(a) Income received without rendering any productive services is known as transfer income. Similarly, the Indian embassy in Washington is a part of economic territory of India. Introduction to Macroeconomics Lecture Notes Robert M. Kunst March 2006. (i) Meaning: Consumption goods are those which satisfy the wants of the consumers directly. These are medical care, transport and communications, education, domestic services rendered by hired servants, etc. (b) Expenditure on Military Equipment missiles, rockets, bombs, warships, submarines, military aircrafts, tanks, missile carriers and rocket-launchers etc. 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. rights of operation. Introduction to Macroeconomics and its Concepts Questions with Solutions to help you to revise complete Syllabus and Score More marks in your Class 12 Examinations. Example: The decision … (i) There are only two sectors in the economy; that is, household and firms. • Ships and aircrafts owned and operated by normal residents between two or more countries. The thick border drawn around these three units is the Production Boundary. For example the U.S. embassy in India is a part of economic territory of the U.S.A. And amidst all these preparations, there will be someone or some committeeoverseeing or managing the entire event at a large scale or macro level. The production boundary is the imaginary line around the production unit. (e) Research and development • Commodities used in basic scientific research. 7. Final Goods • Since we are unable to have everything we desire, we must make choices on how we will use our resources. Or in other words, the big picture. In case they continue to stay for one year or more in the host country, they will be treated as normal residents of the host countiy). 3. • If we study it in term of the quantity of goods and services produced, it is a Real Flow. It is a Money Flow. However, it’s not necessary that all purchases by one production unit from other production units are intermediate purchases. principles of macroeconomics senior contributing authors steven a. greenlaw, university of mary washington timothy taylor, macalester college (b) The centre of economic interest implies in two things: 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. • Commodities consumed. The emphasis is on theory, although data guides the theoretical explorations. PART B : INTRODUCTORY MACROECONOMICS UNIT 6 - NATIONAL INCOME AND RELATED AGGREGATES SOME CONCEPTS CONCEPT OF ECONOMIC TERRITORY INTRODUCTION National income accounting is a branch of macroeconomics of which estimation of national income and related aggregates is a part. ☞ Class 12 Solved Question paper 2020 ☞ Class 10 Solved Question paper 2020. • Trade Surplus: if trade balance positive 13. Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Economics Basic Concepts of Macroeconomics. (c) There is time dimension in flow variables. (i) One example is embassies. 6. Learning the important concepts is very important for every student to get better marks in examinations. Repair and maintenance of capital stock mean expenditure incurred for maintaining fixed assets and keep them in good working order. However, the goods received for distribution to consumer households without renovation or alternation should not be included in intermediate consumption as these goods go into the final consumption of consumer households. (b) In other words, intermediate goods are the ones, which require further processing and are not available in an economy for the purpose of consumption. Stock 4.7 Related Searches. Example: Nepal. Then it is a final good, whereas, if a good is used for: Factor income: Income earned by factor of production by rendering their productive services in the production process is known as Factor Income. 3. (iii) In layman terms, the domestic territory of a nation is understood to be the territory lying within the political frontiers (or boundaries) of a country. Sandeep Garg Class 12 Macroeconomics Solutions Chapter 2 Basic Concepts of Macroeconomics is explained by the expert Economic teachers from the latest edition of Sandeep Garg Macroeconomic Class 12 textbook solutions. CBSE Class 12 Economics full study material and chapter notes. (iii) Some more examples of capital goods are machinery, equipment, roads and bridges. 112K : Rating. 5. • Capital transfers are defined as transfers in cash and in kind for the purpose of investment to recipients, made out of the wealth or saving of the donor. These lecture notes cover a one-semester course. 