Some basic concept of macroeconomics and aggregates of economics
Macroeconomics is that economy in which we study aggregates of economic system. Aggregates of economic means those variables which represent economy as whole.Some aggregates are :
- Aggregate Consumption ⇒ In an accounting period consumption of goods and services of economy.
- Aggregate Investment ⇒ In includes all the expenditure by the producers on the purchase of goods which added to capital during the year.
- Aggregate Demand ⇒ Total expenditure on the purchase of goods and services during accounting period.
- Aggregate Supply ⇒ Total production of goods and services .
- Domestic Income ⇒ Income generated within the domestic territory of a country .
- General Price Level ⇒ It included the prices of all goods and services at the end of specific period of time.
TYPES OF GOODS PRODUCED IN ECONOMY :
- Final Consumer Goods – Those goods which are ready for their final users and consumers are their final users. For example : Bread and Butter.
- Final Producer Goods – Those goods which finally produced for its final users and producers are their final users. For example : Tractors and Harvesters, are used by farmer.
Consumption Expenditure refers to that expenditure by the household on final consumption. Expenditure on final goods by producers is Investment expenditure.
Expenditure on Final Goods = Consumption Expenditure + Investment Expenditure
- Intermediate Goods ⇒ Those goods which are purchased by the one firm from others for the purpose of resale, using them as a raw material.
Some basic Concept of Macroeconomics and Aggregates of economy
Consumer or Consumption Goods :
These are those goods which are used by the consumer for his satisfaction and these goods are used in production of oher goods. For example : Ice cream and milk used by households.
Classification of Consumption / Consumer Goods :
- Durable Consumer Goods → Those goods which are used for several time.
- Semi-durable consumer goods → Those goods which are used for a period of time.
- Non-durable or Single-use Consumer Goods → Those goods which are only used for single time.
- Services → Those non-material goods which directly satisfy human wants.
Difference between Intermediate and Final goods :
| Intermediate Goods
1). These goods may be used as raw material.
2). These goods are resold by the firm for profit.
3). These goods are remain inside the boundary line.
| Final Goods
1). These goods are not used as raw material.
2). These goods are not resold for the purpose of profit.
3). These goods are outside the boundary line of production.