NCERT Books Class 12 Macroeconomics Chapter 2-National Income Accounting

Safalta Expert Published by: Noor Fatima Updated Mon, 18 Jul 2022 11:14 AM IST

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NCERT Books Class 12 Macroeconomics Chapter 2- National Income Accounting is accessible here for download purposes. You can download the PDF for and learn from the book anytime you want.

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When you don't have access to a physical copy, digital NCERT Books Class 12 Macroeconomics PDF are always useful.
 
NCERT Books Class 12 Macroeconomics Chapter 2- National Income Accounting is available here. You may find links to Class 12 Macroeconomics Notes, NCERT Solutions, Important Questions, Practice Papers, and more after each chapter. Scroll down for crucial study materials on the National Income Accounting from the NCERT Book Class 12 Macroeconomics Book.

Here, you can learn the NCERT Books Class 12 Macroeconomics Chapter 2- National Income Accounting. Moreover, you can get the links for other chapters to download the links. 

Table of Content-
Topics Covered
Starting of the Chapter
Glimpses of the Chapter
PDF Link


The Chapter 'National Income Accounting' explains the following-

  • SOME BASIC CONCEPTS OF MACROECONOMICS
  • CIRCULAR FLOW OF INCOME AND METHODS OF CALCULATING NATIONAL INCOME
  • SOME MACROECONOMIC IDENTITIES
  • NOMINAL AND REAL GDP
  • GDP AND WELFARE

'National Income Accounting' Goes Like This-

In this chapter we will introduce the fundamental functioning of a simple economy. In section 2.1 we describe some primary ideas we shall work with. In section 2.2 we describe how we can view the aggregate income of the entire economy going through the sectors of the economy in a circular way. The same section also deals with the three ways to calculate the national income; namely product method, expenditure method and income method. The last section 2.3 describes the various sub-categories of national income. It also defines different price indices like GDP deflator, Consumer Price Index, Wholesale Price Indices and discusses the problems associated with taking GDP of a country as an indicator of the aggregate welfare of the people of the country. 

2.1 SOME BASIC CONCEPTS OF MACROECONOMICS

One of the pioneers of the subject we call in economics today, Adam Smith, named his most influential work – An Enquiry into the Nature and Cause of the Wealth of Nations. What generates the economic wealth of a nation? What makes countries rich or poor? These are some of the central questions of economics. It is not that countries which are endowed with a bounty of natural wealth – minerals or forests or the most fertile lands – are naturally the richest countries. In fact the resource rich Africa and Latin America have some of the poorest countries in the world, whereas many prosperous countries have scarcely any natural wealth. There was a time when possession of natural resources was the most important consideration but even then the resource had to be transformed through a production process.

The economic wealth, or well-being, of a country thus does not necessarily depend on the mere possession of resources; the point is how these resources are used in generating a flow of production and how, as a consequence, income and wealth are generated from that process.

Let us now dwell upon this flow of production. How does this flow of production arise? People combine their energies with natural and manmade environment within a certain social and technological structure to generate a flow of production.

In our modern economic setting this flow of production arises out of production of commodities – goods and services by millions of enterprises large and small. These enterprises range from giant corporations employing a large number of people to single entrepreneur enterprises. But what happens to these commodities after being produced? Each producer of commodities intends to sell her output. So from the smallest items like pins or buttons to the largest ones like aeroplanes, automobiles, giant machinery or any saleable service like that of the doctor, the lawyer or the financial consultant – the goods and services produced are to be sold to the consumers.

The consumer may, in turn, be an individual or an enterprise and the good or service purchased by that entity might be for final use or for use in further production. When it is used in further production it often loses its characteristic as that specific good and is transformed through a productive process into another good. Thus a farmer producing cotton sells it to a spinning mill where the raw cotton undergoes transformation to yarn; the yarn is, in turn, sold to a textile mill where, through the productive process, it is transformed into cloth; the cloth is, in turn, transformed through another productive process into an article of clothing which is then ready to be sold finally to the consumers for final use. Such an item that is meant for final use and will not pass through any more stages of production or transformations is called a final good.

Why do we call this a final good? Because once it has been sold it passes out of the active economic flow. It will not undergo any further transformation at the hands of any producer. It may, however, undergo transformation by the action of the ultimate purchaser. In fact many such final goods are transformed during their consumption. Thus the tea leaves purchased by the consumer are not consumed in that form – they are used to make drinkable tea, which is consumed. Similarly most of the items that enter our kitchen are transformed through the process of cooking. But cooking at home is not an economic activity, even though the product involved undergoes transformation. Home cooked food is not sold to the market. However, if the same cooking or tea brewing was done in a restaurant where the cooked product would be sold to customers, then the same items, such as tea leaves, would cease to be final goods and would be counted as inputs to which economic value addition can take place. Thus it is not in the nature of the good but in the economic nature of its use that a good becomes a final good.

Glimpses of the Chapter are-
 

 



























 
 

NCERT Books Class 12 Macroeconomics Chapter 2- National Income Accounting- PDF Download

Where can you download ‘National Income Accounting’ PDF?

Candidates can download NCERT Books Class 12 Macroeconomics Chapter 2- National Income Accounting PDF for free on our page. Links are given below.

Macroeconomics Chapter 2- National Income Accounting

What topics are covered in ‘National Income Accounting’ Chapter?

The Chapter 'National Income Accounting' explains the following-

  • SOME BASIC CONCEPTS OF MACROECONOMICS
  • CIRCULAR FLOW OF INCOME AND METHODS OF CALCULATING NATIONAL INCOME
  • SOME MACROECONOMIC IDENTITIES
  • NOMINAL AND REAL GDP
  • GDP AND WELFARE

Why is NCERT Books Class 12 Macroeconomics recommended so highly for board exams?

Nearly majority of the questions for board exams are taken from the NCERT Books Class 12 Macroeconomics. A group of qualified professors, making them a dependable resource for pupils, also writes these books.

Are the CBSE Books for Class 12 Macroeconomics significant for board exams?

For higher courses and board exams, the chapters in the CBSE Books for Class 12 Macroeconomics are essential. For Class 12 Economics, students should read the chapter provided in the CBSE books. These examples and drill questions can help you get high marks.
 
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