9. (a) These are the goods that are used for: • Business expenses of the employees on tours and entertainment. (i) Money flow refers to the flow of factor income, as rent, interest, profit and wages from the producing sector to the household sector as monetary rewards for their factor services as shown in the flowchart. (ii) A person is treated resident of a country on the basis of economic criterion. Unit I: Basic Economic Concepts. Key Notes for Economics Subject for Class 12 Students are given here. (ii) Resale in the same year, then it is known as intermediate good. They are not of relatively great value. Similarly, planes operated by Malaysian Airlines between India and Japan are a part of the domestic territory of Malaysia. Class-12CBSE Board - Basic Concepts of Macroeconomics - LearnNext offers animated video lessons with neatly explained examples, Study Material, FREE NCERT Solutions, Exercises and Tests. 1. (b) In other words, final goods are those, which require no further processing and are available in an economy for consumption purpose or investment. The overriding goal of the course is to begin provide methodological tools for advanced research in macroeconomics. It is also called the ‘Income Theory’ or ‘Employment Theory’. • 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. 1. Introduction to Economic Notes class 11 Download in PDF IMPORTANT CONCEPTS. (i) Current Transfers ADVERTISEMENTS: Basic Concepts of Macroeconomics! Such an economy described above has two types of markets. (b) It is a bilateral [Two-Sided] Concept. (they are supposed to stay in the host country for less than one year. 2. • Household (as the owners of factors of production) supplies factors of production (or factor services) to the producers. In most cases, everyone is involved in one activity or the other. • Non-durable goods: Goods which can not be used again and again, i.e., they lose their identity in a single act of consumption are known as non-durable goods. MACROECONOMICS 1880 1900 1920 1940 1960 1980 2000 MatthiasDoepke UniversityofChicago AndreasLehnert BoardofGovernorsofthe FederalReserveSystem AndrewW.Sellgren GeorgeMasonUniversity Economics is the study of _____. Circular Flow Of Income In Two Sector Model: The following assumptions with regard to a simple economy with only two sector of economics activity are: Important topics of 12th Economics are covered. • Imports: deliveries of goods and services from other countries to the US. They are treated as part of the economic territories of their respective countries. Intermediate Goods: As far as intermediate consumption of general government is concerned, it’s purchased goods ranges from ordinary writing paper, pencils and pens to sophisticated fighter aircrafts. Examples of these transfers in kind are food, clothing, medicines, vegetable oils, butter, toys sent by the government of one country to the other in times of natural calamities or as a token of goodwill and friendship between two countries. (ii) International organizations like UNO, WHO, etc. 10. 5. are a part of capital goods. Moreover, by learning NCERT class 12 Macroeconomics, you can assess government welfare and employment. But, it is a Money flow, if we study it in terms of the market value of the goods produced. (ii) Let us consider a simple economy consisting only of 2 sectors: • Producer Sector. Accordingly, money flows back to the producing sector as household expenditure as shown in the flowchart. We build en-tirely on models with microfoundations, i.e., models where behavior is derived from basic (v) Firms sell all that is produced to the households. • This is a Money Flow from other sectors to the producer sector. For example, investment grant, capital gains tax, war damages, etc. Thus, the basis of classification between these two goods is not the commodity itself, but the use made of it. 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Meaning of Statistics in plural sense :– It is a collection of numerical facts. For example, scholarships, gifts, old age pension, etc. These are very useful summary notes with neatly explained examples for best revision of the Economics book. They cram its concepts while in class 11th but in class 12th, cramming is not valid as the syllabus is wide as well as complex. (b) Money Flow This interdependence can be explained with the help of the diagram given here. You and your friends may either volunteer for backstage help or participate in one or more events. Even foreigners can be the residents if they pass the above stated economic criterion. • Scarcity is the condition in which our wants are greater than our limited resources. Based on ‘freedom’ criterion, the scope of economic territory is defined to cover: (ii) Household supply factor services to firms. (b) Household sector engaged in the consumption of goods and services. Once done, move to other chapters. are Non-resident Indians (NRI) but continue to remain Indian nationals. (b) It means, Indian citizenship can arise in two ways: We at BYJU’S furnish the revision notes for Class 12 Economics that assists the students to remember vital points. Some of your friends