Economics 3 Marks Question

True.
Explanation:
It directly satisfies human wants.

Difference between depreciation and depreciation reserve fund:

S. No.	Basis	Depreciation	Depreciation reserve fund
1.	Concept	It is the loss of value of fixed assets in use, on account of normal wear and tear.	It is a provision of funds created by producers to cope up with depreciation losses.
2.	Effect	It leads to correct computation of profit.	These funds are used for the replacement of fixed assets when these are worn out.
3.	Reason	Expected or foreseen obsolescence, normal wear and tear.	Obsolete/ outdated assets need to be repalced.

S. No.	Basis	Microeconomics	Macroeconomics
1.	Meaning	Microeconomics is the study of individual Economic units.	Macroeconomics is the study of the economy as a whole or its aggregates.
2.	Objectives	It lays emphasis on the allocation of resources and price determination.	It lays emphasis on the determination of National income and employment.
3.	Examples	Consumer's equilibrium, individual demand, pricing of good etc.	Economy's equilibrium. national income' Aggregate demand. inflation etc.

The concept of Normal Resident helps to estimate 'National Product'. National Product includes production activities of normal residents irrespective of fact whether performed within the economic territory or outside it. The money value of national product is termed as National Income.

No, it is not necessary that machine purchased is a capital good. It will depend upon its use.

1. If a sewing machine is purchased by a tailor, then it is a fixed asset of the tailor and considered to be a capital good. But the same machine purchased by a consumer household is considered to be a durable use consumer goods.
2. If a car purchased by a taxi driver as a taxi or if purchased by a firm for use in its business is a capital good. But the same car purchased by a consumer household is a durable use consumer goods.

Note: So, finally, the end user of a good determine, whether it is capital good or durable use consumer goods. If an end user of a durable goods is a producer, it is a capital good. If an end user of a durable goods is a consumer household, it is a durable use consumer goods. So, capital goods are only those durable goods which are used as producer goods, not as consumer goods.

Producer goods are all those goods which are used in the process of production i.e., which are used in the production of other goods. Producer goods include two types of goods:

1. Single-use Producer Goods: Goods used as raw material by the producers. It includes raw material like coal, wood, etc. They are not capital goods as they cannot be repeatedly used in the production process.
2. Capital Goods: Goods which are used as fixed assets by the producers, like plant and machinery, which can be repeatedly used in the production process. So, it can be said that all capital goods are producer goods, but all producer goods are not capital goods.

The concept of domestic territory helps to estimate Domestic Product'. As we know Domestic Product includes goods and services produced by production units located in the domestic territory (irrespective of fact whether carried out by residents or non-residents). The money value of domestic product is termed as Domestic Income.

S. no.	Basis	Current Transfers	Capital Transfers
1.	Made out of	Transfers made from the current income of the payer and added to the current income of the recipient the current income of the recipient expenditure are called current transfers.	Capital transfers are defined as transfers in cash and in kind for the purpose of investment wealth or saving of the donor.
2.	Concept	Recurring or regular in nature.	Non-recurring or irregular in nature.
3.	Example	Scholarships, gifts, old age pension, etc.	Investment grant, capital gains, tax, war damages, etc.

Features of capitalist economy are:

1. Private ownership of land and capital.
2. Profit is the only motive.
3. Free play of the market forces of demand and supply.
4. Government looks after growth, stability and social justice in the economy.

Microeconomics is the study of individuals and small groups of individuals whereas Macroeconomics studies the aggregates of an economy.

No, it is not necessary that machine purchased is a final good. It will depend upon its use.

1. If a machine is purchased by a household, then it is a final good. For example, washing machine purchased by a consumer household is a final goods.
2. If it is purchased by a firm for its own use, then it is also a final good. For example, refrigerator purchased by a firm.
3. If it is bought by a firm for resale, then it is an intermediate good. For example, machine purchased by a machine dealer.