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Chapters
Chapter 1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
7: Laws of Returns - Returns to a Factor and Returns to Scale
8: Cost and Revenue Analysis
9: Forms of Market
10: Producer's Equilibrium
11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
13: Money: Meaning and Functions
14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
16: Fiscal Policy
17: Government Budget
SECTION 6: NATIONAL INCOME
▶ 18: National Income and Circular Flow of Income
19: National Income Aggregates
20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
21: Project Work
22: Model Short Answer Questions
![Frank solutions for Economics [English] Class 12 ISC chapter 18 - National Income and Circular Flow of Income - Shaalaa.com](/images/economics-english-class-12-isc_6:557367fb4d974c67badae9e1dbdc022d.jpg "Frank solutions for Economics [English] Class 12 ISC chapter 18 - National Income and Circular Flow of Income")
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Solutions for Chapter 18: National Income and Circular Flow of Income
Below listed, you can find solutions for Chapter 18 of CISCE Frank for Economics [English] Class 12 ISC.
Frank solutions for Economics [English] Class 12 ISC 18 National Income and Circular Flow of Income TEST YOURSELF QUESTIONS [Pages 361 - 363]
Select the correct option for each of the following questions: (1 mark each)
Which of these goods is not a final goods?
Expenditure incurred by households on the purchase of food terms.
Purchase of a factory machine by a firm.
Seeds purchased by farmers for producing rice.
Pen purchased by a student.
Which of these goods is not an intermediate good?
A car purchased by a company for business purpose.
Stationary purchased by a publishing house.
Purchase of vegetables by a hotel.
A car purchased by a household for the use of his family.
Which of the following are transfer payments?
old-age pensions
gifts received from the relatives
donations
all of these
Flow of goods and services and flow of factor service among different sectors of an economy is known as ______.
real flow
money flows
sectoral flow
none of these
Flow of money income and money expenditure among different sectors of an economy is known as ______.
real flow
sectoral flow
money flows
circular flow
The equilibrium condition of circular flow of income in a closed economy is ______.
S = I
S + T = I + C
S + T + M = I + G + X
C + I = S + I
Very Short Answer Questions (2 marks each)
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.
Short Answer Questions (3 marks each)
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.
Long Answer Questions ( 6 marks each)
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.
Solutions for 18: National Income and Circular Flow of Income
Frank solutions for Economics [English] Class 12 ISC chapter 18 - National Income and Circular Flow of Income
Shaalaa.com has the CISCE Mathematics Economics [English] Class 12 ISC CISCE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Frank solutions for Mathematics Economics [English] Class 12 ISC CISCE 18 (National Income and Circular Flow of Income) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. Frank textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in Economics [English] Class 12 ISC chapter 18 National Income and Circular Flow of Income are Circular Flow of Income, Economic Sectors of an Economy, Two-Sector Model without Savings and Investment, Two-Sector Model with Savings and Investment, Three-Sector Model of Circular Flow of Income, Domestic Income, National Income Aggregates, Circular Flow in a Closed Economy, Circular flow and the Equality between Production, Income and Expenditure, Circular Flow in a Open Economy, Concept of National Income, Four-Sector Model of Circular Flow of Income, Significance or Importance of National Income, Significance or Importance of Circular Flow of Income.
Using Frank Economics [English] Class 12 ISC solutions National Income and Circular Flow of Income exercise by students is an easy way to prepare for the exams, as they involve solutions arranged chapter-wise and also page-wise. The questions involved in Frank Solutions are essential questions that can be asked in the final exam. Maximum CISCE Economics [English] Class 12 ISC students prefer Frank Textbook Solutions to score more in exams.
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