Engineering

Economics And
Management
Mechanical Department
Semester : 4
Prepared By :Name
Enrolment No
Harshil Jani
130280119037
Krunal Mamtora
130280119042
Kunj Panchal 130280119052
Parag Parekh
130280119056
Harsh Patel
130280119068
Jay Patel
130280119070
Preyash Panchal
130280119053

Basic Economics
Problems
Introduction
Types of Economics Problems
Meaning & remedies of listed types

Introduction
Problems related to economy are termed
as Economic problem.
Economic problem is an integration of
four parts:
1. Problem of allocation of resources
2. Problem of full- utilization of resources
3. Problem of economical efficiency
4. Problem of economical growth

Different types of Basic economics

problems are as follow :
1. Poverty
2. Unemployment
3. Inflation

Poverty
As per the United Nations, Poverty is
fundamentally a denial of choices and
opportunities, and a violation of human dignity. It
means lack of basic capacity to participate
effectively in society. It means not having enough
to feed and clothe a family, not having a school or
clinic to go to, not having the land on which to
grow ones food or a job to earn ones living, not
having access to credit. It means insecurity,
powerlessness and exclusion of individuals,
households and communities. It means
susceptibility to violence, and it often implies living
on marginal or fragile environments, without
access to clean water or sanitation.
Povertyis general scarcity ordeath ,or the state

Poverty line
To measure the poverty , a central indicator in income and
consumption is defined , which is known as the poverty
line.
It is critical value below which an individual or household is
determined to the poor.
In India, the Minimum Calories intake of a Person has been
put at 2,400 in Rural Area & 2,100 in Urban Areas.
To convert this Calorie intake based Poverty Line into a
Monetary Measure of Poverty, the Cost of Minimum
Consumption Requirements of Food providing the
minimum calories is calculated at prevailing Price.
Thus, Government defined a Person with an Income of
Less than Rs.368 (Rural) & Rs.559 (Urban) per month as
living below Poverty Line.

Statistical Facts on
Poverty

Almost half of the world over 3 billion people

live on less than $2.50 a day.
According to UNICEF, 22,000 children die each
day due to poverty.
Nearly a billion people entered the 21st century
unable to read a book or sign their names.
Less than one per cent of what the world spent
every year on weapons was needed to put
every child into school by the year 2000 and
yet it didnt happen.

Relative Poverty Absolute Poverty

Refers to the Income or
Asset Position of one Class or
Group
of
People
in
comparison with the other
Classes or Groups, or of one
Individual
visavis
the
Others.
The essential point here is
that Poverty of One is
Relative to the Richness of
the other.
For Example, an Average
Middle Class Person is Poor
when compared to the Upper
Middle Class Person, who in
turn, may be poorer than the
Richer Person and so on.

Absolute povertyrefers to a
condition where a person
does not have the minimum
amount of income needed
to meet the minimum
requirements for one or
more basic living needs
over an extended period of
time.
It not only depends on
income but also depends on
services which are needed.
For Example , People below
poverty line are facing
absolute poverty and do not
have enough money to buy
which
is
needed
for
survival.

Causes of Poverty
1.
2.
3.
4.
5.
6.

Unemployment
Corruption
High population growth
Inflation
Land inequality and social justice
Less priority to agriculture sector by
Government
7. Neglecting the poor once
8. Lack of decent housing
9. Health among the main cause of poverty in India

Measures to Reduce
Poverty

1.
2.
3.
4.

Employment opportunities
Uplift of agriculture
Education
Establishment of Small Scale
Industries
5. Reduce Inflation
6. Proper Utilization Of Resources
7. Check Population Growth

Unemployment
When a person is actively searching for a job,
but unable to find the job, is called
unemployment.
It is often used as a measure of health of the
economy.
Unemployment rate is the number of
unemployed person divided by number of
people in labor force.
Unemployment is very serious problem to
society which increases the poverty in the
country.

Types of Unemployment
1. Casual Unemployment: Based on greater
availability of workers than there are jobs for
workers.
2. Disguised Unemployment: This occurs
when when more than the necessary
number of people are employed for specific
work.
3. Seasonal Unemployment: Season related,
agriculture workers mostly.
4. Voluntary Unemployment: People who
are unwilling to work and get continuous
flow of income are voluntarily unemployed.

Causes of Unemployment
1.
2.
3.
4.

Illiteracy
Technology
Population Growth
Social and Cultural Factors

Remedies to
Unemployment
1.
2.
3.
4.

Reform in The Education System

Population Control
Self-Employment Schemes
Policy Towards Seasonal
Unemployment
5. Rapid Indusrtialization

Inflation
It is a sustained increase in the general
price level of goods and services in an
economy over a period of time.
Inflation occurs due to an imbalance
between demand and supply of money,
changes in products and distribution costs
or increase in taxes on products.
Price-inflation is measured by inflation rate
which is calculated year on year bases.

Types of Inflation
1. Demand-pull (or excess demand
inflation)
2. Cost-push inflation
3. Pricing power inflation
4. Sectorial inflation

Causes of Inflation
1.
2.
3.
4.
5.

Unfavorable agricultural production

Hoarding
Deficit financing
Population and black money
Upward revision of admistered
prices
6. Increase in indirect taxes
7. Increase in wage rates

Remedies of Inflation
1. Monetary measures

Higher bank rate

Sale of government securities in open market
Increase in reserve requirements
Selective credit control measures

2. Fiscal measures
Reduction in government spending
Increase in tax rates
Increase in public borrowings

3. Other measures