exchange rate and economic growth.
→ Economic models based on economic variables are useful in understanding an economy.
→ Circular Flow Models provide a base to understand the functioning of a macro economy.
→ An economy could be classified on the basis of economic systems such as capitalistic economy, socialistic economy and mixed economy.
→ However, nowadays it is difficult to find 100 percent capitalist system, socialistic system or perfectly mixed economy.
→ Capitalism: The system where the means of production are privately owned and market determines the economic activities.
→ Circular Flow: It shows flows of income, goods and services and factors of production between economic agents such as firms, households, government and nations.
→ Economic Model: It is an explanation of how the economy, or part of the economy, works.
→ Economic System: The manner in which individuals and institutions are connected together to carry out economic activities in a particular area.
→ Flow: Variables measured over a period of time (Dynamic).
→ Globalism: An economic system where the economic activities of a nation are inter connected and inter dependent on each other nation.
→ Macroeconomics: The branch of economics that studies the behavior and performance of an economy as a whole.
→ Mixedism: An ideology that mixes or combines the principles of Capitalism (Private Role) and Socialism (Nation Role) in an economy.
→ Socialism: A way of organizing a society in which major economic activities are owned and controlled by the government rather than by individual people and companies.
→ Stock: A quantity of a commodity that is constant at a point of time (Static).