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NCERT Solutions for Class 12 Macro Chapter 2 - National Income Accounting

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Class 12 NCERT Solutions Macro Economics - National Income Accounting - Free PDF Download

NCERT textbooks' Macroeconomics Class 12 Chapter 2 introduces students to the principles of National Income Accounting. National income is the total money earned by a country or economy during a certain time period. The second chapter of the Macroeconomics book outlines the many ways for determining a country's national income.


Class:

NCERT Solutions for Class 12

Subject:

Class 12 Economics

Subject Part:

Economics Part 2 - Macro Economics

Chapter Name:

Chapter 2 - National Income Accounting

Content-Type:

Text, Videos, Images and PDF Format

Academic Year:

2024-25

Medium:

English and Hindi

Available Materials:

  • Chapter Wise

  • Exercise Wise

Other Materials

  • Important Questions

  • Revision Notes

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Access NCERT Solutions for Class 12 Macro Economics Chapter 2 - National Income Accounting

1. What are the four factors of production and what are the remunerations to each of these called? 

Ans:  The four production factors are:

i. Land: The land is defined broadly as a factor of production and can take many forms, ranging from agricultural land to commercial real estate to the resources accessible from a specific piece of land. The land has natural resources that may be exploited and refined for human consumption, such as oil and gold. When man alters any of these resources from its original state, it becomes a capital good. For instance, although oil is a natural resource, gasoline is a capital good. A retail mall is a capital good, but farmland is a natural resource.

ii. Capital: Capital refers to man-made goods that are utilised to generate more riches. As a result, it is a manufactured material source of production. Alternatively, capital refers to any man-made production aids that are not consumed for their own sake. To put it another way, items that can be used or consumed in the manufacture of other things. Machines, tools, houses, roads, bridges, and industries are all examples.

iii. Labour: It is defined as human work that is done mentally or physically with the goal of generating money. As a result, it is a physical or mental effort made by a human being during the production process. Wages are the remuneration given to workers in exchange for their productive work.

iv. Entrepreneur: An entrepreneur is an individual being who arranges the other variables in a production and takes on the risks and uncertainties that come with it. He hires the other three factors, gets them together, organises, and coordinates them so that they can make the most money possible. An entrepreneur, for example, is someone who takes the risk of producing television sets.

Factor payments or factor incomes refer to the remunerations given to the factors of production. Rent, wage, interest, and profit are added together to form these figures.


2. Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain.

Ans: In an economy made up of homes and businesses, the only way for households to spend their money is on the goods and services supplied by the businesses. The factors of production spend their earnings on goods and services. As a result, the profit will be returned to the producers in the form of sales revenue. As a result, there is no difference between the amount that firms transfer in the form of factor payments and the amount that households spend on consumption. Year after year, the same thing happens. There is a disparity between aggregate consumer spending and aggregate factor payments if there has been any fault or fissure in the form of savings, imports, or taxes. Households will spend less than their actual earnings if there is some leakage. As a result, enterprises will receive less money in the form of revenue, lowering production and employment. Every subsequent round will repeat the process, resulting in lower levels of production and employment. As a result, for the economy to run smoothly, there must be equality between aggregate consumption expenditure and aggregate factor payments.


3. Distinguish between stock and flow. Between net investment and capital which is a stock and which is a flow? Compare net investment and capital with flow of water into a tank.

Ans: Difference between Stock and Flow:


Stock

Flow

1.

The term "stock" refers to a variable that may be measured at a specific point in time. For instance, consider the bank balance on March 31, 2020.

The variables that are measured throughout time are referred to as the flow. For example, interest earned on bank savings for a period of one year, from April 1, 2019 to September 30, 2020.

2.

There are no time dimensions to it.

It has time dimensions such as 1 year, 6 months, and so on.

3.

Equity shareholdings, inventories, bank deposits, water in a tank, and so on are examples.

Sale of shares of an organisation, purchase of shares by individuals or institutions, interest deposit in various financial institutions, withdrawal of funds, etc are the examples.


Difference between Net investment and Capital:


Net Investment

Capital 

1.

The amount spent by a corporation or an economy on capital assets, or gross investment less depreciation on assets, is known as net investment.

The amount spent by a corporation or an economy on capital assets, or gross investment less depreciation on assets, is known as net investment.

2.

The term net investment refers to flow variables.

The term "capital" refers to a stock variable.


