(i) Capital goods are defined as all goods produced for use in future productive processes. MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. Economic territory or Domestic Territory: (ii) According to the production boundary, if a good crosses the imaginary line around the production unit and reaches to final consumer or investment made by a producer within the imaginary line of production unit, it is known as final good. Free PDF download of Class 12 Macro Economics Chapter 1 - Introduction to Macro Economics Revision Notes & Short Key-notes prepared by our expert Economics teachers from latest edition of CBSE(NCERT) books. For example, Indian Embassy in Russia is a part of the domestic territory of India. This interdependence can be explained with the help of the diagram given here. (v) Foreigners who are the employees of non-resident enterprises and who have come to the country for purposes of installing machinery or equipment purchased from their employers. Following are not included under the category of Normal residents: It is also called the â€˜Income Theory’ or â€˜Employment Theory’. But in national income accounting, the term domestic territory is used in a wider sense. Macroeconomics: Contents (a) Citizenship is basically a legal concept based on the place of birth of the person or some legal provisions allowing a person to become a citizen. (b) Expenditure on Military Equipment missiles, rockets, bombs, warships, submarines, military aircrafts, tanks, missile carriers and rocket-launchers etc. They are not of relatively great value. • Services: Services are non-material goods which satisfy the human wants directly. (iii) Officials, diplomats and members of the armed forces of a foreign country. This includes the expenditure on new parts of the fixed assets. (iv) Hence, Real flows of production and consumption of Firms and households = Money flows of income and expenditure of Firms and Households. (c) Value of goods received from foreign governments in form of gifts or as transfers. (i) Personal Consumption (like bread purchased by consumer household), or (if) Investment Or Capital Formation (like building, machinery purchased by a firm) 5. Capital transfers: Capital transfers are defined as transfers in cash and in kind for the purpose of investment to recipient made out of the wealth or saving of a donor. But, it is a Money flow, if we study it in terms of the market value of the goods produced. For example, bread used by a consumer household is a final goods, but the same used by a bakery for making a sandwich is a intermediate goods. Chapter 1 Introduction to Macroeconomics and its Concepts; Chapter 2 National Income and Related Aggregates; Chapter 3 Money; Chapter 4 Banking; Chapter 5 Aggregate Demand and Its Related Concepts; Chapter 6 National Income Determination and Multiplier; Chapter 7 Excess Demand and Deficient Demand (v) Firms sell all that is produced to the households. (iv) Households spend their entire income on consumption. (iv) International bodies like World Bank, World Health Organisation or International Monetary Fund are not considered residents of the country in which these organisations operate but are treated as residents of international territory. Circular flow of income: It refers to flow of money income or the flow of goods and services across different sectors of the economy in a circular form. This chapter provides a brief introduction to the concept Macroeconomics. There are three types of phases of Circular flow. Examples: Old Age Pension, Scholarship, Unemployment allowance. The first chapter of this subject is Macroeconomics. 10. • Transfers made from the income of the payer and added to the income of the recipient (who receive) for consumption expenditure are called current transfers. Thus, the basis of classification between these two goods is not the commodity itself, but the use made of it. Class 12 Macroeconomics Chapter 1 will start with the introduction to the concepts first. With the help of these ncert.nic.in Solutions Class 12th Macroeconomics Chapter 1, students can score better marks in … including repair and maintenance of capital stock: Non-durable goods and services are those which have an expected life time of use of less than one year. 3. (iv) These goods require repair or replacement over time as their value depreciate over a period of time. For example, Distance, Amount of Money, Money Supply, Water in Tank, etc. CBSE Notes for Class 12 Macro Economics. The students need to learn micro as well as macroeconomics. (c) There is no time dimension in stock variables. This is why this subject has been added for the benefit of the students. (b) It is a bilateral [Two-Sided] Concept. Real flow or physical flow: Real flow of income implies the flow of factor services from the household sector to the producing sector and corresponding flow of goods and services from the producing sector to the household sector. They are treated as part of the economic territories of their respective countries. (b) Resale in the same year (If car purchased by a car dealer for resale). • If we study it in term of the quantity of goods and services produced, it is a Real Flow. Economics that studies how the aggregate economy behaves and other sectors to the Producer sector the staffs these! Macroeconomics Solutions Class 12th Macroeconomics Chapter 1 Introduction provides a brief Introduction to the concepts first CBSE Class Economics... 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