Introduction to Economics Test - 3

Production which takes place for self-consumption is not a characteristic of the economic activity of a capitalist economy because production takes place for sale of goods and services in the market.

The classical school of thought states that all the labourers who are ready to work will find employment and all the factories will be working at their full capacity. This is called classical tradition.

Individuals or institutions who take economic decisions are called economic agents. They can be consumers who decide what and how much to consume, they may be producers who decide what and how much to produce or they may be different entities such as the government, corporation, banks which also take economic decisions like how much to spend.

The British economist John Maynard Keynes published his book “The General Theory of Employment, Interest and Money” in 1936.

Study of aggregates of an economy is the study of macroeconomics. It takes into account various inter-linkages which may exist between the different sectors of an economy.

In a capitalist economy, production activities are mainly carried out by capital enterprises. It has one or more entrepreneurs who exercise control over major decisions and bear a major risk associated with the firm or enterprise.In a capitalist economy, production activities are mainly carried out by capital enterprises. It has one or more entrepreneurs who exercise control over major decisions and bear a major risk associated with the firm or enterprise.

Investment is the process of capital formation or increase in the stock of capital for a firm.

Domestic work does not receive any remuneration in the household sector because it is not considered as an economic activity.

Theory of Household Income does not come under the scope of Macroeconomics. It deals with the theory of national income, employment, money, general price level, economic growth, international trade.

The period from 1929 to 1933 is called the period of Great Depression. During this period, there was a huge fall in the levels of output and employment in the countries of Europe and North America.