Class 9 ICSE Economics - Final Exam Notes
1. Three Major Problems of an Economy
Every economy faces three basic problems due to scarcity of resources:
Problem: What to produce?
Explanation: Decide which goods and services should be produced and in what
quantity.
Key Points: Scarcity forces choice between alternative goods. Example: Should a
country produce more food or more industrial goods?
Problem: How to produce?
Explanation: Decide the method of production. Should it use labour-intensive or
capital-intensive techniques?
Key Points: Efficient use of resources ensures maximum output. Example: Machines
(capital) vs. workers (labour).
Problem: For whom to produce?
Explanation: Decide who will get the produced goods and services.
Key Points: Distribution depends on purchasing power, government policies, and
societal needs. Example: Luxury cars for rich vs. staple food for all.
Efficient Use of Resources:
- Resources should be allocated to maximize output and satisfy needs.
- Economics as a subject helps society make choices on the best use of scarce
resources efficiently.
2. Economic Growth vs Economic Development
Economic Growth:
- Increase in national income or output of a country over time.
- Measured in GDP or GNP; focuses on quantity.
Economic Development:
- Improvement in standard of living, quality of life, and economic welfare of people.
- Includes education, healthcare, employment, income distribution; focuses on quality.
Growth ≠ Development. A country can grow without improving living standards.
3. Classification of Economies
A. By Level of Development
- Developed Economy: High standard of living, advanced industries, good infrastructure,
high per capita income. (USA, Japan)
- Developing Economy: Improving standard of living, growing industries, moderate
income. (India, Brazil)
- Underdeveloped Economy: Low standard of living, agriculture-based, poor
infrastructure, low income. (Some African countries)
B. By Ownership & Decision Making
- Capitalistic Economy: Private ownership; individual decisions; profit motive.
- Socialistic Economy: State ownership; planned allocation; focus on social welfare.
- Mixed Economy: Combination of private and public ownership; market forces +
government planning; balance profit and welfare.
4. Overview of Indian Economy
A. Nature of Indian Economy
- India is a developing economy.
- Main sectors: Agriculture, Industry, Services (Service sector not included in September
test syllabus).
- Sectors classified by ownership and location.
B. Main Sectors
- Agriculture: Provides food and raw materials; employs large workforce; foundation for
industrial growth (Farming, dairy, fishing)
- Industry: Produces goods; creates employment; contributes to GDP (Factories, textile,
steel plants)
- Interrelationship: Agriculture provides raw materials for industry; Industry supplies
tools, fertilizers, machinery for agriculture.
C. Classification by Ownership
- Private Sector: Owned and managed by individuals or companies (Tata, Reliance)
- Public Sector: Owned and managed by the government (Indian Railways, ONGC)
D. Classification by Area
- Rural Sector: Villages and countryside; agriculture dominant
- Urban Sector: Cities and towns; industry and services dominant
E. Role of Agriculture in India
- Employs largest workforce.
- Provides food and raw materials.
- Helps in export earnings.
- Supports rural economy.
Problems in Agriculture:
1. Low productivity
2. Dependence on monsoon
3. Small land holdings
4. Lack of modern techniques and irrigation
Quick Summary Table – Indian Economy
- Type of economy: Developing
- Major sectors: Agriculture, Industry
- Ownership: Private, Public
- Area: Rural, Urban
- Key issues in agriculture: Low productivity, monsoon dependence, small holdings