4. What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm. 

Ans: Planned Inventory Accumulation: Inventory that has been planned In the event of a predicted drop in sales, the company will have unsold stock of goods that it had not budgeted for. As a result, inventories will be built up in advance.

Unplanned Inventory Accumulation: Inventory accumulation that was not intended. In the case where there is an unexpected decline in the sales, the company will have unsold goods that it had not budgeted for. As a result, unanticipated inventory accumulation will occur. 

Relationship between Inventory Changes and Value Added:

Change in a firm's inventories over a year = value added + intermediate products utilised by the firm – the firm's sale over the year and value added. It is value added in the net contribution made by a firm in the production process = value of production – value of intermediary products consumed.


5. Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.

Ans: The following three approaches can be used to compute GDP:

(a) Source of income: National income is calculated using this method in terms of factors of production. 

GDP = Total payments made to the factors of production

$\mathrm{GDP}\equiv\sum_{\mathrm i=1}^{\mathrm M}{\mathrm W}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm M}{\mathrm P}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm M}{\mathrm I}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm M}{\mathrm R}_{\mathrm i} $ --------- (i)

$ \sum_{\mathrm i=1}^{\mathrm M}{\mathrm W}_{\mathrm i} $ represents total wages and salaries received by i-th households.

$\sum_{\mathrm i=1}^{\mathrm M}{\mathrm P}_{\mathrm i}$ represents total profit received by i-th households.

$\sum_{\mathrm i=1}^{\mathrm M}{\mathrm I}_{\mathrm i}$ represents total income received by i-th households.

$\sum_{\mathrm i=1}^{\mathrm M}{\mathrm R}_{\mathrm i}$ represents total rent received by i-th households.

Equation (i) can be simplified as

$\mathrm{GDP}\equiv\mathrm W+\mathrm P+\mathrm I+\mathrm R$

(b) Value Added Product: The way of measuring national income in terms of each generating firm in the economy is known as value added or product method.

$\mathrm{GDP}\equiv\mathrm{Sum}\;\mathrm{of}\;\mathrm{gross}\;\mathrm{value}\;\mathrm{added}\;\mathrm{by}\;\mathrm{all}\;\mathrm{firms}\;\mathrm{in}\;\mathrm{an}\;\mathrm{economy}$

$\mathrm{GDP}\equiv{\mathrm{GVA}}_1+{\mathrm{GVA}}_2+.......{\mathrm{GVA}}_{\mathrm n}$

Where,

${\mathrm{GVA}}_1 $ represents the 1st firm's gross value added.

${\mathrm{GVA}}_2$ represents the 2nd firm’s gross value added

${\mathrm{GVA}}_{\mathrm n}$ represents the gross value added by the nth firm.

Therefore,

$\mathrm{GDP}\equiv\sum_{\mathrm i=1}^{\mathrm n}{\mathrm{GVA}}_{\mathrm i}$

(c) Expenditure method:

$\mathrm{GDP}\equiv\mathrm{Total}\;\mathrm{consumption}\;+\;\mathrm{Investment}\;+\;\mathrm{Government}\;\mathrm{Consumption}\;\mathrm{expenditure}\;+\;\mathrm{Net}\;\mathrm{exports}$

$\equiv\sum_{\mathrm i=1}^{\mathrm N}{\mathrm C}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm N}{\mathrm I}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm N}{\mathrm G}_{\mathrm i}+\sum_{\mathrm i=1}^{\mathrm N}{\mathrm X}_{\mathrm i}$

Since households spend a portion of their income on imports, imports account for a portion of consumer expenditure, which is denoted by ${\mathrm C}_{\mathrm M}$. Similarly, foreign investment products and imports account for a portion of both investment and government consumption spending. ${\mathrm I}_{\mathrm M}$ and ${\mathrm G}_{\mathrm M}$ represent the portions of investment and government consumption expenditures, respectively. Thus, the final consumption, investment, and government expenditures spent on domestic firms are denoted by $\mathrm C-{\mathrm C}_{\mathrm M},\mathrm I-{\mathrm I}_{\mathrm M},$ and $\mathrm G-{\mathrm G}_{\mathrm M}$, respectively.

