There are certain economy notes for IAS preparation that each and every IAS aspirant should know. As there are many topics to cover in Economics, most of the IAS aspirants find it difficult. Hence, we, with the help of the experts, have successfully chosen all the important and relevant notes required for IAS preparation.
Important Economy Notes for IAS preparation
Discussing economics notes for IAS preparation needs to follow a chronology. That is, we will start with the single unit concept, i.e. microeconomics and then move further to macroeconomics, money and labor market.
Microeconomics for IAS preparation
Economics is the study that focuses on the production of goods and services, their distribution, consumption, and a lot more. Economics can be divided into two parts. Macroeconomics, and Microeconomics.
- Macroeconomics deals with the government decisions
- Microeconomics deals with the individual and business decisions
Demand and Supply
Demand is one of the economic principles that states the desire of the customers to buy certain goods and services. It is mainly because the price of that certain good is quite reasonable or affordable. If the price of the good increases, the demand of the customers to buy that decreases, and vice versa.
Supply is the economic principle that states the total amount of goods and services that are available for the customers to buy them. The higher the price, the more will be the supply. Unlike demand theory, it is directly proportionate to the price of goods and services.
The economic principle states the condition when demand and supply balance each other but prices remain the same.
Macroeconomics – GDP, Inflation, and Unemployment
GDP which stands for Gross Domestic Product is the total market value of the goods and services that are being produced within a country during a specific period of time. The experts calculate GDP every year, and it is an important factor in determining the economic performance of a country.
Inflation is the rise in the price of goods and services which are of daily use like clothing, foods, water supply, housing, transportation, recreation, and more. It can happen when the cost of production rises.
Unemployment refers to the number of individuals that are part of work force but not yet employed. There can be many reasons behind this state, it can be because of the growth in population, slow economic growth, lack of industry, and so on.
Aggregate demand and supply
Aggregate demand is the measurement of the total amount of demand for all the goods and services produced in the country.
Aggregate supply is the measurement of the total amount of supply of all the goods and services being produced in the country.
Money and Banking
Supply of money
The money supply is the measurement of the total currency or other liquid deposits within the boundary of a country.
Money can be anything that is accepted as the payment for goods and services. It is a medium of exchange.
- Money is the medium of exchange
- Store of value
- Unit of account
Economic Policy notes for IAS preparation
Economic policy is a framework, implemented and administered by the government, to improve a nation’s overall wellbeing. It involves controlling and setting the economy. Economic policies deal with taxation, government budget, money supply, interest rates, the labor market, national ownership, and a lot of the other things that include government interventions into the economy.
economic policies can be of two types – fiscal policy and monetary policy. We will discuss in the latter part of this article. The economic policies that the government imposes can be assessed in two ways. These are positive economics and normative economics.
- Positive economics is generally based on the facts, and there is no chance to approve or disapprove of it. It tells us about what is the current situation.
- Whereas, normative economics tells us about what should be done in an economy. It is based on value judgments.
Hence, most of the economics policy for the public is made by combining the two. The aim of the economic policy includes Economic growth, Full employment, and price stability.
Fiscal and Monetary Policy
Fiscal policy is the policy that deals with the taxation and government spending that impacts the economy. It is important to stabilize the economy.
It is the part of the macroeconomic policy which includes management of money supply and interest rate.
Economic analysis is the study of economic policies. Analysis helps to determine how the economic policy of the government is operating, whether it is operating effectively or not. It mainly focuses on the production process, it determines how much profit it is making.
There are many other economy notes that are essential for the IAS aspirants to know like Taxation in India, Goods and Services Tax (GST), Union Budget, Financial Markets, National Income, about the Reserve Bank of India and its policies, Indian Companies Act, and more. It’s great to attempt learning these economy notes for IAS preparation one by one for a clearer understanding.