Macroeconomics primarily focuses on the study of ___ economic variables.

Aggregate

What distinguishes capital goods from consumption goods?

Capital goods are used in the production of other goods and services, while consumption goods are purchased by consumers for final use.

Fill in the blank: ___ goods are not meant for resale and are included in national income.

Final

True or False: Intermediate goods are final goods that are used for consumption.

False; intermediate goods are used for resale or further production.

What is the main difference between stock and flow variables in economics?

Stock measures a variable at a specific point in time, while flow measures a variable over a period of time.

Riddle: I am a quantity measured at a specific time, static in nature, often related to wealth. What am I?

Stock

Define depreciation in the context of macroeconomics.

Depreciation refers to the decline in the value of fixed assets due to wear and tear, passage of time, and obsolescence.

True or False: Gross investment is calculated by subtracting depreciation from net investment.

False; net investment is calculated by subtracting depreciation from gross investment.

What type of goods includes items like cars and televisions?

Consumption goods

Fill in the blank: The net addition made to the existing stock of capital is known as ___ investment.

Net

What is the circular flow of income in an economy?

The circular flow of income represents the continuous movement of production, income, and expenditure between production units and households, illustrating how income is redistributed in a circular pattern.

Fill in the blank: In the context of the circular flow of income, the payments for land, labour, capital, and entrepreneurship are called ___, ___, ___, and ___ respectively.

Rent, wages, interest, profit

True or False: The inner loop of the circular flow of income represents the flow of factor services from firms to households.

False. The inner loop represents the flow of goods and services from firms to households.

What are the three main methods for calculating national income?

Value Added Method, Expenditure Method, Income Method.

Riddle: I add value to products at different stages, without me, the final product wouldn't be the same. What am I?

Value Added in the production process.

Fill in the blank: The formula for calculating Gross Value Added (GVA) is ___ minus ___ from the total output.

Total output; intermediate consumption

How does the Value Added Method contribute to calculating national income?

The Value Added Method calculates national income by summing the value added by each production unit to the final product, reflecting the contributions of different industries.

What is the importance of the circular flow model in understanding economic transactions?

The circular flow model helps illustrate the interdependence between households and firms in the economy, showing how income flows through production and expenditure cycles.

What is the formula to calculate Net Value Added at Factor Cost (NVAFC)?

NVAFC = Sales Increase in Unsold Stock – Purchase of Raw Materials – Depreciation – (Indirect Tax – Subsidies)

True or False: Double counting occurs when the value of intermediate goods is excluded from the final value calculation.

False. Double counting occurs when the value of intermediate goods is included alongside the final product value.

Riddle: I am a method that avoids counting the same value twice; I help keep national income accurate and precise. What am I?

Double counting prevention in value-added method

What is the significance of avoiding double counting in national income accounting?

Avoiding double counting is crucial to ensure that national income is accurately calculated, reflecting the true economic output without inflating figures by counting intermediate goods.