Scribd
Upload
3 views4 pages

Unit 12

The document outlines the role and functions of an economy, emphasizing its importance in resource allocation, production, income distribution, economic stability, growth, and regulation of activities. It discusses the relationship between economy and development, highlighting how economic growth leads to improved living standards and infrastructure, while also addressing challenges such as inequality and poor governance. Additionally, it explores economic and social inequality, its causes, effects, and potential solutions to reduce disparities in society.

Uploaded by

akberaali786786
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
3 views4 pages

Unit 12

The document outlines the role and functions of an economy, emphasizing its importance in resource allocation, production, income distribution, economic stability, growth, and regulation of activities. It discusses the relationship between economy and development, highlighting how economic growth leads to improved living standards and infrastructure, while also addressing challenges such as inequality and poor governance. Additionally, it explores economic and social inequality, its causes, effects, and potential solutions to reduce disparities in society.

Uploaded by

akberaali786786
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

12.1.

1 – Role and Functions of Economy


Definition of Economy:

An economy refers to the system of production, distribution, and consumption of goods and
services within a society or a country. It encompasses all activities related to managing
resources, employment, trade, and wealth.

Roles of an Economy:

1. Resource Allocation:
o An economy determines how scarce resources (land, labor, capital) are
allocated among competing uses.
o It decides what to produce, how to produce, and for whom to produce.
2. Production of Goods and Services:
o The economy organizes the production process in various sectors like
agriculture, industry, and services.
o Ensures efficient use of factors of production.
3. Distribution of Income:
o Distributes income among individuals and groups based on ownership of
resources and contribution to production.
o Aims to ensure equity and reduce disparity.
4. Economic Stability:
o Works to control inflation, reduce unemployment, and maintain balance in
foreign trade.
o Uses fiscal and monetary policies to ensure economic stability.
5. Growth and Development:
o Encourages investment, innovation, and infrastructure development to
promote GDP growth.
o Supports technological advancement.
6. Regulation of Economic Activities:
o Government intervenes through laws and regulations to control monopolies,
ensure consumer rights, and protect the environment.

12.1.2 – Economy and Development


Concept of Economic Development:

Economic development is a multi-dimensional process involving:


• Growth of national income (GDP),
• Improvement in standard of living,
• Reduction in poverty and unemployment,
• Structural transformation of the economy.

Relationship Between Economy and Development:

1. Economic Growth as a Basis for Development:


o Economic growth (increase in GDP) provides resources to invest in
education, health, and infrastructure.
2. Employment Generation:
o A growing economy creates jobs and reduces poverty, leading to better living
conditions.
3. Improved Living Standards:
o With increased national income, people have better access to goods,
services, and amenities.
4. Structural Transformation:
o Economy shifts from agriculture to industry and services, showing signs of
modernization.
5. Infrastructure Development:
o Economic activities demand improved transport, energy, and
communication facilities, which also support development.
6. Human Capital Development:
o Economic policies focus on education, training, and health care to develop a
skilled workforce.

Challenges to Economic Development:

• Inequality,
• Poor governance,
• Low investment in human capital,
• Political instability.

12.1.3 – Economic and Social Inequality


Economic Inequality:

Refers to the unequal distribution of income and wealth among individuals or groups in a
society.
Causes of Economic Inequality:

1. Unequal ownership of assets (land, capital).


2. Differences in education and skills.
3. Unemployment or underemployment.
4. Inequitable economic policies (e.g., regressive taxes).
5. Globalization and technology – benefitting a few while leaving others behind.

Social Inequality:

Social inequality is the unequal access to resources, opportunities, and rights based on class,
caste, gender, religion, or ethnicity.

Forms of Social Inequality:

• Gender inequality: unequal pay, limited leadership roles for women.


• Caste or ethnic discrimination.
• Regional disparities (urban vs rural).

Effects of Economic and Social Inequality:

1. Poverty and Social Exclusion:


o Marginalized groups remain trapped in a cycle of poverty.
2. Reduced Economic Efficiency:
o Inequality limits access to education and health, reducing productivity.
3. Social Unrest and Crime:
o Inequality fuels resentment, leading to instability and crime.
4. Political Instability:
o Unequal societies may face protests, riots, and weak democratic
institutions.
5. Obstruction to Development Goals:
o Inequality undermines efforts to achieve inclusive and sustainable
development.

Solutions to Reduce Inequality:

1. Progressive Taxation:
o Tax the rich more to fund social programs.
2. Universal Access to Quality Education and Health:
o Empower the disadvantaged to compete fairly.
3. Job Creation and Minimum Wages:
o Ensure fair income distribution.
4. Affirmative Action Policies:
o Support historically marginalized communities.
5. Social Security Systems:
o Pensions, unemployment benefits, and subsidies for the poor.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy