BUDGETARY MADE EASY.

I NTRODUCTION

I wrote this book to help general readers who don't plan to become experts in economics. Instead, it is a book created for laypeople who want to learn some of the fundamental ideas in economics so that they may follow conversations as they occur in mainstream social media like facebook twitter and the rest. The book may be particularly useful to engineers, accountants, managers, IT specialists, bankers, businessmen, civil employees, journalists, political and union workers, and other professionals who are interested in learning about economics but do not wish to specialize in the subject. The book may be helpful to a new student who wants to specialize in economics because it is so straightforward and may aid in his understanding of the fundamental ideas in economics. An advanced economics student who is passionate about reading and studying all that has been written on the subject can also love the book.

OUR ECONOMY

A Delhi housewife visits the market to buy eggs, vegetables, fruits, toothpaste, a bottle of shampoo, a packet of butter, and some toothpaste. After completing all of her shopping, she returns home in 30 minutes. Although the goods she bought were from various regions of India, the adjacent market had access to them all. What is the force that transported all of our housewives' needs to the neighborhood market? There were no orders from the Indian government directing the shipment of specific goods made in particular locations to specific markets. However, this is precisely what has occurred. This entry was posted on August 1, 2010.

Our housewife is unable to give even one instance in which she went to the store to buy toothpaste but had to come home empty-handed because it was not on the shelves. Adam Smith, the founder of modern economics, referred to this power as the "invisible hand" since it enables the housewife's needs to be met in the local market. This entry was posted on August 1, 2010.

Market forces are another moniker for the "invisible hand." the manufacturer who created

He did so to advance his vested interest in financial gain.

The retailer also had a financial gain in mind when selling these things to our housewives. Similarly, people carried out the process of moving veggies and toothpaste from their point of production to the retail market, everyone acting in their self-interest. But as evidenced by the interests of our housewife and so many others like her, what is in the self-interest of so many people is also in the interest of society. This entry was posted on August 1, 2010.

Unquestionably, there is an "invisible hand." This also suggests that the system is subject to some natural rules, such as the law of market forces. The study of how these market forces function, their flaws, and the corrective actions that must be taken to stop their faulty operation makes up a large portion of the subject matter of economics. This entry was posted on August 1, 2010.

An economy is made up of several components.

They consist of the government, traders, producers, customers, and so forth. Essentially, the goal of all economic activity is to satisfy the demands of the public or the customer. The many products and services available on the market are purchased by consumers using their income. They also benefit from a variety of government-provided services that are free or heavily discounted. The people or households that "act as consumers" are those who generate income through productive economic activity. An individual's or a household's income is divided into two categories: spending on goods and services and saving and investing. This entry was posted on August 1, 2010.

A very dynamic part of our economy is the producers. The producers might be set up as large corporations or as modest-sized industrial facilities. The primary task of producers is to create things or services that they can charge customers or the government for. Their revenue is derived in part from the profits they make from these sales. In general, the affluence of the productive class can be used to assess the health or well-being of an economy. It is an indication of a healthy economy when producers are motivated to invest more and more in their productive endeavors and when profits are high. This entry was posted on August 1, 2010.

In an economy, production can refer to both the creation of commodities and the provision of services. Producing products includes making things like toothpaste, veggies, cereals, and automobiles. Other services created and offered in the market include those related to banking, insurance, transportation, trade, education, and health care. This entry was posted on August 1, 2010.

A significant portion of an economy's activity occurs irrationally as a result of market forces at work. Society can depend on the functioning of market forces to satisfy consumer demands for goods like toothpaste, shoes, televisions, washing machines, and similar items. However, some services will not be adequately provided by the operation of market forces, such as defense, law and order, public highways, rural postal services, education, medical care for the poor, and so on. It becomes important for the government to directly intervene in these areas to manufacture and provide goods and services. This entry was posted on August 1, 2010.

Only if a production line generates sufficient profits will the private sector invest in it.

The private sector may be willing to invest in providing postal services in urban regions because there is potential to earn a sufficient return, but it will find it unprofitable to set up a post office in a distant community where demands can only be fulfilled satisfactorily by the government.

In the same way, the private sector might step up to open hospitals and educational institutions for the wealthy who can afford to pay for the services offered to them. However, the needs of the poor will be mainly disregarded if all hospitals and educational institutions are handled by the private sector according to market principles. Therefore, the government finds it necessary to directly invest in many other areas of production and public works in addition to defense and the maintenance of law and order. This entry was posted on August 1, 2010.

