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Sandeep Garg Macroeconomics Class 12 Solutions Chapter 2

Last updated date: 17th Apr 2024
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Class 12 Macroeconomics Sandeep Garg Solutions Chapter 2 - Basic Concepts of Macroeconomics

The Economics syllabus assigned for Class 12 students can be divided into two different sections, Macroeconomics and Microeconomics. Macroeconomics is that category which studies broader concepts of an economy. For example, it analyses the relationship between income, expenditure, investment, etc. of an economy as a whole.

The first volume or part of Sandeep Garg Economics solutions covers the Macroeconomics chapters. Sandeep Garg class 12 Macroeconomics solutions chapter 2 is about the ‘Basic Concepts of Macroeconomics’.

Sandeep Garg Macroeconomics Class 12 Solutions Chapter 2

Important Contents in the Sandeep Garg Class 12 Macroeconomics Solutions Chapter 2

The second chapter of Sandeep Garg Macroeconomics solutions, class 12 Sandeep Garg chapter 2 PDF is also available online to help students in their economics lessons. The PDF can be downloaded for free from the Vedantu App.

Factors of Production

Factors of production are such inputs which are required to create, produce, and supply a product or service. The four factors of production in an economy are: 

  • Land

  • Labour

  • Capital

  • Entrepreneur

Land, in this context, implies all such natural resources which are required in the production of goods or service. These are naturally available, such as water, climate, forest, land, etc. For example, the wood used to make furniture can be listed under this category.

In Sandeep Garg Class 12 Solution Basic Concepts of Macroeconomics, you get an elaborate answer on what the factors of production are and what are their roles in an economy.

Gross Investment

Gross investment can be said to be the total investment incurred by a company, without accounting for depreciation. It helps estimate the actual financial condition of a company. In Sandeep Garg class 12 Macroeconomics Solutions Chapter 2, you find a detailed answer on gross investment. It also contains an example to explain the concept better.


Any product, commodity, resource, or asset is bound to depreciate over time. Eventually, it loses its initial efficiency as well as monetary value. This decrease in loss of value or efficiency can be termed as ‘depreciation’ in macroeconomics. For example, machines, tools, equipment, etc. wear off over time.

While calculating a company’s estimates, depreciation is applied directly against the cost of assets. In Class 12 Sandeep Garg solution chapter 2 Basic Concepts of Macroeconomics, the definition, expectation, and effects of depreciation have been detailed.

Capital Loss

Capital loss is the loss faced by a company due to the loss in value of capital assets. This loss is faced when the asset is sold at a lower price than what it was bought for. In class 12 macroeconomics Basic Concepts of Macroeconomics, you learn about the difference between Depreciation and Capital Loss listed in a chart form.

Current Transfers

Current transfers are the transactions made from a current account. These transactions are one-sided; current transfers do not bring returns. These include transfers like donations, worker’s wages, tax payments, grants, foreign aid, etc. Question 2 of Class 12 Sandeep Garg chapter 2 PDF depicts the working of current transfer through a chart diagram.

Capital Goods

Capital goods are assets used in the production process to create/produce some other product or service. These are not finished goods which can be consumed by customers. Rather, capital goods are needed to produce finished goods. Machines used to make a pen can be said to a capital good.

Consumer Goods

These are finished goods or final products sold in the market for consumer use. Consumer goods are not supposed to go through any further production process. They are ready to be sold and consumed.

Sandeep Garg class 12 macroeconomics solutions chapter 2 accurately explains the difference between capital and consumer goods. The categorisation has been done on the basis of definition, sales, end buyers, comparative demand, and price determination.

Tips to Follow for Your Macroeconomics Preparation

Some important tips you could follow:

  • Try revising the easier chapters from the solutions first; move on to the difficult chapters only after understanding the previous chapters.

  • Note down the topics in which you require more study and revision.

  • Refer to the solutions and answers to get your doubts clarified.

All the question-answers provided in the second chapter of Sandeep Garg Macroeconomics solutions are equally important for your board exams. Make sure to read, understand, and refer to them soon after you have finished reading the corresponding textbook lesson.

Why choose Vedantu for downloading Sandeep Garg Solutions Class 12?

Having vast knowledge in the field of economics, Mr Sandeep Garg has excelled in preparing the students for writing board exams. The solutions of Sandeep Garg Macroeconomics Class 12 Chapter 2 Basic Concepts of Macroeconomics are designed in a very comprehensive and clear manner in consideration of the latest syllabus of CBSE.

