Basics

Syllabus
According to the Notification by UPSC

1. Growth and Development

2. Planning

3. Budgeting

4. Agriculture

5. Investment Models
According to PYQ (Prelims + Mains)

1. Basics

2. Growth and Development

3. Planning in India

4. National Income & Accounting

5. Public Finance

6. Money & Banking

7. Inflation

8. Capital Market

9. International Trade

10. Agriculture

11. Land Reforms

12. Food Processing

13. Industry

14. Social Sector (Unemployment, Poverty & Infrastructure)

15. International Organisation (WTO, WB & IMF)

 Importance in UPSC/CSE

Weightage in Marks Booklist

Prelims

Mains
 Micro and Macro Economics
Micro

1. Study of individual units

2. Deals with individual income, individual prices, individual output etc.

3. Main tools are demand and supply

Macro

1. Study of economy as a whole

2. Deals with aggregates such as national income, employment etc.

3. Tools are aggregate demand and supply

What Economics is about?
Despite Having Such A Big Chain Why Isn’t Economy A Chaotic Mess?

• The Fundamental Problem Of Economics Then Is That Of Coordination.

 Objectives of this Coordination
1. Improving economic efficiency

2. Reducing economic inequality

3. Stabilizing the economy through macroeconomic policies

4. Conducting international economic policy

 Tools of this Coordination
1. Taxes on incomes and goods and services

2. Expenditures on certain goods or services along with transfer payments that

provide resources to individuals

3. Regulations or controls that direct people to perform or refrain from certain

economic activities.
• Economics consists of 4 human behaviour

1. Production-Economic Growth

2. Exchange and Evaluation-Flow

3. Social Distribution-Economic Development

4. Accumulation-Stock
• Growth v. Development

• Growth v. Environment

• Inclusive and Exclusive Growth

What is Economics?

• Wealth Theory/Invisible Hand Theory/Laissez Faire Policy-Adam Smith.

Economics is a science of wealth.
• Welfare Theory-Malthas. It is the study of mankind how we acquire material
and non-material prerequisites for improving his welfare. Because wealth is
just a means and cannot be an end.

• Scarcity and unlimited want Theory-Robbins (Scarcity of resources having

alternative use).
Evolution

1. Mercantilism-England (Trade).

2. Physiocrates-France (Production).
3. Classical Theory- Adam Smith (invisible hand theory, market mechanism and
price system, Price mechanism)- Laissez fair or free economy. Non-
interventionist economy.
Ø But they failed on 2 counts :

a) Why diamond is costlier than water.

b) Could not address the causes of great depressions during 1929-33.

4. Neo Classical Theory (Marginal Utility is more important than total utility.
Marginal utility is determined by the scarcity of the goods.). They said that
scarcity of a commodity hold the key to its price. All pricing theories were
given by them. According to them Prices of factor is determined by Marginal
Productivity and Prices of Products are determined by Marginal Utility.
5. Keynesian Theory (Pump priming) of Cambridge University.
6. Monetarism (Milton J Friedman) from Chicago school. He said Money
matters. Monetary policy is the product of this school.

7. Rational Expectation Theory

What is the 'Rational Expectations Theory’?

• The rational expectations theory is an economic idea that the people make
choices based on their rational outlook, available information and past
experiences.