2. • an open economy is an economy in which there
economic activities done between domestic
community & outside.
• Open economy is the economy activity done all
over the world.
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3. • (i) It neither exports goods and services to the
foreign countries nor imports goods and
services from the foreign countries
• ii) It buys shares, debentures, bonds etc. from
foreign countries &sells shares, debentures,
bonds etc. to foreign countries
Functions of Open Economy
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4. • (iii) It borrows from the foreign countries &
lends to the foreign countries
• (iv) It receives gifts from foreigners & sends gifts
to foreigners
• (v) Normal residents of a open economy can go
to other countries to work in their domestic
territory & also foreigner is allowed to work in
the domestic territory of a open economy
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5. Merits of Open Economy
• Great Choice for consumers
• Increased competition
• Lower price and quality products
• Gains From Trade
• Increased export & import
• Expanded markets 3/5/2015 5SHEIK NOWHEED
6. • Closed economy is an economy, which does
not have any sort of economic relation with
rest of the world.
• There is no closed economy in today's world
• A closed economy does not enter into any
one of the following activities
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7. Functions of Closed Economy
(i) It neither exports goods and services to
the foreign countries nor imports goods
and services from the foreign countries
(ii) It neither buys shares, debentures,
bonds etc. from foreign countries nor
sells shares, debentures, bonds etc. to
foreign countries
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8. • (iii) It neither borrows from the foreign countries nor
lends to the foreign countries
• (iv) It neither receives gifts from foreigners nor sends
gifts to foreigners
• (v) Normal residents of a closed economy cannot go to
other countries to work in their domestic territory. No
foreigner is allowed to work in the domestic territory
of a closed economy
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9. Sector Of The Economy
Primary sector
Secondary sector
Tertiary sector
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11. Primary Sector
• The primary sector includes the production of raw
material and basic foods
• Activities associated with the primary sector include
agriculture, mining, forestry, farming, grazing, hunting
and gathering, fishing, and quarrying
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12. • The packaging and processing of the raw material
associated with this sector is also considered to be
part of this sector
• In developed and developing countries, a decreasing
proportion of workers are involved in the primary
sector
• Agriculture in India is the major sector of its economy
account 18% of the GDP
• It provides employment to 60% of the country’s total
population
• About 43% of the country’s total geographical area is
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13. Primary Sector
• Among other things, the government also tried to
decrease the dependence on monsoons
• Better seeds, use of fertilizer, education of farmers and
provision of agricultural credit and subsidies are reasons
for increase in agricultural productivity
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14. • major producer of milk, cashew nuts, coconuts, tea,
ginger, turmeric and black pepper in the whole
world
• It is the second largest producer of wheat, sugar,
groundnut and inland fish
• It is the third largest producer of tobacco and rice
• India accounts for 10 per cent of the world fruit
production with first rank in the production of
banana and sapota
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18. Secondary Sector
• The secondary sector of the economy or industrial sector
includes those economic sectors that create a finished,
tangible product: production and construction
• All of manufacturing, processing, and construction lies
within the secondary sector
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19. • Activities associated with the secondary sector
include metal working and smelting, automobile
production, textile production, chemical and
engineering industries, aerospace manufacturing,
energy utilities, breweries and bottlers, construction,
and shipbuilding
• This sector generally takes the output of the primary
sector and manufactures finished goods
• gives employment to 17% of the total workforce
• The government aims at achieving self-sufficiency in
production and protection from foreign competition
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20. • These products are then either exported or sold to
domestic consumers and to places where they are suitable
for use by other businesses
• This sector is often divided into light industry and heavy
industry
• Many of these industries consume large quantities of
energy and require factories and machinery to convert the
raw materials into goods and products
• They also produce waste materials and waste heat that may
pose environmental problems or cause pollution.
• industrial sector accounts for 27.6% of the GDP
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24. Tertiary Sector
• The tertiary sector of the economy is the service
industry
• it holds the highest importance among all sectors
• This sector provides services to the general
population and to businesses
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25. • Activities associated with this sector include retail
and wholesale sales, transportation and
distribution, entertainment, restaurants, clerical
services, media, tourism, insurance, banking,
healthcare, and law.
• In the U.S., more than 80% of the labor force are
tertiary workers
• In most developed and developing countries, a
growing proportion of workers are devoted to the
tertiary sector
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26. • the tertiary sectors account for 51% of the GDP.
• India is the fifteenth largest country in the world in terms
of services' output
• This sector provides employment to 23% of the
workforce and is the fastest growing sector,
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