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  • Figure 1.1 Production Processes and The National Income: Wheat Produced by Farmer (INR 50) Sale of Bread

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    Surendra Vyas
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    The document summarizes how production processes contribute to national income. It shows wheat being produced by a farmer and then purchased by a baker, who transforms it into bread. The baker also purchases capital goods like an oven and racks to scale up production. The nation's aggregate output or GDP is the sum of private sector output from these production activities plus government spending.

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    1 Production Processes and the National Income

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    Chart

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    The document summarizes how production processes contribute to national income. It shows wheat being produced by a farmer and then purchased by a baker, who transforms it into bread. The baker also purchases capital goods like an oven and racks to scale up production. The nation's aggregate output or GDP is the sum of private sector output from these production activities plus government spending.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
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    6 views1 page

    Figure 1.1 Production Processes and The National Income: Wheat Produced by Farmer (INR 50) Sale of Bread

    Uploaded by

    Surendra Vyas
    The document summarizes how production processes contribute to national income. It shows wheat being produced by a farmer and then purchased by a baker, who transforms it into bread. The baker also purchases capital goods like an oven and racks to scale up production. The nation's aggregate output or GDP is the sum of private sector output from these production activities plus government spending.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Figure 1.

    1 Production Processes and the National Income

    Wheat for Bread Produced Final


    Self Consumption---- Non-Market activity- Purchase
    In Household (Farmer does not Pay himself
    To produces bread)
    Wheat Sale of
    Produced Bread Consumption
    By Farmer
    (INR 50)
    Purchased by Wheat + Effort
    Baker (Who puts result in output Unsold bread
    In effort to transform of bread on shelves
    It to another good)
    Value of effort = INR 50
    Wheat not
    used up Inventory

    New oven,
    Purchased Not used Not sold
    New Baking Racks By baker so up during to others
    (Capital Stock) As to scale course of as Final
    Up production Year Good
    (Gross Investment) Net Addition Net
    to Capital Investment
    Stock
    Depreciation of
    Capital Good
    (Depreciation)

    The Aggregate output of a nation is thus computed by its GDP and is the sum of the private sector output
    and the government costs.

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