Points to remember about National Income
1-Goods:-In economics a good is defined as any physical object, natural or man-made, that could command a price in the market.
2-Consumption Goods:-Those goods that satisfy human wants directly.
3-Capital Goods:-Those final goods which help in production. These goods are used in generating income.
4-Final Goods:-Those goods which are used either for final consumption or investment.
5-Intermediate Goods:-Refers to those goods and services which are used for further production or for resale. These goods do not fulfill needs of mankind directly.
6-Investment:-Addition made to the stock of capital during a period is called investment. It is also called capital formation.
7-Depreciation: – It is expected fall in value of fixed capital goods due to normal wear and tear and obsolescence.
8-Gross Investment:-Total addition of capital goods to existing stock of capital during a time period at market price.
9-Net Investment:-It is a measure of net availability of new capital or new addition to capital stock in an economy.
Net National Income = Gross investment-Depreciation.
10- Stocks :- Variables whose magnitude is measured at a particular point of time is called stock variables.
11-Flows:-Variables whose magnitude is measured over a period of time are called flow variable.
12-Economic Territory:-Economic (or domestic) territory is a geographical territory administrated by a Government within which persons, goods and capital circulate freely.
13-Scope of Economic Territory:-
a) Political frontiers including territorial waters and airspace.
b) Embassies, consulates, military bases etc. located abroad.
c) Ships and aircraft operated by the residents between two or more countries.
d) Fishing vessels, oil and natural gas rigs operated by residents in the international waters.>