Left unsupervised While a significant amount of an economy's activities are handled relatively effectively by market forces, the government frequently needs to step in to address various distortions. For instance, sugar production and distribution in India can be left to the free operation of market forces during normal times. But in some instances, such as when sugar is in short supply and its price is rising, the government may need to implement sugar rationing to satisfy the requirements of the less fortunate members of society. Sugar rationing could involve charging low or subsidized prices for a set amount of sugar to be distributed per person through the public distribution system. This entry was posted on August 1, 2010

Consequently, a study of economics is a study of economic activity.

The influence of market forces allows for the more effective completion of many of these tasks. But.

There are some situations where it becomes necessary for the government to regulate how the market works. In other cases, the functioning of market forces will simply fail to provide the desired results. The government will have to step in as a producer of products and services in these areas. This entry was posted on August 1, 2010.

DETERMINANTS OF PRODUCTION

Four production variables are discussed in economics: land, labor, capital, and entrepreneurship. These four components drive all economic activity and produce all wealth. Land provides the only source of revenue, whereas labor generates salaries, capital generates interest, and business generates profits. Rent, wages, interest, and profit are the four properly defined categories that encompass all income produced in the economy. The features of the four components of production and the income each one produces can be examined in more detail in this chapter. This entry was posted on August 1, 2010.

Although not limited in an absolute sense, land's availability is fundamentally constrained in comparison to other resources. A country's overall land area is fixed by the lines defining its political boundaries. In modern times, a country's land area may be thought of as including the portion of its adjacent oceans that fall inside its exclusive economic zone. Even the rights of a nation to some planetary regions, the Arctic, the Antarctic, or specific oceanic regions where it has bases are up for discussion. This entry was posted on August 1, 2010.

The amount of land that can be used for agriculture or other types of economic activity varies, although the land area of a nation as defined by its political boundaries is fixed. It is possible to turn an area of land that was formerly used for agriculture into a residential neighborhood or to buy it to establish an industry. Dry wastelands can be transformed into productive agricultural land by installing the proper irrigation infrastructure. As a result, in an economic sense, the supply of land is not set. But because there is a relatively little supply, the cost of land tends to rise steadily in real terms over time. This entry was posted on August 1, 2010.

In general, urban land is more expensive than rural or agricultural land. This is thus because the land is more scarce, used more intensively, and productively exploited in metropolitan areas. In addition, the development of multi-story homes and buildings increases the effective supply of land in metropolitan areas. This entry was posted on August 1, 2010.

A country's labor force could be thought of as a segment of its overall population.

The basic rule is that a nation's workforce does not include any of its citizens under the age of 15 or older than 60. The country's workforce will also need to be closed off to some other groups in society who are physically or mentally unable. Women who decide to stay out of the workforce must also be excluded similarly. In most cases, a nation's student population is also not counted among its labor force. This entry was posted on August 1, 2010

When a nation's population is increasing, the labor force of that nation tends to increase as well.

The age distribution of the population affects the labor force size as well.

For instance, a nation with a sizable proportion of the population under the age of 15 will see a significant increase in its labor force for several years in the future. This will have a significant impact on the nation's unemployment rate. This entry was posted on August 1, 2010.

Salary earners and wage earners can be used as broad categories to describe a nation's labor force. Those with stable employment and monthly pay, as well as other advantages like paid time off, are considered salary earners. Contrarily, wage earners are individuals who work for a daily wage, frequently in the agricultural or rural sector, without a fixed term of employment and are not eligible for benefits like job security, paid time off, etc. The group of people who get salaries can also be divided into full-time and part-time workers. This entry was posted on August 1, 2010.

The two aforementioned areas of work have separate unemployment issues. The amount of man-days of employment that are available to wage earners each year determines how much unemployment they experience. The intensity of unemployment among them may be deemed to be high if they experience prolonged unemployment for a year. On the other hand, in the case of those who make a salary, it may be observed that the level of unemployment is correlated with how long it typically takes for job seekers to find acceptable work.

A nation's capital resources are derived from the savings that its citizens, producers, and government have amassed.

in a nation

Without including resources that are imported, the amount of savings in a nation determines the number of resources that are available for investment. Therefore, a nation with a high saving rate has the potential to advance more quickly.

Household savings are typically put in a variety of savings plans, which results in the creation of financial assets. Public institutions employ the public's savings deposits to provide loans for manufacturing and other economic endeavors. Savings that are deposited in a bank, for instance, are used to provide loans to farmers, the government, industrialists, and other groups. The banks pay a rate of interest to the person who placed the savings. The interest rates on the loans that the banks offer are even higher. The profit of the financial institution is the difference between the interest provided to depositors and the interest charged on loans. This entry was posted on August 1, 2010.

