CBSE Class 12-commerce Macroeconomics Circular Flow of Income and Methods of Calculating National Income
Learn about the Circular Flow of Income and Methods of Calculating National Income from the CBSE Class 12 Commerce Economics chapter National Income Accounting by referring to our revision notes, sample papers, past year papers etc. at TopperLearning.
In this simplified economy, there is only one way in which the households may dispose of their earnings – by spending their entire income on the goods and services produced by the domestic firms. The other channels of disposing their income are closed: we have assumed that the households do not save, they do not pay taxes to the government – since there is no government, and neither do they buy imported goods since there is no external trade in this simple economy. In other words, factors of production use their remunerations to buy 15National Income Accounting the goods and services which they assisted in producing. The aggregate consumption by the households of the economy is equal to the aggregate expenditure on goods and services produced by firms in the economy. The entire income of the economy, therefore, returns to the producers in the form of sales revenue.
- What is the circular flow of income and product?
- Explain the circular flow of income in a simple economy.
- What is meant by circular flow of income?
- Money flows are opposite to real flows. How?
- What is product method?
- What is meant by value added?
- What are the three methods of measuring national income?
- What is the difference between national income at market price and factor cost?
- How the factor payments and the transfer payments are treated in the estimation of national income?
- Define GDP.
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