Even before the publication of Johan Maynard Keynes book, some economists were of the view that income and consumption were functionally related. However, it was Keynes who first stressed the importance of the positive functional relationship between aggregate income and aggregate consumption. The consumption function c = f(y)
Mixed Economy is an economic system which combines in itself the features of capitalism and that of the Socialism. Unlike a pure capitalistic economy, it has an important public sector, i.e. a number of industries which are owned and managed by the state. The State is not the all pervasive owner of all means of production.
Socialism is an economic system in which the means of production are owned and managed by the State. Ownership of means of production is not allowed. People can have personal property which is transferable and inheritable. In socialism economic activities are carried on mainly for social gains and personal interest is of less significance.
Communism is an economic system where means of production are controlled and managed by a Central State Authority, and there is also a restriction on the ownership of personal property. In communism personal belongings, as clothing, watches, and shoes are allowed to be owned by individuals and the houses are owned by the State.
Suppose you have a budget of Rs. 10 per week. You can spend your money on potatoes at Rs. 2 per kg or tomatoes at Rs. 1 per kg or on some combination of the two. The consumption opportunity line or budget line shows all possible combinations.
Each point in the diagram stands for a basket of meat and ghee (cooking oil) A, B, C, D are all baskets among which a certain consumer is indifferent. All give equal utility. These points and all others on a smooth curve connecting them constitute an indifference set. An indifference curve is a graphical representation of an indifferent set. Indifference curve properties are:
Capitalism is that part of economic systems where productions are owned and managed by private individuals and institutions. They are at liberty to use any technique of production and produce anything they like. In capitalism, State is to take care of only internal and external security of the country.
International politics may be defined as “the pattern of political interaction between and among states.” Interaction in the international system ranges from conflict to co-operation. At one extreme is pure conflict as when the interests of non-state actors are opposed. If one actor realized its goals, the other can not achieve its objectives.