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Basic concepts of economic sciense

Economics is the social science studying the production, distribution and consumption of goods and services. Every person has needs and wants.

Things which are necessary for survival are called needs. Things which are not necessary for survival but which add comfort and pleasure to our lives are called wants.

The work people do is called economic activity. All economic activities taken together make up the economic system of a town, a country or the world. Such an economic system is a sum-mi.il of what people do and what they want.

An economic system is a set of rules used to allocate a society's resources to satisfy its citizens' needs.

The recourses of a society are known as' its factors of production and include land, labour, capital and entrepreneurs.

The dollar value of all final goods and services produced by an economy over a given period of time is known as the gross national product (GNP), and it can be used to forecast trends, analyze economies, or compare two or more economies.

Economic forces affecting business include the profit motive, with profit being the foundation of economic systems.

Yet another economic force that can determine price levels is supply and demand. Supply is the producer's ability and willingness to provide goods or services on a particular date at a given price. Demand is the amount of goods or services1 that consumers are willing to purchase on a given date at a given price. '

Government is the final force affecting economic system, and its laws help protect and enhance economy, rather than just limit it.

British economy

Britain has an open economy, in which international trade plays a vital role.

Private enterprise accounts for three-quarters of gross domestic product and over two-thirds of total employment.

The economic and industrial pattern has altered considerably in the last few years. As in other industrialized nations, service industries have become much more important and now account for 71 per cent of employees. Financial and other business services have grown in significance. The City of London has the greatest concentration of banks in the world and one of the largest stock exchanges.

The keynote of government industrial policy is to encourage enterprise. Its two foundations are open markets and individual initiative. Competition policy seeks to promote market efficiency. A substantial privatization program has encouraged share ownership. It has also involved the privatization of 29 major businesses, including British Airways, British Gas, British Telecom, etc.

Britain is the fifth largest trading nation in the world. Britain imports far more goods than it exports. Over 80 per cent of visible exports are manufactured goods. Machinery accounts for over 28 per cent of the total. Finished manufactures comprise 52 per cent of imports and semi manufactures 27 per cent. The export of services and other invisible items occupies an important place in the economy. Britain's invisibles surplus is the second largest in the world.

About half Britain's trade is with European Community partners. Britain has international obligations under the General Agreement on Tariffs and Trade and European Community agreements. These have led to the progressive removal of almost all quantitative import restrictions imposed on economic grounds. Britain maintains few restrictions on its international trade.

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