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.

Depreciation

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.