Explore topic-wise InterviewSolutions in Current Affairs.

(A) Democracy

Per capita consumption: Average consumption by each person.

Self-sufficiency: Ability to provide all the things needed without external help.

1. Moulds 

2. Speakers

3. Spare parts 

4. Tyres, Tubes, etc.

Consumer goods: The goods which are directly consumed by the consumers are known as consumer goods.

Basic goods industries: Industries or factories producing essential goods such as machines, electricity, minerals, and ores, and transport facilities are basic industries.

In our area the government is giving pensions to the old people and handicapped. They give Rs. 200/- to the old and Rs. 500/- to the handicapped every month. They release these funds for every 2 or 3 months once. These pensions are given to the beneficiaries through the employs of local bodies.

They select one place to hand over these pensions. Everyone should reach there in prescribed time. There may be 400 to 500 beneficiaries in that centre. They should stand in a line for hours together and sometimes two or three days also. How pity this is ! We feel so sad for this. Why don’t the government send the pensions directly to their homes or to their accounts ? In this connection we request the government and its officials to view this issue in humanitarian grounds.

For the simplicity of its study, the definition of economics is divided into five major parts.

1. Steel 

2. Engines 

3. Cement

4. Bricks 

5. Wood 

6. Glass 

7. Vegetables 

8. Cotton, etc.

Economists are not unanimous with regard to the definition of economics due to the variation in the nature of economic actions and the continuous changes in them.

The two components of the Balance of Payment account are:

• Current account
• Capital account

1. Marshall, in his definition, has assumed maximum welfare as central point of economics, while Robbins has mainly focused on economical utilisation of resources. But both these human tendencies lead towards a common ultimate objective of ‘Maximum satisfaction’. 

2. The word ‘Wealth’ has been used in Marshall’s definition, while Robbins has used the expression ‘limited resources’. To a certain extent, both terms have been used in the same implication, since^’limitation’ is a major characteristic of’wealth’.

B) Environmental pollution

Marshall has considered maximum welfare as the centre-point in his definition.

1. Difference in definition format Marshall’s definition is sectional, while the definition of Robbins is analytical.

2. Difference in contents Marshall in his definition has included a study of wealth in reference to actions that are related to earning money and spending money, while Robbins studied human behaviour related to choice in economics. 

3. Form of economics According to Professor Marshall, economics is a social science, while Robbins considers economics to be a human science.

Major criticism of Marshall’s definition is as follows Marshall’s definition was welfare centred and thus has following criticism:

• Classification of resources on the basis of physical and non physical nature : Marshall limited the study of the subject-matter of economics to the acquisition and consumpition of physical economics. But in reality, there are non-material resources also, like, the savicies of needs to bed doctors, engineers, labour, advocates etc., who create resources through their services and study of these services is done under economics. 
• Economics is not a social science only : Assuming economics as only social science shall be inappropriate, because concepts of economics are such that they apply to people within and outside the society equally. Hence, economics is a human science. 
• According to Robbins, “economics may be related to anything but it is certain that it is not related to the causes of public welfare. 

Robbins believed the welfare related approach to be faulty on certain grounds:

1. Many activities like production of psychotropic substances and their use is not in the best interest of human welfare, but that is studied as a part of economics. 

2. There is no evidential parameter for welfare. Currency cannot be treated as an evidential parameter for welfare because welfare is a psychological and emotional expression.

• When economics is related to welfare, it means that the economists have to decide on pros and cons of economic activities, which relates to normative science. Robbins treat economics as positive science, which does not decide about what is wrong, but rather it studies according to the situation.
• Scope of economics is skewed : In economics, negligence of the acquisition and consumption of non-physical sources, study of anti social, uncommon and non-economic activities have become the reason for its criticism.

Economists do not treat the definition of Robbins as flawless. Salient criticisms of this definition are as follows :

• Making the scope of economics wider than human wants : Prof. Robbins, by stating economics as human science, has deemed the alternative aspect of all human activities as the subject matter of economics. Henceforth, the scope of the study of economics has widened and demonstration of economic principles, analysis and investigation of problems have become too complex. 
• Inadequate concentration on social character of economics : According to Robbins, activities of people living outside the society are also studied. But economics is needed only when the economic problems become socially important and activities of one group of human beings affect the other group. 
• Economics is not a value theory only : Robbin’s definition of economics is restricted to the distribution of resources in producing various goods and consequently, and how the value and price of such goods is fixed. But scope of economics is much wider than mere allotment of resources and determining of values. 
• Neutrality towards objectives : Robbins has written “Economics is related only to resources. He has not clarified how objectives will be set, for which limited resources are used. If we are not aware about the objectives, then we cannot ensure maximum utilization of limited resources. 
• Economics is not only a real science but also an art : If economics is assumed as real science it will merely remain as a science of building principles, but critics believed that the responsibility of economics is not restricted to building the equipment, but also throwing light on the process of using that equipment. 
• Definition is situational : Prof. Robbins treats accomplishments as given and stable and believes that a coordination is established between those accomplishments and sources but in realolife, both keep choosing. 
• Reason of economic problems : Scarcity gives birth to economic problems- This statement of Robbins is not completely true. According to critics, economic problems arise not only due to scarcity or they being limited, but also due to they being excessive/ ample.