Substituting these values in the above equation

$\mathrm{GDP}=\mathrm C-{\mathrm C}_{\mathrm M}+\mathrm I-{\mathrm I}_{\mathrm M}+\mathrm G-{\mathrm G}_{\mathrm M}+\sum_{\mathrm i=1}^{\mathrm M}{\mathrm X}_{\mathrm i}$

$=\mathrm C+\mathrm I+\mathrm G+\sum_{\mathrm i=1}^{\mathrm M}{\mathrm X}_{\mathrm i}-\left({\mathrm C}_{\mathrm M}+{\mathrm I}_{\mathrm M}+{\mathrm G}_{\mathrm M}\right)\\=\mathrm C+\mathrm I+\mathrm G+\mathrm X-\mathrm M$

What is created in the economy is either consumed or invested, as a result all three techniques get the same outcome for calculating GDP. From three separate perspectives, the three techniques present the same picture of an economy. The product method shows the entire value added, the income method shows the revenue earned by all components, and the expenditure approach shows the expenditure incurred by all factors. The producer in the economy employs four factors of production to manufacture final items and receives money through sales, which is equal to the firm's total value addition. Firms give remuneration to factors, which operate as the factors' income. These remunerations are equal to the contributions of the factors to the value added. These factor incomes are then spent on goods and services, demonstrating that factor income and expenditure are equal. As a result, the three approaches will always yield the same GDP value.


6. Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was ( – ) Rs 1,500 crores. What was the volume of trade deficit of that country?

Ans: A budget deficit occurs when government spending exceeds tax revenue, and a trade imbalance occurs when the economy's import spending exceeds its export revenue.

Budget deficit = G - T

Where,

G = the government expenditure

T = government income that is tax revenue

Trade Deficit = M - T or (I - S) + (G - T)

Where,

M = Import expenditure

T = export revenue

I = Investment multiplied by Inflow into the country

S = Savings

It is given that,

I - S = Rs. 2000 crores.

G -T = (-) Rs. 1500 crores.

Therefore,

Trade deficit = (I - S) + (G - T)

= 2000 + (-1500)

= Rs. 500 crores.


7. Suppose the GDP at market price of a country in a particular year was Rs 1,100 crores. Net Factor Income from Abroad was Rs 100 crores. The value of Indirect taxes – Subsidies was Rs 150 crores and National Income was Rs 850 crores. Calculate the aggregate value of depreciation.

Ans: It is mentioned that,

National Income $\left({\mathrm{NNP}}_{\mathrm{FC}}\right)= Rs. 850 crores$

$\left({\mathrm{GDP}}_{\mathrm{MP}}\right)= Rs. 1100 crores$

Net factor income from abroad = Rs. 100 crores

Net indirect taxes = Rs. 150 crores

${\mathrm{NNP}}_{\mathrm{FC}}= {\mathrm{GDP}}_{\mathrm{FC}}+ \text{Net factor income from abroad - Depreciation - net indirect taxes}$

Putting these values in the formula,

850 = 1100 + 100 - Depreciation - 150

850 = 1100 - 50 - Depreciation

850 = 1050 - Depreciation

Depreciation = 1050 - 850 = Rs. 200 crores

So, depreciation is Rs. 200 crores.


8. Net National Product at Factor Cost of a particular country in a year is Rs 1,900 crores. There are no interest payments made by the households to the firms/government, or by the firms/government to the households. The Personal Disposable Income of the households is Rs 1,200 crores. The personal income taxes paid by them is Rs 600 crores and the value of retained earnings of the firms and government is valued at Rs 200 crores. What is the value of transfer payments made by the government and firms to the households?

Ans: ${\mathrm{NNP}}_{\mathrm{FC}}$= Rs. 1900 crores

PDI = Rs. 1200 crores

Personal income tax = Rs. 600 crores

Value of retained earnings = Rs. 200 crores

$PDI = {\mathrm{NNP}}_{\mathrm{FC}}- \text{Value of retained earnings of firms and government + Value of transfer payments - Personal Tax}$

1200 = 1900 -200 + Value of Transfer payments - 600

1200 = 1100 + Value of transfer payments

Value of transfer payment = 1200 - 1100 = Rs. 100 crores.


9. From the following data, calculate Personal Income and Personal Disposable Income. 



Rs (Crore)

(a)

Net Domestic Product at factor cost

8,000

(b)

Net Factor Income from abroad

200

(c)

Undisbursed Profit

1,000

(d)

Corporate Tax

500

(e)

Interest Received by Households

1,500

(f)

Interest Paid by Households

1,200

(g)

Transfer Income

300

(h)

Personal Tax

500

Ans: $\text{Personal Income} = {\mathrm{NDP}}_{\mathrm{FC}}+ \text{Net factor income from abroad (NFIA) + Transfer Income - Undistributed Profit - Corporate Tax - Net Interest Paid by Households}$.

