Class 12 CBSE Economics

3. Macroeconomics is a branch of economics that studies how an overall economy—the market
systems that operate on a large scale—behaves.
Macroeconomics studies economy-wide phenomena such as
•inflation
•price levels
•rate of economic growth
•national income
•gross domestic product (GDP)
•changes in unemployment
Ye economics ka voh part hai jo puri country ke paiso ke baare mein btata hai, or ye bhut
barhe scale pe chalti hai.
Ye itna barha hai ki ye desh ki in in chizo ke baare mein btata hai
•Mehngai
•Kisi chiz ke daam ka brhna yaah kam hona
•Humare desh ke barhne ki kya speed hai
•Paisa desh ka
•Hum total kitne goods and services vech rhe hai
•Kitne logo ko kaam mila yaah kitno ko nahi

4. BASIS
1. Origin
2. Definition
3. Objective
4. Evolution
5. Deals with
6. Assumptions
MACROECONOMICS
Greek word ‘Makros’ which
means large.
It studies the economic
relationship of the economy
as a whole.
Principles, policies and
problems relating to
achievement of full
employement and expansion
of production.
After keynesian theory of
Employement, Interest and
Money.
Equillibrium in all markets.
Microvariables remain
constant.
MICROECONOMICS
Greek word ‘Mikros’ which
means small parts.
It studies the economic
relationship of an individual
or of group level.
Principles, policies and
problems relating to
achievement of optimum
utilisation of resources.
Before 18th century.
Equillibrium in one market.
Macrovariables remain
constant.

5. BASIS
7. Variables
8. Significant role
9. Approach
10. Popularised by
11. Theories
MACROECONOMICS
Aggregate demand, aggregate
supply, inflation,
unemployement, poverty etc.
Government
Top down approach for
analysing the economy.
John maynard keynes
Theory of national income
Theory of money
Theory of general price level
Theory of employment
Theory of international trade
MICROECONOMICS
Price, consumer’s demand,
wages, rent, profit, revenue,
cost etc.
Market mechanism
Bottoms up approach for
analysing the economy.
Alfred Marshall
Theory of consumer’s
behaviour and demand
Theory of producer’s
behaviour and supply
Theory of price determination
under different markets

6. CAPITALIST ECONOMY SOCIALIST ECONOMY MIXED ECONOMY
Produce goods which give
high profits.
Produce goods which are
important for social welfare.
Produce both the goods with
profit and welfare.
Use capital intensive
technique.
Use labour intensive
technique.
Use both capital and labour
intensive.
They produce for Rich people
as they have capacity to pay.
They produce for Poor people
as their motive is welfare.
They produce for both rich
and poor people.

7. It is an economic system where production and distribution are privately owned.
There is no intereferance of government in this.
Government maintains law and order only.
Their only motive is profit maximisation.
This is also known as Free Market Economy.
Example:- Hong Kong, Singapore, Canada, UAE etc.
•No role of Government
•Profit Motive
•Law of demand and supply operates
•More role of Private sector
•Also known as LAISSEZ FAIRE (which means
minimum restrictions or interferance of govt.)

9. These are individuals or group of individuals.
They do the consumption of goods.
They supply factors of production to business ( land,
labour, capital, owner ).
They purchase goods from business sector.
Their Expenditure is called CONSUMPTION
EXPENDITURE.

10. These carry the production of goods & services.
They take factors of production from household sector.
They supply goods and services to consumer.
They do this for profit making.
They include Sole proprietorship, Partnership, Company etc.
Their expenditure is called INVESTMENT EXPENDITURE.

11. It provides law and order.
It maintains stability and help in the growth of country.
It provides administration services.
They make developmental projects like dams, roads,
industries, education, healthcare etc.
They impose taxes.
They provide goods at nominal prices.
Their expenditure is called GOVERNMENT EXPENDITURE.

12. This sector is engaged in import and export of goods
and services.
This sector is known as External sector and Rest of
the world sector.
They also invest capital outside the country and also
allows other to invest here.

16. Real flow of income implies the flow of factor
services from the household sector to the producing
sector and corresponding flow of goods and services
from the producing sector to the household sector.
Money flow refers to the flow of factor income, as
rent, interest, profit and wages from the producing
sector to the household sector as
monetary rewards for their factor services.

19. It deals with the production of goods and services by the producer sector.
If we study it in term of the quantity of goods and services produced, it is a Real
Flow.
But, it is a Money flow, if we study it in terms of the market value of the goods
produced.
It means the flow of income in the form of rent, interest, profit and wages, paid by
producer sector to the household sector.
It is a Money Flow.
Disposition means expenditure made.
This phase deals with expenditure on the purchase of goods and
services by households and other sectors.
This is a Money Flow from other sectors to the producer sector.

20. The Great Depression was the worst economic downturn in the history of the industrialized
world. It originated in the United States of America when the stock market crashed which
results in the beginning of a decade of high unemployement, profit, low profit and deflation
and it gradually spread to other countries of the world. The main cause behind this was fall in
aggregate demand due to under consumption and over investment.
CAUSE AND EFFECT RELATIONSHIP OF GREAT DEPRESSION