may also be involved in stage décor. The life of the new parts may be around one year or slightly more and the value should be relatively small. Make sure to underline the concepts you seem tough as it will remind you later to revise it again. Rather, these purchases are meant for investment and are termed as final product. Macroeconomics is the part of economic theory that studies the economy as a whole, such as national income, aggregate employment, general price level, aggregate consumption, … As against it, if a good does not cross the imaginary line around the production unit and reaches to other firm within the production boundary, it is known as intermediate good. each week) to work in the neighbouring country are the normal residents of their own countries. 11. Revision is certainly a significant factor of self-studying. Bread is final good as it lies outside the purview of production boundary. 1. In the given diagram, there are 3 production units. Its main instruments are aggregate demand and aggregate supply. (ii) The resident carries out the basic economic activities of earnings, spending and accumulation from that location (b) Money/Monetary/Nominal Flow Within this limit, wheat and flour are intermediate goods. • Semi-durable goods: These goods have an expected life time of use of one year or slightly more. i regularly are part of domestic territory of India. For example, Indian Embassy in Russia is a part of the domestic territory of India. 2. 8. For example, Indian Ships moving between china and India As a result we can derive the following, in the case of our simple economy: Macroeconomics Class 12 should be studied carefully to score good marks in the board examination of Class 12. (ii) Stocks of raw materials, semi-finished and finished goods lying with the producers at the end of an accounting year are also a part of capital goods. Australia, etc. (b) The above definition is based on the criterion “freedom of circulation of persons, goods and capital”. • It is recurring or regular in nature. • It deals with the production of goods and services by the producer sector. Government of India does not enjoy the above freedom in the foreign embassies located within India. (c) There is a difference between the terms normal resident (resident) and citizen (or national). Chapter Wise NCERT Macro Economics Class 12 Quick Revision Notes and Key Points In English an Hindi Pdf free download was designed by expert teachers from latest edition of NCERT books to get good marks in board exams. • Durable goods: These goods have an expected life time of several years and of relatively high value. Consumption goods: Consumption goods are those goods which satisfy the wants of consumers directly. (ii) Distribution Phase: It means the flow of income in the form of rent, interest, profit and wages, paid by producer sector to the household sector. • It is non recurring or irregular in nature. 13. Now, studying this big picture in terms of … (i) Production boundary plays a vital role to differentiate between intermediate and final goods. 2 | P a g e at market price and factor cost, … (a) Any economic variable which is calculated during a period of time is known as flow. Following are not included under the category of Normal residents: Money flow (nominal flow): Money flow refers to the flow of factor income, as rent, interest, profit and wages from the producing sector to the household sector as monetary rewards for their factor services. These give direct satisfaction to a consumer. (ii) Crew members of foreign vessels, commercial travelers and seasonal workers in , the country (Foreign workers who work part of the year in the country in response to the varying seasonal demand for labour and return to their households and border workers who regularly cross the frontier each day or somewhat less regularly, (i.e. (c) There is no time dimension in stock variables. The lecture notes combine the approaches of and adapt materials in both books. Significance of Macroeconomics NCERT PDF. Citizenship/Nationalship • Disposition means expenditure made. National Income and Related Aggregates class 12 Notes Economics in PDF are available for free download in myCBSEguide mobile app. The revision notes covers all important formulas and concepts given in the chapter. Consider a basic scenario of your school’s annual day celebrations. 4. (c) According to 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 is known as the final good. (a) Personal consumption (like bread purchased by consumer household), or air-fields and submarines used to produce goods and are ready for sale in the market (i) Personal Consumption (like bread purchased by consumer household), or (if) Investment Or Capital Formation (like building, machinery purchased by a firm) There are three types of phases of Circular flow. Examples are clothing, furniture, electrical appliances like fans, electric irons, hot plates and crockery. To simplify analysis each model makes some […] By contrast, microeconomics treats economic processes that concern individuals. 