${\mathrm{NDP}}_{\mathrm{FC}}= Rs. 8000\;crores$

NFIA = Rs. 200 crores

Transfer Income = Rs. 300 crores

Undistributed profit = Rs. 1,000 crores

Corporate tax = Rs. 500 crores

Net interest paid by households = Interest paid - Interest received

= 1200 - 1500

= (-) Rs. 300 crores

So, putting the values in the above formula

PI = 8000 + 200 + 300 - 1000 - 5000 -(- 300)

= 8000 + 200 + 300 - 1000 - 500 + 300

PI = 7300

So, Personal Income = Rs. 7300 crores

Personal Disposable Income = Personal Income - Personal Payments

= 7300 -500

= Rs. 6800 crores.


10. In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.

Ans: Its given that,

Indirect tax = 30

Personal tax = 20

Depreciation = 50

Retained earnings = 220

(i) ${\mathrm{GDP}}_{\mathrm{MP}}= Rs. 500$

(ii) ${\mathrm{NNP}}_{\mathrm{MP}}$ = GDP - Depreciation

= 500 - 50

= Rs. 450

(iii) ${\mathrm{NNP}}_{\mathrm{FC}}$= NNP - Sales tax

= 450 - 30

= Rs. 420

(iv) $PI = {\mathrm{NNP}}_{\mathrm{FC}}- \text{Retained earnings}$

= 420 - 220

= Rs. 220

(v) PDI = PI - Income Tax

= 200 - 20

= Rs. 180


11. The value of the nominal GNP of an economy was Rs 2,500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 3,000 crores. Calculate the value of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year under consideration? 

Ans: It is given that,

Nominal GNP = Rs. 2500

Real GNP = Rs. 3000

GNP deflator $=\dfrac{\mathrm{Nominal}\;\mathrm{GNP}}{\mathrm{Real}\;\mathrm{GNP}}\times100 $

= 83.33 %

So, (100-83.33)% = 16.67%

No, the price level has fallen down by 16.67%.


12. Write down some of the limitations of using GDP as an index of welfare of a country.

Solution: The following are some of the drawbacks of using GDP as a metric:

1. GDP distribution: It is possible that when GDP rises, disparities in income distribution may rise as well, widening the gap between rich and poor. GDP does not take into account changes in income distribution inequities. As a result, people's well-being may not increase at the same rate as GDP.

2. Non-monetary transactions: Many economic activities are not measured in monetary terms. Non-market transactions, such as housewife services, kitchen gardening, leisure time activities, and so on, are not included in GDP due to a lack of data. However, such actions have an impact on the economy.

3. Change in pricing: If an increase in GDP is due to an increase in prices rather than an increase in physical output, it is not a valid indicator of economic well-being.

4. Rate of population growth: GDP does not take into account changes in a country's population. If the pace of population increase exceeds the rate of GDP growth, the availability of goods and services per capita will decline, negatively impacting economic welfare.

5. Externalities: Externalities are the conditions referring to the benefits or harms of an activity that are caused by a firm or an individual and for which they are neither paid nor penalized. Activities which result in benefits to others are termed as positive externalities and activities which result in harm to others are termed as negative externalities.


NCERT Solutions for Class 12 Macroeconomics Chapter 2 – A Synopsis of National Income Accounting

Chapter 2 Macroeconomics Class 12 describes different subcategories of national income. Various price indices, based on which the total national income of a country is estimated, are also explained in this lesson. The names of these price indices are:

  • Consumer Price Index.

  • GDP (Gross Domestic Product) Deflator.

  • Wholesale Price Index.

Class 12th Macroeconomics Chapter 2 delves into the concepts about how economic wealth is generated, calculated and utilised in a country.


Methods of Calculating National Income

To calculate the monthly or annual national income of an economy, we can take up various approaches. In the Class 12 Macroeconomics Chapter 2, students get to understand these methods in a detailed manner. Here are the three ways of accounting national income:

  1. Product/Value Added Method

In the value-added method, national income is measured as a flow of goods and services in the economy. The monetary value of all final goods and services produced in an economy over a span is calculated to derive the national income. Final goods and services in this context refer to such goods and services which are ready to be consumed.

