Class 12 Economics Chapter 1 Notes
introduction of macro economics
Here we are providing notes of the first chapter of Class 12 Economics “Introduction to Macroeconomics”. In this chapter, the main features related to macroeconomics have been studied.
These notes will prove useful for those students who are preparing for the board exam this year. This material prepared in simple and systematic language will help in revising the chapter quickly and remembering the main points.
Introduction of Macro Economics Class 12 Economics chapter 1
class 12 Economics chapter 1 notes
Macro Economic
Macroeconomics is that part of economic theory which studies the behaviour of aggregates relating to the entire economy such as national income, national output.
Micro economics
Studies individual units of an economy, such as individual demand, production of a firm.
Consumer Goods
Those final goods and services which directly satisfy the human wants of the consumer. The goods and services purchased by the consumer are consumer goods.
capital goods
These are the final goods that help in production and are used for income generation. These increase the capital assets of the producer and are durable in nature.
Final goods
Final goods are those goods which have crossed the production line and are ready for use by their final users. That is, those which are used for consumption or investment.
Consumers
The persons/entities who consume final goods and services to satisfy their wants are called consumers.
Producers
The firms/organisations that produce final goods and services are called producers.
intermediate goods
These are goods and services which can be resold in the same year or are used as raw material in the production of final goods or which can be transformed. These do not directly fulfill human needs. Services used by the producer such as lawyer’s services; raw materials etc. are intermediate goods.
depreciation
The decrease in the value of fixed assets due to normal wear and tear, obsolescence and passage of time is called depreciation or consumption of fixed capital. Depreciation is calculated by dividing the value of fixed capital by its estimated life (in years).
Investment
The increase in the stock of capital goods in a given period is called investment. It is also called capital formation or investment.
Gross Investment:
The total increase in the stock of capital goods in a given time period is called gross investment. It includes depreciation. It is also called gross capital formation.
Net Investment:
Net investment is the net increase in the stock of capital goods in an economy over a period of time. It does not include depreciation.
Circular flow of income
The continuous flow of goods and services, factor services, and monetary income between different sectors of the economy is called the circular flow of income. Its nature is cyclical because it has neither a beginning nor an end point. The real flow represents the flow of produced goods and services and factor services. The monetary flow represents the flow of consumption expenditure and factor payments.
Circular flow of income phases
The circular flow of income has three phases, which are as follows:
(1) Production phase -
In this stage, the firm produces goods and services with the help of factors of production.
(2) Distribution phase -
In this stage, factor income (rent, wages, interest, and profits) flows from firms to the household sector.
(3) Consumption expenditure
In this stage, the income earned by the factors of production is spent on the goods and services produced.
stock
- A stock is a quantity (variable) that is measured at a specific point in time, such as money and wealth, money supply, etc.
- It does not have a time dimension.
- It is a static concept.
- Examples: The population of India on April 12, 2012, national wealth.
Flow
- A flow is a quantity (variable) that is measured over a period of time, such as national income, investment, etc.
- It has a time dimension because its magnitude can only be measured over a specific period.
- It is a dynamic concept.
- Examples: The number of children born during 2012, national income.
ncert Class 12 Macro Economics Chapter 1 Notes in English
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