1. Economic Systems… Combination of various agencies, entities that provide the economic structure that defines the social community. Involves the production, allocation of economic inputs, distribution of economic inputs, distribution of economic output, households banks, and government.

2. Basic Units Household Firm Industry Government

3. Functions of the Economic Systems What to produce-Capital vs. consumer How to produce For whom to produce Economic growth

4. Socialism(controlled economy or communism)

5. Features State ownership of means of production Central economic planning Social welfare Equality of opportunity Classless society Absence of competition

6. Merits Social Justice Economic Stability Rational Allocation of Resources Higher economic Growth Absence of class struggle

7. Demerits Concentration of economic power in the state Lack of incentive and initiative Lack of consumer sovereignty Loss of occupational freedom Inefficiency and low productivity Corruption

8. Capitalism.. Features of capitalism Right to private property : use of personal property for individual gains Right of Inheritance Freedom of Enterprise Freedom of choice for consumers Profit motive Competition : Large number of Buyers and Sellers Price mechanism: Demand AND Supply

9. Features of Capitalism contd… Role of government: a)No central planning b)Ensures law and order c)Enact laws necessary for public welfare

10. Merits Of Capitalism… Incentive : to undertake enterprise and bear risk Efficient Utilization of Resources Rapid Economic Growth Capital Formation : Creation of more wealth which is to be left for children Flexibility and Adaptability Democratic Nature Innovation

11. Demerits…. Concentration of economic power Economic instability: Instability of the price level: Cyclical fluctuations Lack of Maximum social satisfaction: distribution of goods according to the ability to pay rather than needs of the people Social waste: unnecessary expenditure on advertising and ruthless exploitation of natural and human resources. Rise of monopoly : Giant corporations dominate the structure Social discrimination: “Haves” and “have not” Loss of human values : Materialistic attitude give rise to social evil

12. Mixed Economy

13. Features Co existence of public and private sectors Classification of industries Economic planning Price mechanism Profit motive cum social welfare

14. Merits Individual freedom Rapid economic growth Social welfare

15. Demerits Economic instability Lack of freedom Inefficiency Lack of coordination

16. State Control of Business

17. Rationale of state control Legal framework Imperfect competition Minimising effects of wealth and economic power Social objectives: employment, price stability and economic growth. Egalitarian society

18. Industrial base Balanced regional development Fulfilling the basic needs Encouraging decentralized industrial development Profitable exploitation of scarce national resources Saving valuable foreign exchange

19. Economic Roles of The Government Regulatory Role a)Determining areas of operation b)Regulation of practices in economic centers c)Regulating relationship among various segments of economy

20. Promotional Role a)Arrangement of education, health and social welfare b)Encouraging entrepreneurial skills c)Promotion of science and technology and management d)Providing facilities of transport and communication e)Establishment of financial and banking institutions

21. Entrepreneurial Role Planning Role