A monarchy is a type of government ruled by a hereditary ruler, such as a king or queen. A theocracy, on the other hand, is a system where a small group of religious leaders rule in the name of a god. A monarch who claims the divine right of kings uses their religion to justify their position of power. (See image: Courtesy of tvtropes.org) A monarch can claim to rule by god's will, but doesn't have to be a religious leader.
Some common problems they faced is that they both expanded their lands and had trouble controlling the old and new territories.
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Yes, in general it is true that an important characteristic of civilization is economic activity, since without economic activity it is impossible to trade and grow the economy to the extent that people can develop new skills and trades.
