Question

Pigous definition of Economics, was restricted only to economic systems:

• A. Which were guided by the market forces or monetary terms
• B. In which production and investment were undertaken with the business motives
• C. Both (A) and (B)
• D. Neither (A) nor (B)

Answer 1

Answer: (C)

Both (A) and (B)

As per Pigou : Economic system is restricted to market force because: prices in the economy, production or output which made the definition less effective as an economic system, Therefore, his definition of economics was very much restricted to individual variables like market forces. Explaining relationship between employment and wealth, enabling the economy to return to its "natural rates, purchasing power of money results in decreased government and investment expenditure. Therefore his definition was restricted to production & investment.