groups: households and firms (the private sector), the government (the public sector), and the rest of the world (the external sector.

We are supposed to recognize that one person’s expenditure is someone else’s income

(i)  Socialism is defined as a way of organizing a society in which major industries are owned and controlled by the government.
(ii) A Socialistic economy is also known as ‘Planned Economy’ or ‘Command Economy'.

1. The term coined by Manfred D Steger (2002) to denote the new market ideology of globalisation that connects nations together through international trade and aiming at global development.
2. This ideology is also termed as ‘Extended Capitalism’ or 'Globalism'.

(i) Price Mechanism is the heart of any capitalistic economy.
(ii) All the economic activities are regulated through price mechanism.

Globalisation is nothing but connect the nations together through international trade and aiming at global development.

The movements of business cycles are,
(i) Boom
(ii) Recession
(iii) Depression and
(iv) Recovery

There are three models of circular flow of income. They are,
(i) Two sector model
(ii) Three sector model
(iii) Four sector model

(i) Central planning authority is the controlling authority in a socialistic economy.
(ii) All the decisions are under taken by the central planning authority.
(iii) It means all factors of production are nationalized and managed by public authority.

i) Efficient use of Resources
ii) Automatic working
iii) Higher Rates of capital formation
iv) Development of new technology

(i) Circular flow of income is a model of an economy showing connections between different sectors of an economy.
(ii) It shows flows of income, goods and services and factors of production between economic agents such as firms, households, government and nations.

(i) Capitalism is a system where the means of production are privately owned.
(ii) Market determines the economic activities (e.g.) The USA, Japan.

(i) Inflation refers to steady increase in general price level.
(ii) The General price level is based on Wholesale Price Index, Consumer Price Index.

Macro economics is the branch of economics that studies the behaviour and performance of an economy as a whole.