Question

Into how many parts can the subject matter of economics be divided? Describe them in detail.

Answer 1

• Consumption : Consumption is that economic activity which is associated with the consumption of utility of goods and services for direct satisfaction of individual and collective requirements. Consumption is regarded to be both the beginning and end of economics because all the economic activities such as production, exchange, distribution, etc. are performed for consumption itself. 
• Production : Production is associated with increasing the utility and value of goods and services. The process of making bread is production. Land, labour, capital, organization and enterpreneur are the major resources used in its production. 
• Exchange : The process of exchange is associated with sale and purchase of a product or service. Exchange is required for consumption of goods produced and for fulfillment of wants. Invention of currency, due to the defects in barter exchange system, made exchange an easy affair. Now, all the goods and services are sold and purchased using currency. The theory of price determination is based on currency itself. 
• Distribution : Production is the result of collective efforts of various sources. Therefore, it is very important to determine the remuneration for every source of production under the process of production and this is associated with income distribution. Under this, it is understood what is national income, how should this be evaluated, and how should interest, revenue, wages, profit, etc. be determined. Along with this, it is also ensured whether the national income is being judiciously distributed or not. At present, the foremost duty of a state is economic welfare of the people, i.e. interference of the state in economic sphere is continuously increasing. 
• Public Finance : Study of public income, public expenditure, deficit financing system, tariff system, etc. are done under this branch of economics. Along with time, the subject matter of economics is also changing.