Three factors of Economics

Capital

In economics, the stock of resources that are used to produce other goods now and in the future.

In classical economics the three factors of production are capital, labour, and land.

Capital embodies the man-made resources, which include the buildings, plant, equipment, and inventories created by all three factors.

In this sense, capital goods may be contrasted with consumer goods.

The creation of capital goods means that consumption is forgone, resulting in saving.

 The flow of saving becomes a flow of investment. Expenditures on education and training are often referred to as investment in human capital (see Gary S. Becker).

Financial capital is the term given to the stocks and bonds issued in order to finance the acquisition of capital goods.

Labour

In economics, the general body of wage earners.

In classical economics, labour is one of the three factors of production, along with capital and land.

 Labour can also be used to describe work performed, including any valuable service rendered by a human agent in the production of wealth, other than accumulating and providing capital.

 Labour is performed for the sake of its product or, in modern economic life, for the sake of a share of the aggregate product of the community's industry.

The price per unit of time, or wage rate, commanded by a particular kind of labour in the market depends on a number of variables, such as the technical efficiency of the worker, the demand for that person's particular skills, and the supply of similarly skilled workers.

Other variables include training, experience, intelligence, social status, prospects for advancement, and relative difficulty of the work. All these factors make it impossible for economists to assign a standard value to labour. Instead, economists often quantify labour hours according to the quantity and value of the goods or services produced.

Economy Policies

Capitalism

or free-market economy free-enterprise system

Economic system in which most of the means of production are privately owned, and production is guided and income distributed largely through the operation of markets.

Capitalism has been dominant in the Western world since the end of mercantilism. It was fostered by the Reformation, which sanctioned hard work and frugality, and by the rise of industry during the Industrial Revolution, especially the English textile industry (16th–18th centuries).

Unlike earlier systems, capitalism used the excess of production over consumption to enlarge productive capacity rather than investing it in economically unproductive enterprises such as palaces or cathedrals.

The strong national states of the mercantilist era provided the social conditions, such as uniform monetary systems and legal codes, necessary for the rise of capitalism.

 The ideology of classical capitalism was expressed in Adam Smith's Wealth of Nations (1776), and Smith's free-market theories were widely adopted in the 19th century.

 In the 20th century the Great Depression effectively ended laissez-faire economics in most countries, but the demise of the state-run command economies of eastern Europe and the former Soviet Union (see communism) and the adoption of some free-market principles in China left capitalism unrivaled (if not untroubled) by the beginning of the 21st century.

Economic Theory of basic

Classical Economics

School of economic thought largely centred in Britain that originated with Adam Smith and reached maturity in the works of David Ricardo and John Stuart Mill.

The theories of the classical school were mainly concerned with the dynamics of economic growth.

Reacting against mercantilism, classical economics emphasized economic freedom. I

t stressed ideas such as laissez-faire and free competition.

 Many of the fundamental principles of classical economics were set forth in Smith's Wealth of Nations (1776), in which he argued that a nation's wealth was greatest when its citizens pursued their own self-interest.

Neoclassical economists such as Alfred Marshall showed that the forces of supply and demand would ration economic resources to their most effective uses.

Smith's ideas were elaborated and refined by Ricardo, who formulated the principle that the price of goods produced and sold under competitive conditions tends to be proportionate to the labour costs incurred in producing them.

Mill's Principles of Political Economy (1848) gave the ideas greater currency by relating them to contemporary social conditions. Among those who have modified classical economics to reach very different conclusions are Karl Marx and John Maynard Keynes.

Economics and Commerce

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Classical Economy

Economy policies

• Acceptance
•  Three Factor of Economics

Agriculture

Indian population

Indian economy and poverty

Banks

International Trade

Acceptance

Acceptance

Short-term credit instrument consisting of a written order that requires a buyer to pay a specified sum to the seller at a given date, signed by the buyer as a promise to honor the obligation.

Instruments of Credit

Acceptances are often used in export/import transactions: an exporter may require a buyer to sign and return an acceptance, which the exporter can then sell to the bank at a discount, thereby obtaining payment promptly. The buyer then has until the bill's maturity date to dispose of the goods and pay the promised sum (now owed to the bank). See also bill of exchange; promissory note.

Source; Britannica encyclopedia