Question
What is ‘barter’? Explain ‘standard of deferred payment’ function of money.
Standard of Deferred Payment:
Deferred payments mean those payments which are to be made in the future. If a loan is taken today, it would be paid back after a period of time.
The amount of loan is measured in terms of money and it is paid back in money. A large number of credit transactions involving huge future payments are made daily. Money performs this function of standard for deferred payments because its value remains more or less stable.
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| (Rs. crores) | ||
| 1 | Current transfers from government. | 25 |
| 2 | Compensation of employees. | 600 |
| 3 | Net current transfers from the rest of the world. | 20 |
| 4 | Rent. | 100 |
| 5 | Consumption of fixed capital. | 50 |
| 6 | Interest. | 120 |
| 7 | Net indirect tax. | 110 |
| 8 | Profit. | 80 |
| 9 | Mixed income of the self-employed. | 200 |
| 10 | Net factor income from abroad. | (-)10 |
| Quantity | TR (Rs) | TC(Rs) | Profit |
| 0 1 2 3 4 5 6 7 | 0 5 10 15 20 25 30 35 | 5 7 10 12 15 23 33 40 |
| Quantity | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Marginal Revenue | 10 | 6 | 2 | 2 | 2 | 0 | 0 | 0 | -5 |
| S.No. | Contents | ₹ (in crore) |
| (i) | Value of Output in Economic Territory | 4,100 |
| (ii) | Net Exports | (-)50 |
| (iii) | Intermediate Purchase by Primary Sector | 600 |
| (iv) | Private Final Consumption Expenditure | 1,450 |
| (v) | Intermediate Purchases by Secondary Sector | 700 |
| (vi) | Government Final Consumption Expenditure | 400 |
| (vii) | Net Domestic Fixed Capital Formation | 200 |
| (viii) | Intermediate Purchases by Tertiary Sector | 700 |
| (ix) | Net Change in Stock | (-)50 |
| (x) | Net Indirect Taxes | 100 |
| (xi) | Consumption of Fixed Capital | 50 |