CBSE Class 12 Ecomonics - National Income and Related Aggregates

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CBSE Class 12 Ecomonics - National Income and Related Aggregates. Learning the important concepts is very important for every student to get better marks in examinations. The concepts should be clear which will help in faster learning. The attached concepts made as per NCERT and CBSE pattern will help the student to understand the chapter and score better marks in the examinations.

Six Marks Questions (6 M)



• Macro Economics: Its meaning
• Consumption goods, capital goods, final goods, intermediate goods, stock and flow, gross investment and depreciation.
• Circular flow of income
• Methods of calculation of national income
• Value added method (product method)
• Expenditure method
• Income method
•Concepts and aggregates related to national income
• Gross national product
• Net National product
• Gross and Net domestic product at market price and at factor cost.
• National disposable income (Gross and net)
• Private income
• Personal income
• Personal disposable income
•Real and Nominal GDP
• GDP and welfare

Macro Economics: - Macroeconomics is the study of aggregate economic variables of an economy.

Consumption goods:- Are those which are bought by consumers as final or ultimate goods to satisfy their wants.
Eg: Durable goods car, television, radio etc.
Non-durable goods and services like fruit, oil, milk, vegetable etc.
Semi durable goods such as crockery etc.

Capital goods – capital goods are those final goods, which are used and help in the process of production of other goods and services. E.g.: plant, machinery etc.

Final goods: Are those goods, which are used either for final consumption or for investment. It includes final consumer goods and final production goods. They are not meant for resale. So, no value is added to these goods. Their value is included in the national income.

Intermediate goods intermediate goods are those goods, which are used either for resale or for further production. Example for intermediate good is- milk used by a tea shop for selling tea.

Stock: - Quantity of an economic variable which is measured at a particular point of time. Stock has no time dimension. Stock is static concept. Eg: wealth, water in a tank. 

Flow: Flow is that quantity of an economic variable, which is measured during the period of time.
Flow has time dimension- like per hr, per day etc.
Flow is a dynamic concept.
Eg: Investment, water in a stream.

Investment: Investment is the net addition made to the existing stock of capital.

Net Investment = Gross investment – depreciation.

Depreciation: - depreciation refers to fall in the value of fixed assets due to normal wear and tear, passage of time and expected obsolescence. Circular flow in a two sector economy.


Producers (firms) and households are the constituents in a two sectors economy. Households give factors of production to firm and firms in turn supply goods and services to households.

Related aggregates

Gross Domestic product at market price

It is the money value of all final goods and services produced during an accounting year with in the domestic territory of a country.

Gross National product at market price:

It is a money value of all final goods and services produced by a country during an accounting year including net factor income from abroad.

Net factor income from abroad:

Difference between the factor incomes earned by our residents from abroad and factor income earned by non-residents with in our country.
Components of Net factor income from abroad

• Net compensation of employees
• Net income from property and entrepreneurship (other than retained earnings of resident companies of abroad)
• Net retained earnings of resident companies abroad


· NNP Mp = GNP mp - depreciation
· NDP Mp = GDPmp - depreciation

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