CAIIB Super Notes: If you are preparing for CAIIB- these are a must-have. Visit http://sirfbusiness.blogspot.com for more info.

1. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Fundamentals of Economics, Microeconomics
and Macroeconomics and Type of Economies
Module A: Economic Analysis

2. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
CAIIB – SUPER NOTES
Advanced Bank Management: Fundamentals of Economics,
Microeconomics and Macroeconomics and Type of Economies

3. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Contents
Coverage:
1. Economics – An
Introduction
2. Microeconomics and
Macroeconomics
3. Problem of an Economic
Organisation
4. Types of Economies

4. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
ECONOMICS- AN INTRODUCTION
1.

5. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Economics
EconomicsEconomics
A Study of
Wealth
A Study of
Wealth
Science of
Human
Welfare
Science of
Human
Welfare
A Study of
‘Means’
and ‘Ends’
A Study of
‘Means’
and ‘Ends’

6. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
A Study of Wealth
• Adam Smith’s Definition: The subject matter of economics is
the study of how wealth is produced and consumed.
• Also known as the ‘wealth definition’

7. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Science of Human Welfare
• Prof. Alfred Marshall’s Definition: ‘Economics is a study of
mankind in the ordinary business of life. It is on one side, the
study of wealth and more important side, a part of the study
of man.’
• The ultimate purpose of Economics is to promote well-being
or welfare.
• Also known as the ‘welfare definition’

8. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
A Study of ‘Means’ and ‘Ends’
• Lionel Robbins’ Definition: ‘Economics is the science which studies
human behaviour as a relationship between ends and scarce
means which has alternative uses.’
• Also known as the ‘scarcity definition’
• Important aspects:
– Man has unlimited wants
– The means to satisfy human wants are limited
– Resources are not only limited but have alternative uses
– Man has to make a choice. Economics is the science of choice.

9. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
MICROECONOMICS AND MACROECONOMICS
2.

10. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Microeconomics and Macroeconomics
• Microeconomics is a branch of economics that studies how
households and firms make decisions to allocate limited
resources, typically in markets where goods or services are
being bought and sold. Focused on individual agents.
• Macroeconomics deals with the performance, structure and
behaviour of a national or regional economy as a whole.

11. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
PROBLEM OF AN ECONOMIC
ORGANISATION
3.

12. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
3 Problems of an Economic Organisation
What is to be produced?What is to be produced?
How are the goods to be produced?How are the goods to be produced?
For whom are they produced?For whom are they produced?

13. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
TYPES OF ECONOMIES
4.

14. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
Types of Economies
Market Economy/
Capitalistic Economy
Market Economy/
Capitalistic Economy
• Individuals and Private
Firms make the major
decisions about
production and
consumption.
• Firms produce the
commodities that yield
the highest profits (What)
by the techniques of
production that are least
costly (How) for those
who have the means and
are willing to spend
(Whom)
• ‘Laissez Faire Economy’ –
Extreme case of a market
economy
Command Economy/
Socialistic Economy
Command Economy/
Socialistic Economy
• Govt. makes all the
important decisions
• The govt. addresses the
major questions by virtue
of its ownership of
resources and power to
enforce decisions.
• Ex: Former Soviet Union
Mixed EconomyMixed Economy
• Has elements of both
Market and Command
Economy.
• All modern day
economies fall under this
category.
• Ex: India

15. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
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16. CAIIB – Super-Notes© M S Ahluwalia Sirf Business
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M S Ahluwalia, amongst other things, is a visual artist, blogger,
blog designer and of course an MBA and Banker from New
Delhi, India.
To know more about him you may visit his blog-site: Estudiante De La Vida