Frank solutions for Economics [English] Class 12 ISC chapter 18 - National Income and Circular Flow of Income [Latest edition]

Which of these goods is not a final goods?

Which of these goods is not an intermediate good?

Which of the following are transfer payments?

Flow of goods and services and flow of factor service among different sectors of an economy is known as ______.

Flow of money income and money expenditure among different sectors of an economy is known as ______.

The equilibrium condition of circular flow of income in a closed economy is ______.

Define national income.

Distinguish between domestic income and national income.

Why are pure exchange transactions excluded from national income?

What is meant by final goods?

What is meant by intermediate good?

What do you understand by “transfer payments” or “transfer earnings”?

Define domestic territory.

What is double counting of national income?

Explain with the help of an example, the problem of double counting while calculating national income.

What is meant by circular flow of income?

What are the two kinds of flow of national income?

What are the two kinds of flow of national income?

Distinguish between real flows and money flows.

State different sectors in an economy from the viewpoint of circular flow of income.

Define factor markets.

Define product markets.

State the equilibrium condition of circular flow in a two-sector economy.

What is meant by withdrawals (leakages)?

Name two items of withdrawals (leakages).

With the help of relevant examples, explain the meaning of leakages in the circular flow of income.

With the help of relevant examples, explain the meaning of injections in the circular flow of income.

What is meant by injection?

Name any two items of injection.

Differentiate between a closed economy and an open economy.

Distinguish between final goods and intermediate goods. Give an example of each.

Classify the following as a final or intermediate good. Give reasons for your answer.

A car purchased by a company for business purposes.

Classify the following as a final or intermediate good. Give reasons for your answer. 

Pen or Paper used by a consumer.

Classify the following into an intermediate good and a final good. Give reasons for your answer.

A new car purchased by a taxi driver.

Classify the following into an intermediate good and a final good. Give reasons for your answer.

Stationary purchased by the government.

Classify the following into an intermediate good and a final good. Give reasons for your answer.

Wheat flour is purchased by a housewife.

Classify the following into an intermediate good and a final good. Give reasons for your answer.

Purchase of machinery for installation in a factory.

Classify the following into an intermediate good and a final good. Give reasons for your answer.

Purchase of vegetables by a hotel.

Discuss the problem of double counting in the estimation of national income. How is this problem resolved?

Draw a diagram to show the real flow and money flow of income in a two-sector model of circular flow of income.

What will happen to the level of circular flow of income in the following situation?

S = I

What will happen to the level of circular flow of income in the following situation?

S > I

What will happen to the level of circular flow of income in the following situation?

I > S

With the help of relevant examples, explain the meaning of leakages in the circular flow of income.

With the help of relevant examples, explain the meaning of injections in the circular flow of income.

Show with the help of a diagram various flows of income in a two-sector model with leakages and injections.

Explain how saving-investment equality brings about equilibrium in the circular flow of income.

Describe with the help of a diagram various flows of money in a closed economy. 

Describe with the help of a diagram various flows of money in a closed economy.