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National Income Accounting Part 4
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2.2 circular flow of income.

Mohini Jain
Gold medalist in Economics and graduate from St. Francis. Loves to read novels.

Unacademy user
one of the best mentor on this platform
Mohini Jain
6 months ago
:)
Yes, India consumption driven country. India has a huge population, so tend to consume in what ever capacity they are. This basically ranges from match box to Mercedes benz and asha to audi. The advantage is the more we consume the more we pay indirect taxes. This may not always be true. India import goods from different countries. Like electronics and pretty retail goods from china and we also import textiles from Bangladesh, though we are a major players in textiles,many more imports.Our consumption is helping grow imports, that means companies in other countries are benefiting at the cost of India's growth. Assume India has all those companies to replace the imports. People will be buying desi products, desi companies will be paying taxes to the government. And many people will be employed domestically. If this production business is vibrant, our companies will excess the production, they will export it to the other countries which will make money and eventually our foreign exchange will increase. But if the process consumption decreases due to any reason , there will be stock of unsold goods, which will have to be sold either at throwaway prices or unreasonably at cheaper rates. The economy will collapse and jobs will lost. Consumption based economy is good, till such time our export balances imports and till such time imports do not eat into our exports.Domestic production should also increase to at least the quench the requirement thirst of domestic consumption.
Mohini Jain
9 months ago
That's a really good answer actually... I think you don't have to worry about answer writing Ramana :)
Mohini Jain
9 months ago
And if possible i hope to see you in today's special class :)
Madam, you are really doing great work in this platform and I really appreciate your effort to make the economic concepts simple. Thank you very much. i have question...tat is i watched all the lectures from your course entitled "Concepts of Economy Simplified through Storytelling for govt.exam" here my question is.... whether for UPSC aspirant the CONCEPTS explained in the above mentioned course is enough or i have to watch NCERT (11th and 12th) courses also. THANK YOU VERY MUCH
Mohini Jain
9 months ago
Hey Seevagan... Ncerts for Economoy are enough... I suggest if you have watched the complete course of concepts simplified through Storytelling.. That should be enough.. But safe side... Just go through ncerts as well.. :)
Superb mam...1 doubt ..? Why word "factor" has been used in factor payments or factor services.... why not just services or payments..?
Mohini Jain
9 months ago
Ravikant if my memory serves me correct... I think you attended my special classes on Economics... Right? I did tell you in that why we call it factors... Think a bit... Here goes the hint... Mathematically factor means what?
Ravikant Bhande
9 months ago
yeah...!!!! got it mam.......I remembered you started by taking example of 10 and its factor 2 and 5....Now i got it..ill never forget now...Thank you so muchhh.!!!!
Mohini Jain
9 months ago
👍 :)
Why word factor has been used ?
Mohini Jain
9 months ago
Hey Raman.. Have you attended my special class on National income accounting?
S Ramanareddy
9 months ago
Hi Mohini, No i didn't attended any special classes. I am attending Ncert Macroeconomics classes which are taught by you.
Mohini Jain
9 months ago
Ok... So I will go with the basics to explain it to you..
Mohini Jain
9 months ago
See... I'm sure you know factors concept in Maths... So what are the factors of 20...1,2,4,5,10,20...so using these numbers you can derive 20...right..? So these factors are producing number 20
Mohini Jain
9 months ago
Similarly... In order to produce anything you need certain things... Like land, labour, capital and so on... And since these are used to 'produce'... They are called as 'factors' of production...
Mohini Jain
9 months ago
I hope you got it... :)
S Ramanareddy
9 months ago
Thanks for explaining. I have answered your question which is asked in the video. Please let me know your feedback on it.
Mohini Jain
9 months ago
👍
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