The students have the facility of downloading the solution PDF from the Vedantu website. Moreover, the extra benefit that the students get is that the solutions are available free of cost on the Vedantu website. The solutions will assist the students while they are preparing and also while revising the chapter at the last moment. Economics is a subject that requires toil and hard work and power of will to understand the numerous existing concepts.

Sandeep Garg Solutions Class 12 Chapter 2 - Basic concepts of macroeconomics are available free of cost on the Vedantu website. Avoid any unnecessary hassle and enjoy hassle-free preparation with the help of Vedantu.

Study of Economic Indicators

The study of integrated indicators such as GDP, unemployment rates, and inflation indicators to understand how the rest of the economy works and develop models that define the relationship between factors such as income, output, consumption, unemployment, inflation, savings, investment, government spending, and international trade in Macroeconomists. These variables taken as a whole include a set of variables called economic indicators. These indicators, which are classified as advanced, lagging and related to their ability to predict, in conjunction with others give economists a more accurate view of the economy.

The Role of the Financial System

Financial markets are associated with rapid economic growth. The financial market helps to achieve the following list of incomplete goals:

  • Saving Mobilization: Funding from depositors or residual units such as local people, business firms, units of state-owned enterprises, central government, provincial governments, etc. is an important role played by financial markets. Borrowers (e.g. bond issuers) are linked to lenders (e.g. bond buyers) in the financial markets.

  • Investment: Financial markets play an important role in investment planning. The investment can be done by both firms and individuals in companies through financial markets (e.g. by buying stock).

  • National Growth: An important role played by financial markets is that they contribute to the growth of the nation by ensuring the unrestricted flow of funds accumulated in deficit units. In other words, financial markets help to move money from industry to industry or firm to a firm based on supply and demand for their products.

  • Business growth: Financial markets allow entrepreneurs (and established firms) to access the funds needed to invest in projects or companies.

Finance Policy

Financial policy is an important system, under the control of the country's finances. This financial officer is usually the central bank or financial board. Monetary policy is often used by the central bank to stabilize prices and increase the strength of the country's currency.

Monetary policy aims to reduce unemployment rates and stabilize GDP. It also regulates the provision of money in the economy. For example, the central bank can pump money into the economy by withdrawing money to buy bonds and other goods. On the other hand, the country's largest bank can also sell bonds and withdraw money from distribution.

Monetary Policy

Monetary policy is a system that uses government revenue generation and expenditure as tools to control the economic downturn. The government uses monetary policy to stabilize the economy during the business cycle. For example, if economic productivity does not match the desired product, the government can waste inefficient resources and help increase productivity.

Generally, economists prefer monetary policy over monetary policy. This is because monetary policy is under the control of the central bank, which is an independent entity. Monetary policy is under the control of the state, which may be affected by political motives.

FAQs on Sandeep Garg Macroeconomics Class 12 Solutions Chapter 2

1. What are the Various Factors of Production?

The four factors of productions in economics are land, labour, capital, and entrepreneur. All the factors contribute to the production of a product or service. They bring individual returns after a product/service has been created.

2. What are the Various Reasons Behind Asset Depreciation?

The various reasons which lead to asset depreciation include perishability, wear and tear, as well as inefficiency or obsolescence. The 6th answer in Sandeep Garg class 12 macroeconomics solutions chapter 2 explains this.

3. How Many Questions are there in Sandeep Garg class 12 Macroeconomics Solutions Chapter 2?

There are six questions in the second chapter of Sandeep Garg Class 12 macroeconomics solutions. The answers to these questions are backed by examples so that students do not face confusion while reading them.

4. What do you mean by unemployment in Class 12 Chapter 2 - Basic concepts of macroeconomics?

Economists measure the level of unemployment in the economy by calculating the percentage of the unemployed. Categories of unemployment include general unemployment, disputed unemployment, and structural unemployment. Unemployment was long gone when wages were too high for employers to consider hiring more workers. Random unemployment occurs when the time it takes to find the right employee is too long. Staff shortages occur when there is a discrepancy between job skills and the actual skill required in the job. Another important category of unemployment is unemployment that occurs when economic growth has stopped.

5. Describe the concept of income and output in Class 12 Chapter 2 - Basic concepts of macroeconomics?

One of the most important concepts of macroeconomics is income and output. The national output is the sum of all the goods and services produced in the country over some time. And when production units or organizations sell everything they produce, they make an equal amount of income. Thus, you can measure your output by calculating the total revenue from the sale of all goods and services. In the case of macroeconomics, economists often measure national income or output by gross domestic product or GDP.