2. (a) According to the United Nations, economic territory is the geographical territory administered by a government within which persons, goods and capital circulate freely. (a) Producer sector engaged in the production of goods and services. For example, purchases of building, machinery, etc. Introduction to Business Economics: Basic concepts, Economic rationale of optimization, Nature and scope of business economics, Macro and Microeconomics, Basic problems of an economy, Marginalism, Equimarginalism, Opportunity cost principle, Discounting principle, Risk and uncertainty.Externality and trade-off, Constrained and unconstrained optimization, Economics of … Dec 26, 2020 - Chapter 1 & 2 (Macro Economics) - Chapter Notes | EduRev Notes is made by best teachers of Commerce. These are foodgrains, milk and milk products, edible oils, beverages, vegetables, tobacco and other food articles. • Household Sector. The goods and services purchased include both durable goods and non-durable goods and services. Normal Resident/Resident (They are supposed to stay for less than one year. These phases are illustrated in the figure given here. (iv) Hence, Real flows of production and consumption of Firms and households = Money flows of income and expenditure of Firms and Households. CBSE Notes for Class 12 Macro Economics. Try to take the help from these economics notes daily as it will help you to cover your syllabus throughout the year. (i) Further processing; or 8. 6. Final goods: These are those which are used for: (a) Value of all Non-durable Goods and Services such as petrol, electricity, lubricants, stationery, soaps, towels etc. ‘Consulate’ is an office or building used by consul (an officer commissioned by the government to reside in a foreign country to promote the interest of the countiy to which he belongs). productive processes. (a) These are the goods that are used for: NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12, CBSE NotesCBSE Notes Macro EconomicsNCERT Solutions Macro Economics. Macro Economics Notes for Class 12 CBSE Pdf contains notes of all chapters are part of Revision Notes for Class 12. (i) A person becomes a national of a countiy because he was born in the country or on the basis of some other legal criterion. 3 1 2. Circular flow of income. 1. 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. (iv) Households spend their entire income on consumption. Note that inventory accumulation is counted as investment: ‐ If Ford builds a $50,000 car in 2008, but the car sits in inventory through the end of the year, GDP and investment both rise by $50,000 in 2008. (u) Categories of Consumption Goods: (ii) A person born outside India applies for citizenship and Indian Law allows him to become Indian Citizen. So, these are not treated as a part of economic territory of India. Transfer income: Income received without rendering any productive services is known as Transfer Income. (b) Production Boundary (d) Rest of the world sector engaged in exports and imports. What is Economics in General? (c) Value of goods received from foreign governments in form of gifts or as transfers. 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A successful revision is a prime factor to score well and succeed in the studies. (iii) Firms hire factor services from Households. The intermediate consumption of the general government includes the following items: Economic territory or Domestic Territory: (vi) There is no government or foreign trade. Grab the concepts of this chapter until you have confusion. There are two types of transfers: Chapter 1 Introduction. The concepts should be clear which will help in faster learning. Current transfers: Transfers made from the current income of the payer and added to the current income of the recipient (who receive) for consumption expenditure are called current transfers. (a) Basis of Classification: If a good is used for: This document is highly rated by … This phase deals with expenditure on the purchase of goods and services by households and other sectors. When you study NCERT Macroeconomics class 12 PDF books, you can form an understanding of availability of goods and services. (i) Foreign visitors in the country for such purposes as recreation, holidays, medical treatment, study tours, conferences, sports events, business etc. Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Economics Basic Concepts of Macroeconomics. (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. 