  1. Expenditure Method

National income in this method is calculated as a flow of expenditure. It derives annual national income through GDP, which is the total of private expenditure, government expenditure, net exports, and gross capital formation.

  1. Income Method

Here, national income is considered as a flow of factor incomes. The four factors of income are land, labour, capital, and entrepreneur. Each of these factors has an individual source of income. Land generates rent; labour receives wages, capital earns interest while an entrepreneur enjoys his share of profit. The total of all these factor incomes gives us NDP or National Domestic Product at factor costs.


National income formulas for Class 12 Macroeconomics are also provided in NCERT books.


Questions in the NCERT Solutions of Class 12 National Income Accounting Chapter

There are a total of five questions in the second chapter of the National Income Accounting chapter. You can simply download a PDF of CBSE Class 12 Macroeconomics Chapter 2 solutions to read precise and appropriate answers. The solutions have been drafted in a lucid manner which would help students prepare better for their board exams.

Question 1: What are the four factors of production, and what are the remuneration to each of these called?

Ans: The four factors of production have been explained precisely along with their remuneration in this answer of ch 2 Macroeconomics Class 12. They are land, labour, capital, and entrepreneurship.

Question 2: Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments?

Ans: NCERT Solutions for Class 12 Macroeconomics Chapter 2 clearly explains why equality of final expenditure and aggregate factor expenses is necessary to maintain a smooth flow of income in an economy.

Question 3: Distinguish between stock and flow, investment and capital. Which is a stock and which is a flow? Compare investment and capital with a flow of water into a tank.

Ans: In the NCERT solutions for Class 12 Macroeconomics Chapter 2 national income accounting, you will get the differences enlisted in the form of a chart which is easy to understand.

(Image will be uploaded soon)

Question 4: What is the difference between planned and unplanned inventory accumulation? Write down the relation between exchange inventories and value-added of a firm.

Ans: This question has been answered with a detailed explanation and examples. These kinds of conceptual questions are very important to understand Macroeconomics Class 12 Chapter 2 thoroughly.

Question 5: Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP?

Ans: NCERT Solutions for Class 12 Macroeconomics Chapter 2 gives a proper analysis of the three methods along with examples and formulas.

Six out of the 12 questions in this chapter are sums based on National Income Accounting. Students must practise these sums well for the upcoming board exams as they will be getting similar types of sums to solve in the paper.


Key Concepts of Chapter 2 National Income Accounting

Some of the key concepts discussed in this chapter are listed below:


  • Some basic concepts of Macroeconomics

  • Circular flow of income and methods of calculating national income

    • The product or value-added method 

    • Expenditure method

    • Income method 

    • Factor cost, basic prices, and market prices

  • Some Macroeconomic identities

  • Nominal and real GDP

  • GDP and welfare


Why Should You Solve NCERT Solutions for Class 12th Macro Economics?

  • The NCERT solutions include detailed explanations of all the concepts of Chapter 2 National Income Accounting of Class 12 Macro Economics.

  • Practising the questions and answers provided in our NCERT solutions will help improve students’ understanding of the topics. 

  • These solutions are prepared by our subject experts having years of experience in this field to provide quality study material.

  • These solutions consist of a step-by-step explanation of the questions, which will help the students to secure good marks in the exam.


Important Study Material Links for Class 12 Economics Chapter 2 - National Income Accounting

S.No.

Important Study Materials Links for Class 12 Economics Chapter 2

1.

Class 12 National Income Accounting Revision Notes

2.

Class 12 National Income Accounting Important Questions



NCERT Solutions for Class 12 Macro Economics - Chapter-wise List

Given below are the chapter-wise NCERT Solutions for Class 12 Macro Economics. These solutions are provided by the Macro Economics experts at Vedantu in a detailed manner. Go through these chapter-wise solutions to be thoroughly familiar with the concepts.




Chapter-wise List of NCERT Solutions for Class 12 Microeconomics

These chapter-wise NCERT Solutions for Class 12 Microeconomics provide detailed explanations and answers to all textbook questions. They are designed to help students master core economic concepts and excel in their exams



Additional NCERT Books for Class 12 Economics

The NCERT Books for Class 12 Economics provide a comprehensive understanding of key economic theories and concepts. These textbooks are essential resources for students preparing for their board exams, covering both microeconomics and macroeconomics in detail.




Related Links for NCERT Solutions Class 12 Economics

These links offer direct access to detailed NCERT Solutions for Class 12 Economics. Covering both microeconomics and macroeconomics, these solutions help students understand key concepts and prepare effectively for exams.



