1. Macroeconomics:

Macroeconomics is a branch of economics dealing with the performance, structure, behaviour, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from, for example.

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1.2 Types of economies:

• Free Market Economy

• Planned Economy
• Mixed Economy

• Free Market Economy: A free market is a market without economic intervention and regulation by government except to enforce onership and contracts. A free-market economy is an economy where all markets within it are free. This requires protection of property rights, but no coercive regulation, no coercive subsidization, no coercive government-imposed monopolistic monetary system, and no coercive governmental monopolies.

• Planned Economy: Planned economy(or command economy) is an economic system in which the state or workers’ councils manage the economy. It is an economic system in which the central government makes all decisions on the production and consumption of goods and services. In such economies, central economic planning by the state or government controls all major sectors of the economy and formulates all decisions about the use of resources and the distribution of output.
• Mixed Economy: It is one where some goods and services are produced in the free-market sector of the economy, but others are produced by the state – i.e. it is mixture of a pure free-enterprise market economy and a pure command economy. Some resources are allocated via the market mechanism and some via the state.

3. Economic Problem of Scarcity:

There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used. Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy. Also the Government has a limited amount of money!!! However, it is unable to satisfy all its wants. The BASIC ECONOMIC PROBLEM arises because resources are scarce, but human wants are unlimited. Any resources that are not scarce are called FREE GOODS. The air that we breathe seems without limit and so is considered to be a free good. However, with increasing pollution in the world, fresh, clean air may be scarce.