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The given statement is refuted. The end-use of the machine determines whether it is a capital good or not. For example, 1st Case: Purchase by a household A machine purchased by a household (say, computer, refrigerator, etc.) is a consumption…
(a) Milk purchased by a tea stall. It is an intermediate good as milk is purchased by a tea stall for further production. (b) Bus purchased by a school. It is a final good as bus is treated as an…
(a) A car used as a taxi: It is a capital good because it is used for producing services for generating income. (b) Refrigerator in a hotel: It is a capital good because it is used for providing services over…
Factor income to abroad refers to factor income paid to the normal residents of other countries (i.e., non-residents) for their factor services within the economic territory. Components of factor income to abroad: (i) Compensation of employees paid to the non-resident…
Answer:- (i) Machine purchased by a firm. It is a Final Goods, as Machine purchased by a firm is not meant for sale, it is purchased for their own use that would help in further production. (ii) Soft drinks purchased…
Answer:- (i) Unemployment Allowances. It is a transfer Income as no services and goods are provided against the payment. In other words, no productive work is done against the payment received. (ii) Salary received by Rakesh from a company. It…
Ans – (a) Paper purchased by a publisher is an intermediate product as paper is used for further production during the same year. Intermediate Products are purchased by the firm and is either meant for further sale without modification or…
The given statement is justified in a two-sector economy. In a two-sector economy, there are only two sectors. Households Firms The following are the assumptions of it: 1. Households spend all their income 2. Firms retain nothing as undistributed profit…
A simple economy assumes the existence of only two sectors. Household Sector Firm Sector Households are the owners of factors of production and consumers of goods and services. Firms produce goods and services and sell them to the households. In…
Distinguish between Stocks and Flows Stocks Flows Stock refers to the value of a variable at a point of time Flow refers to the value of a variable during a period of time Stock is not time-dimensional. it is measured…