SOME
BASIC CONCEPTS OF MACRO ECONOMICS
•PRESENTED BY:
RAMESH KUMAR,
PGT (ECONOMICS)
K V FARIDKOT CANTT
•
•THERE
ARE DIFFERENT CONCEPTS OF MACRO ECONOMICS
•1. Factor income,
•2. Transfer Income,
•3. Current Transfer,
•4. Capital transfer,
•5. Stock,
•6. Flow,
•7.Normal resident,
•8.Final goods and
•9. Intermediate goods.
•10. Gross Investment
and
11. Depreciation.
• EXPLANATION OF
CONCEPTS
•1. Factor income: - Income earned by
factors of production during production process by rendering their services. It
is bilateral concept.
•2. Transfer Income: - Income received
without rending any services. Like scholarship, old age pension and
unemployment allowance.
•3. Current Transfer:- Transfer made from the income of the payer and added to
the income of recipient for consumption expenditure.
•4. Capital transfer: Capital Transfer are
those transfer which are made from the saving of the payers for investment
purpose.
•5. Stock: - Any economic variable
is measured at a point of time like water in the tanks, money in bank account,
distance and money supply etc. It is static concept.
•6.Flow:-
Any economic variable
which is calculating during period of
time is called Flow variable. Water in river, spending of money, Export and
import etc
•7.Normal resident: - It may be person or institute, who resides more than one
year. His / Her centre of interest lies
in domestic territory of a country. He done all his
economics activities from that country
•8.Final goods :- Final goods are those goods, which are out off production
boundary and ready for consumption or you. These goods or services have values,
or Price.
•9. Intermediate goods: - Intermediate good are
those goods which are not the final goods, but these good help to produce other
goods like - sugar cane help to made sugar, leather for shoes, thread for
cloths.
•10. Gross Investment : -
•Gross Investment is addition to the
stock of capital or capital equipment before making allowance for deprecation.
•It raise the
productive capacity of goods and services.
•However investment
should not confused with finacials investment , because
F I is only transfer of ownership right from one person to another like,
shares, bonds, debentures, an old house.
11. Depreciation : -
•Depreciation or
Consumption of fixed capital is loss in value of fixed capital due to normal
wear and tear or change in technology. It is also called ‘capital consumption
allowance’. Loss of fixed assets is attributed due to following reasons: -
•(i) Regular wear and
tear,
•(ii) Natural rate of
accidental damages,
•(iii) Foreseen obsolescence.
•
•Home work
•1. What is meant by
factor income and transfer income?
•2. What are the Current transfer and capital
transfer?
•3. What is means by
stock and flow?
•4. What is meant by
resident?
•5. What is production
boundary?
•6. What is meant by
Gross investment?
•7. What are reasons
for consumption of fixed capital.
•