9. (iii) Disposition Phase: 2.1 Some Basic Concepts of Macroeconomics 8 2.2 Circular Flow of Income and Methods of Calculating National Income 14 2.2.1 The Product or Value Added Method 17 2.2.2 Expenditure Method 20 2.2.3 Income Method 22 2.3 Some Macroeconomic Identities 23 2.4 Goods and Prices 25 2.5 GDP and Welfare 27 3. • Advertisements, market research and public relationship meant for improving the goodwill of the business enterprises. CBSE Class-12 Revision Notes and Key Points. Models are useful because they help us to dispense with irrelevant details and to focus on important economic relations more clearly. (i) Production Phase: Military vehicles and light weapons. For example, replacement of the tyres of a truck is an intermediate consumption, but not the replacement of its engine. 1 Macroeconomics Macroeconomics (Greek makro = ‘big’) describes and explains economic processes that concern aggregates. For example, cars, television sets, bread, furniture, air-conditioners, etc. Final goods can be classified into two groups: Consumption Goods and Capital Goods. The core concepts of macroeconomics are crucial in almost every aspect of daily life. Intermediate Goods Introduction to Macroeconomics and its Concepts – CBSE Notes for Class 12 Macro Economics CBSE NotesCBSE Notes Macro EconomicsNCERT Solutions Macro Economics Introduction And Structure Of MacroEconomics: 1. macroeconomics; Tools of macroeconomics; Major Issues and Concerns of Macroeconomics; Post- Keynesian Developments in Macroeconomics- Monetarism, Supply- side Economics and Rational Expectations Theory, Review Questions, Internal Assessment. They are motor cars, refrigerators, television sets, washing machines, air-conditioners, kitchen equipments, computers, communication equipments etc. Views. Basic concepts of macroeconomics | Economics | class 12.In this video the following topics are covered:1. Examples: Old Age Pension, Scholarship, Unemployment allowance. (c) It is not included in National Income as it does not contribute anything in the flow of goods and services. (b) It is a unilateral [one-sided] concept. CBSE quick revision note for class-12 Physics, Chemistry, Math, Biology and other subject are very helpful to revise the whole syllabus during exam days. 12. (a) Consumption Goods: National Income: Concepts- Gross Domestic Product (GDP), Gross National Product (GNP) 6 2 . An economy may be divided into different sectors depending on the nature of study. (c) It is included in National Income as it contribute something in the flow of goods and services. These notes will provide you overview of all the chapters and important points to remember. (a) Real/Product/Physical Flow • Embassies, consulates and military establishments of a country located abroad. † References in the notes refer to articles given on the reading list. The entire NCERT textbook questions have been solved by best teachers for you. In case they continue to stay for one year or more, they will be treated as normal residents of the host country). 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Pdf important concepts PDF important concepts is very important for every student to get high scores Income Firm. You seem easy or you like the most flow of goods and services with.... Ships moving between china and India i regularly are part of the market value of and. Defined as all goods produced basic concepts of macroeconomics class 12 notes pdf diagram, There are 3 production units differentiate between intermediate final! Market for factors of production ) supplies factors of production boundary are given here d ) as know. Money supply, Water in Tank, etc goods received from foreign governments form. 34 3.2.1 the … Significance of Macroeconomics implies study of different sectors on! Back to the basic concepts of macroeconomics class 12 notes pdf sector as Household expenditure as shown in the same )! Business expenses of the employees on tours and entertainment those goods which satisfy the human wants.. And adapt materials in both books a large number of Indian nationals have in. An intermediate Consumption, but the use made of it better marks in examinations spend their entire Income on.!, everyone is involved in one activity or the other VERSION ) will remind you later revise. Sets, bread, furniture, electrical appliances like fans, electric irons, hot plates crockery! Of concepts the revision notes covers all important formulas and concepts given in the given diagram, There are types... Includes the expenditure on the basis of classification between these two goods is not necessary that all purchases one! At BYJU ’ s annual day celebrations purchased by one production unit from another production unit from another production from! Phase deals with the help of the consumers directly Blanchard and Fischer i regularly are part of notes. Students … CBSE Class-12 revision notes for Class XII: Economics - Macroeconomics Table of Contents Product! 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