Question

Explain the functions of economy.​

Answer 1

Answer:

The three most important functions of economics are as follows:

Just as feeding, digestion and growth are the vital processes of living beings; similarly production, consumption and growth are the essentials of economies.

Production:

The first vital process of an economy is production which must go on continuously. “Production includes any activity, and the provision of any service, which satisfies and is expected to satisfy a want.”

Consumption:

The second vital process of an economy is consumption. Consumption means the use of economic goods and services in the satisfaction of human wants.

Growth :

Now we look at the processes by which economies grow like living things. Economic growth is “the process whereby the real per capita income of a country increases over a long period of time.” We enumerate the factors which lead to the growth of an economy.

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Answer 2

Functions of Economies: Production, Consumption and Growth
Production: The first vital process of an economy is production which must go on continuously.
Consumption: The second vital process of an economy is consumption.