Sometimes households choose to purchase shares in various companies with their money rather than depositing them in a bank. The primary distinction between saving money in a bank and investing in stocks is that while the former yields a fixed rate of interest, the latter yields a variable income that carries some risk. To make up for the risks taken on by share investors, the average return on shares is typically higher than the return on bank savings. This entry was posted on August 1, 2010.

Enterprise, the fourth factor of production, is an important one. The actions of the other three elements are coordinated by this factor. It is the job of the entrepreneur to employ capital, labor, and land to build a business.

A unit of production The extra money the business owner makes over and above his expenses, which include rent for the land, laborer compensation, and interest on capital borrowed, is what he calls his profit. An entrepreneur's revenues are essentially a reward for his ability to organize and the risks he takes. This entry was posted on August 1, 2010.

The distinction between an original and a copycat entrepreneur is important in economics. The former is the one who takes risks and starts businesses in difficult locales. By introducing new items to the market and providing the theoretical and applied breakthroughs of scientists and technologists a practical form, the inventive entrepreneur uses difficult new scientific and technological discoveries to create previously unheard-of inventions. A creative entrepreneur takes the initial steps in a new industry. Because he is the pioneer in the industry before the copycat entrepreneur enters the market and replicates the original innovation, he typically stands to gain greatly. When the original innovation is successful, many copycat entrepreneurs will start to follow in its footsteps. From the perspective of a country's technical advancement, the function of an inventor is essential. He is a dynamic component of a nation's growth and economic progress. This entry was posted on August 1, 2010. Section Three

DETERMINATION OF PRICE

Without water, man cannot survive. One of the things that are most beneficial to man is water. However, the cost of water in terms of money is minimal or close to nil. Gold, on the other hand, has a very limited utility. However, gold is relatively expensive on the market. As a result, a good's price is independent of its usefulness to people. On the other side, we see through economics that the forces of supply and demand operate to set the price of an item. This hypothesis states that gold is expensive due to its restricted supply compared to water's high price because of its unlimited supply. This entry was posted on August 1, 2010.

We'll now look at how the market determines the cost of just one product: apples. We are examining the entire Indian market, and we also presume that apples are not imported or exported from India. Assume that a kilogram of apples costs Rs 50 in 2017. Let's assume that, based on the current apple pricing, growers decide to grow 100 crores of apples in 2017. Let's further imagine that 2017 proves to be a particularly terrible year for crops, that real apple output falls 25 billion short of projections, and that the.

Only Rs 75 crore worth of apples were produced in total in 2017. The farmers decide to price apples at Rs 70 per kg. They do this knowing that the overall demand for apples in India in 2017 will be 75 crores at the price of Rs 70 per kg. They were right, and by the end of the year, it was discovered that 75 crores of apples had been made and sold in India for Rs 70 per kg. This entry was posted on August 1, 2010.

Apple growers are encouraged to produce more apples in 2016 as a result of the rise in apple prices. The number of apples produced in 2018 was 125 crore. However, when the 125 crore production target is reached, it becomes clear that not all of the products can be sold for Rs 70 per kg. In 2018, the cost of apples drops to Rs 40 per kg, the price at which the entire crop may be sold. As a result, apples cost Rs 40 per kg in 2018. This entry was posted on August 1, 2010.

From the aforementioned illustration, we may deduce that: The supply of apples is 100 crores for Rs 50 per kg and 125 crores for Rs 70 per kg. At the same time, there is a demand for apples in the amount of Rs. 100 crores at Rs. 50 per kg, Rs. 75 crores at Rs. per kg, and Rs. 125 crores at Rs. 40 per kg. This entry was posted on August 1, 2010.

In graphical form, the aforementioned example results in an upward-sloping supply curve and a downward-sloping demand curve, as illustrated below. In other words, as the price of apples rises, so does the supply, and as the price rises, so does the demand for apples. The price of apples during a typical year where supply and demand are equal is Price Calculation if 100 crores of apples were grown and sold throughout India, the price per kilogram would be Rs 50.

The process of determining market pricing is intricate, and the illustration we've seen is incredibly simplistic. For the sake of simplicity, we assumed that the cost of apples stayed the same for an entire year in India. In actuality, the cost fluctuates from place to place and day to day. Additionally, the cost of apples varies according to their quality. However, a simplified illustration enables us to comprehend the fundamental factors involved in price determination. This entry was posted on August 1, 2010. In general, we can see that raising a commodity's price will increase its production.

Wheat producers are encouraged to boost production when the price of wheat rises in the nation, when the price of wheat increases in comparison to the price of paddy, they may convert some land that has been utilized to grow paddy into wheat. This entry was posted on August 1, 2010.

There is a risk that the production of a necessary good won't keep up with demand if the government sets the price of that good at a low level. The government will be compelled to ration this resource under such circumstances. Otherwise, there will be a