1. After 1947, India began many initiatives to promote industrial activities in the country. 

2. Major objectives were – to become self sufficient in meeting our needs and to make the country an industrially developed nation.

Professor. J.K.Mehta

Similarities between Marshall’s and Robbins’ definitions : 

1. Both Marshall and Robbins in their respective definitions have treated economics as science. 

2. Both the economists have given priority to the humans first and then, resources. 

3. In Marshall’s theory, the central point is maximum welfare, whereas Robbins has mainly focused on economization. But the tendency of both the economists is one i.e. maximum satisfaction. 

4. In Marshall’s definition, the word ‘wealth’ is used, whereas in Robbins’ definition, limited resources has been used. To an extent, both these words are used in context to similar meaning because scarcity is a major characteristic of wealth. 

5. Prof. Robbins stated that limited resources need to be used very cautiously so that there could be maximum production for the interest of maximum people. Whereas, Prof. Marshall regarded it as maximum welfare.

Difference between the two definitions

• Difference in nature of definition : Marshall’s definition about economics is classificatory, whereas Robbins’ definition about economics is analytical. Marshall explained all the activities, either physical or non-materialist, economic or non-economic in normal life business as a subject of economics, whereas Robbins didn’t separate different activities, rather, he included the study of making choice in the subject matter of economic problem.
• Difference in contents : Marshall included in economics those monetary activities which are related to earning money and use of money whereas, Robbins studied about selection of human behaviour and regarded this process of selection to be an economic aspect or economic problem.
• Form of Economics : According to Prof. Marshall economics is a social science in which he mentions the economic activities of only those people who live in the society, whereas, according to Robbins’ definition, economics is a human science which studies selection behaviour of human beings.
• Differences in classification of resources : Marshall included only economic resources in the study of economics whereas Robbins included all such physical and non-material resources which are scarce.
• Nature of Economics : Marshall agrees that economics is positive science and normative science and he also classified economicsm in arts. Whereas Robbins mentioned economics as empirical Science. 
• Difference in Objective : Prof. Marshall explained that objective of economics is growth in welfare of human, whereas according to Robbins there are no such objectives in economics and also stated that there is no link between human welfare and economics.

Functions of IBRD (or) World Bank: The World Bank performs the major role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long term loans for various development projects. Article 1 of the Agreement states the functions performed by the world bank as follows.

(I) Investment for productive purposes: The World Bank performs the function of assisting in the reconstruction and development of territories of member nations through facility of investment for productive purposes. It also encourages the development of productive facilities and resources in less developed countries.

(II) Balanced growth of international trade: Promoting the long range balanced growth of trade at international level and the maintaining equilibrium in BOPs of member nations by encouraging international investment.

(III) Provision of loans and guarantees: Arranging the loans or providing guarantees on loans by various other channels so as to execute important projects.

(IV) Promotion of foreign private investment: The promotion of private foreign investment by means of guarantees on loans and other investment made by private investors. The Bank supplements private investment by providing finance for productive purpose out of its own resources or from borrowed funds.

(V) Technical services: The World Bank facilitates different kinds of technical services to the member countries through Staff College and experts.

Usually, Macro economic variables depend on Micro economic variables in an economy. For instance, Aggregate demand function is the sum of individual demand function. Hence, Macro economics depends on Micro economics.

Marshall, Pigou, Stuart Mill, etc were the supporters of welfare-centric definition.

Because economic rules are such that apply to people living in society in the same manner as to those living outside the society.

Today’s age is the age of growth. Therefore, along with, the subject metter of economics its definitions are also changing. Modem Nobel prize winning economists, including Prof, Samuelson, Peterson, Ferguson and others have also defined economics on the basis of growth. Samuelson has given more priority to the human habits of selection and limitation of resources, but he hasn’t given any importance to the means according to the desires of the people. Neither has he considered allocation of means as important nor has given any measures to overcome this problem.

He has only pointed out the problems but has not found their solutions. Samuelson has not stated anything new in the thinking of development. Marshall’s and Robbins definition includes that. K. G. Seth has also emphasized more on the means like Samuelson. They have neither emphasized on money, nor on financial welfare. They have only focused on the development of meAnswer:The economists who have given the development-related definitions have majorly focused on the me Answer:They have not linked economics with human welfare, physical welfare and economic welfare.

