Introduction to Adam Smith
Adam Smith is known as the father of modern economics. He was a professor at the University of Glasgow, Scotland, before his published book ‘An Inquiry into the Nature and Causes of the Wealth of Nations’. Smith was a French physiocrat. we will discussed Some Basic Concepts of Macroeconomics
Final goods are those goods which have crossed the boundary line of
production and are ready for use by their end users.
Final goods are divided into two categories: consumption goods and capital goods.
Consumption goods are known as consumer goods
Consumer goods are those goods that directly satisfy human needs, they are not used for the production of other goods.
Capital goods are those goods which are used for many years in the process of production, they are fixed assets of the producer eg plant and machinery.
Consumer durables- These are those goods which are used for many years
3) Washing Machine
Intermediate goods are those goods which have not yet crossed the threshold of production .
For some it is the final commodity; for some it is the intermediate object.
Example- Milk is the intermediate commodity for the tea maker and for a common man who wants to drink a glass of milk at night, milk is the last commodity.
Stock and flow
means of stock
Stock is a quantity measured at a certain point in time [eg]
you may have ₹50,000 in your bank account on 1st January 2020
[means of flow]
to be measured over a specific period of time What is the amount you probably spend in the canteen for ₹ 200 per day
It includes both the expenditure incurred by the producers on the purchase of new assets and the replacement of existing assets during an accounting year.
About the accounting year
Accounting year of Reserve
Bank of India The accounting year of Reserve Bank of India is between July 1 and June 30 .
Whereas the financial year of the country is between 1 April to 30 March .
[circular flow of income and method of calculation of national income]
Real flow refers to the flow of goods and services in different sectors of the economy.