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Basic concepts in macroeconomics

 CONSUMPTION GOODS:- Consumer goods are products bought for consumption by the average consumer. Alternatively called final goods , Consumer goods are the end result of production and manufacturing . Clothing, food and jewellery are all examples of consumer goods. From an economic point of view, consumer goods can be classified as durable (useful for longer than three years) , nondurable (useful for less than three years ), or pure services  (consumed instantaneously as they are produced). For marketing purposes, consumer goods can be grouped into different categories based on consumer behaviour, how consumers shop for them , and how frequently consumer shop for them. CAPITAL GOODS:- These are physical assets that a company uses in the production process to manufacture products and services that consumers will later use. Capital goods include buildings, machinery, equipment, vehicles and tools. Capital goods are not finished goods instead they are used to make finished goods. ...
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Methods of measuring national income

There are 4 methods of measuring national income. Which method is to be used depends on the availability of data in a country and the purpose in hand. 1) PRODUCT METHOD; - according to this method,  the total value of final goods and services produced in a country during a year is calculated at market prices. To find out the GNP,  the data of all productive activities are collected and assessed at the market prices.  Only the final goods and services are included and the intermediary goods and services are left out. 2) INCOME METHOD:- according to this method, the net income payments received by all citizens of a country in a particular year are added up. It takes into account the net incomes that accrue to all factors of production. The data pertaining to income are obtained from different sources. 3) EXPENDITURE METHOD:- according to this method,  the total expenditure incurred by the society in a particular year is added together and includes consumption,...
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Different types of income

Some other types of income are as follows: 1) DOMESTIC INCOME - Income generated by factors of production within the country from its own resources is called domestic income.  It includes; - (a) wages and salaries (b) rents (c) interest (d) dividends (e) undistributed corporate profits (f) mixed incomes (g) direct taxes Since domestic income does not include income earned from abroad,  it can also be shown as:       Domestic Income= National Income- Net income earned from abroad. 2) PRIVATE INCOME - It is the income obtained by private individuals from any source, productive or otherwise, and the retained income of corporations. It can be shown as: Private Income = National Income + Transfer Payments + Interest on Public Debt - Social security - Profits and surpluses of public undertakings. 3) PERSONAL INCOME - it is the total income received by the individuals of a country from all sources before payment of direct taxes in one year, . It can ...
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Concepts of national income

The concepts of National Income are:- GDP, NDP, GNP, NNP. 1) GDP- It stands for GROSS DOMESTIC PRODUCT.  It is the total value of goods and services produced within the country during a year. GDP is calculated both at market price and factor cost. A) GDP AT MARKET PRICE:- Dernberg defines GDPat market price as, " the market value of the output of final goods and services produced in the domestic territory of a country during an accounting year. " The formula to calculate GDP at Market price is:              GDPmp= C+I+G+(X-M) Where,              C= Consumption expenditure on goods and services               I= Investment in fixed capital               G= Government expenditure on final goods and services                X= Exports of goods and services of the country       ...
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What is national income? It's meaning and definitions.

MEANING National Income is a term which has been used synonym to national dividend,  national output and national expenditure. On this basis National Income has been defined in a number of ways. In common words,  National Income means the total value of goods and services produced annually in a country. In other words,  the total income accruing to a country from economic activities in an year's time is known as national income. It includes payments made to all resources in the form of wage,  interest,  rent and profits. DEFINITIONS The definitions of national income can be grouped into two classesclasses:- Traditional Definitions and Modern Definitions. 1) TRADITIONAL DEFINITIONS A) Marshall's definition - According to Marshall, " The Labour and capital of a country acting on its natural resources produce annually a certain net aggregate of commodities,  material and immaterial including services of all kinds. This is the true net annual inco...
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