Important Related Links for CBSE Class 12 Economics


Conclusion

If you're studying for the Class 12 MacroEconomics exam and are stuck in Chapter 2, you can always turn to Vedantu's NCERT Answers for assistance. For many years, Chapter 2 of NCERT Answers Class 12 MacroEconomics has been the greatest study resource for students.


As a result, by practising all of the questions and answers in Chapter 2 of NCERT Answers Class 12 MacroEconomics by Vedantu, students will be well-prepared for the test and will be able to ace their board exams with flying colours. You may also obtain extra study tools from our website, such as review notes, crucial problems, and even the NCERT textbook.

FAQs on NCERT Solutions for Class 12 Macro Chapter 2 - National Income Accounting

1. What are the Various Aggregates Included in National Income Accounting?

The aggregates used while calculating the national income of an economy are GDP (Gross Domestic Product), GDP at factor cost, NDP (Net Domestic Product) at market price, NDP at factor cost, NNP (Net National Product) at factor cost, NNP at market price, GNP (Gross National Product) at factor cost, and GNP at market price.


Factor cost in this respect means the value of goods and services, including the factors inputs like raw materials, inputs, etc. Market price, on the other hand, is the final price at which a good or service is being sold in the actual market. It is determined through demand and supply. All the above-mentioned aggregates have different formulas.

2. What are the Different Ways of Calculating National Income?

There are three ways of calculating the national income of a country. The names of these methods are - the product or value - added method, income method, and expenditure method. Starting with the product method, national income here is measured as a flow of goods and services.


The total value of all goods and services existing in an economy is calculated to derive national income. In the income method, national income is treated as a flow of factor incomes (land, labour, capital, and entrepreneur). In the expenditure method, national income is calculated as a flow of expenditure in an economy.

3. What is the Difference Between Capital and Investment?

Capital in terms of an economy implies the source of funds required to generate the flow income. Capital is mandatory to engage in investing activities. On the other hand, investment is related to the purchase and selling of resources.


These resources are utilised to produce goods and services. While capital denotes the source of funds, investment denotes deployment of those funds. Capital is represented as a liability in the balance sheet, while investment is described as an asset. Capital account forms the credit balance, and investment forms the debit balance in income accounting.

4. Where can I get NCERT Solutions for Class 12 Macroeconomics for Chapter 2 PDF?

Students can download the chapter-wise PDF of Vedantu’s Class 12 MacroEconomics NCERT Solutions free of cost. Students should understand and learn the concepts thoroughly, before going through the solutions, so that they can fully grasp the content and the logic behind any topic. More help and guidance regarding this can be availed either on the Vedantu website or app.

5. What is national income accounting Class 12?

National income accounting refers to a governmental agency or a system that is responsible for monitoring a country's economic activity and providing data on how the economy is functioning. Total revenues by domestic corporations, salaries paid, and sales and income tax data for businesses will all be included in such a system. This is explained in the NCERT Class 12 MacroEconomics book.

6. What are the ways of national Income Accounting Class 12?

There are numerous techniques for estimating national income these days. The value-added technique, the income method, and the expenditure approach are the three most prevalent methodologies. The value-added approach is concerned with the value contributed to a product at each step of its manufacturing. These are the primary methods characterized by National Income Accounting. Read about them well and practice the relevant problems related to them.

7. Is MacroEconomics Chapter 2 Class 12 tough?

MacroEconomics can be interesting if you know the methods, but if you don't know the basic concepts and processes involved then it can cause a lot of confusion in your mind and this subject will be really tough for you. It is a huge subject, and it is easy to become lost in the countless concepts and processes. Focus on the fundamentals, and with enough practice, you'll fare well. While solving different problems, you'll also learn about the many sorts of questions that might be asked, as well as the test paper's format.

8. Is it important to do all the Exercises of Chapter 2 Class 12 MacroEconomics?

All exercises have been developed in a well-structured hierarchy of difficulty to quickly evaluate the student's ability to tackle different sorts of problems while also assisting him in bridging the knowledge gap. It is critical to practice all of the activities in order to score well and properly comprehend all of the essential topics. As a result, it is best not to neglect any exercises. If you want to improve your scores and gain a better knowledge of the ideas, go to Vedantu's website and look through their practice modules and solutions to acquire a better comprehension of the topics.