Friday, 13 September 2019

Sectors of an economy - ICSE, Class 9, Economics

An economy can be broadly classified into the following three sectors-

1. Production Sector- Production Sector refers to the sector where goods and services are produced. This sector produces goods and services with the help of various factors of production namely Land, Labour, Capital and Enterprise.

2. Consumption Sector- This sector is also referred to as the household sector. This sector provides all the factors of production to the production sector and in return gets paid for these services (in the form of rent, wages, interest and profit). This income is then spent by the people of this sector on buying goods and services produced by the production sector.

3. Government Sector- Government these days plays a very important role in the economy. It acts both as a producer as well as consumer in the economy. As a producer, it hires various factors of production for production of goods and services like health, education, defence etc which are consumed by the entire society. As a consumer, it purchases various goods and services from the production sector which are consumed collectively by the entire society.

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