Indian ideology on development-related definitions : The definition of Prof. Mehta on the basis of Indian philosophy, civilization and culture is very different from the rest of the world. In the opinion of the western economists, economic growth implies satisfaction of needs, but according to the Indian ideology satisfaction is not derived from fulfillment of maximum needs, but by eliminating the wants. According to the Indian ideology, due to the unlimited wants, they can never be fulfilled. Therefore, the level of want lessness can only be increased by eliminating or decreasing the unlimited wants.

Alfred Marshall and John Maynard Keynes were the pioneers in Micro and Macro economies respectively.

Marshall has considered economics as a study of the physical welfare of humans.

Professor Adam Smith in the book (An Enquiry into the Nature of Wealth of Nations) published in 1776, considered economics as a science of wealth. All the classical economists believed that the ultimate purpose of human economic activity was to earn wealth. Due to giving more emphasis on the study of wealth, many delusional ideas have arisen in respect to economics. It came to be understood that economics tells man to be excessively attracted towards ‘money’, but in the beginning of the 19th century itself, some economists started saying that money is only a means for betterment of human life.

Professor Robbins called economics a human Science. It tells us how to use the limited resources in the best way. By keeping in mind the desires of humans. The science of wealth was an initial ideology of economics, but with the change of time, the definition of economics also changed. Now it started to be considered a human science To meet the requirements, the resources (time and money) are limited to humans. Humans have to choose among the needs in such a situation, which shows the study of human beings. To meet the unlimited needs of human beings, economics is just about coordinating with limited resources. So, with the change of time, economics became a ‘study of humans’ rather than ‘science of wealth’.

1. (b) satisfied

2. (a) opposed

3. (a) stop

4. (b) terrific dream

5. (c) excited

Areas of Macro-economics study are National Income. Aggregate employment, inflation, Investment etc.

1. (a) deserted

2. (c) energetic

3. (b) welcome

4. (b) set

5. (c) always

The definition of “Scarcity” was given by Robbons. Economists do not treat the definition of Robbins as flawless. 

Salient criticisms of this definition are as follows:

• Making the scope of economics wider than the wants : Prof. Robbins, by defining economics as human science, has deemed the alternative aspect of all human activities as subject matter of economis. Henceforth, the scope study of economics has widened and demonstration of economic principles, analysis and investigation of problems have become too complex.
• Inadequate concentration on social character of economics : According to Robbins, activities of people living outside the society are also dwelt upon. But economics is needed only when the economic problems take the form of social importance and activities of one group of human beings affect the other groups.
• Economics is not only a value theory : Only that part of Robbin’s definition has been studied which elaborates how the distribution of resources has been done in producing various goods and consequently, how is the value and price of such goods fixed ? But scope of economics is much wider than mere allotment if resources and setting of values.
• Neutrality towards objectives : Robbins has written “Economics is not only related to sources, but also how objectives will be set, for which limited resources are used. If we are not aware about the objectives, then we cannot ensure maximum utilization of limited resources.
• Economics is not only a real science but also an art : If economics is assumed to be a real science it will merely remain as a science of building principles, but critics believed that the responsibility of economics is not restricted to building the equipment, but also throwing light on the process of using that equipment.
• Definition is situational : Prof. Robbins treats accomplishments as given and stable and believes that a coordination is established between those accomplishments and sources. 
• Reason of economic problems : Scarcity gives birth to economic problems-this statement of Robbins is not completely true. According to critics, economic problems arise not only due to scarcity, or they being limited, but also due to excessive availability.

(c) Welfare-centered definition

Economics is a science of choices according to the Robbins.

The way of solution to economic problems is called nature of macro economics. The nature of macro economics explains the central essence of economy. It includes all economic activities and helps to understand how an economy functions in different situations.

“Economics is a science that studies human behaviour that is related to human wants on the limited means (resources) which have multiple utilities”.

1. (b) next to

2. (a) crawling

3. (b) under

4. (c) productive

5. (b) tracking

According to the Marshall, “Economics is a study of the ordinary business of life. It examines that part of the personal and social actions which is most closely connected with the attainment and consumption of material requisites of well-being.”

(c) Socialistic

Robbins has defined economics as a science of choice.

J.M.Keynes laid the foundation for Macro economics.

The Great depression of 1930 proved that the Classical Economic Policy was wrong.

Marshall explained economics as a social science.

(a) Investment

J.M.Keynes wrote ‘The General Theory of Employment, Interest and Money’.

(d) Mixedism

In Mixed economies both private and public sectors coexist.

(a) Equal opportunity – Mixidism

(a) Political economy

(d) Social welfare – Traditionalism

(a) Traditional Government Involvement only