1.intermidate goods and final goodsrn
2.stock and flowrn
3. domestic and national product
Ans 1. Intermediate goods and final good are distinguished on the basis of following points.
Basis of Difference
Final goods are those products that are ready for use by the final consumers.
Intermediate goods are those products which are not ready for final use and are used only as raw materials for further production.
Such goods do not require any further processing.
These goods require further processing and go through various stages of production.
These goods are not meant for resale.
Such goods are resold for further production.
For example, cotton purchased by a consumer for personal consumption is a final good.
For example, cotton purchased by a textile industry for making cloth is an intermediate good.
Ans 2. Following points highlight the difference between a stock variable and a flow variable.
Basis of Difference
A variable is said to be a stock variable, if it is measured at a particular point of time.
A variable is said to be flow if it is measured over a period of time.
Element of Time
Such variables do not have an element of time attached with them.
These variables have an element of time attached to them.
For example, profits as on 31st march, 2011 is a stock variable
For example, interest earned on bank deposits for 1 year, i.e. from October 01, 2009 to September 30, 2010 is a flow variable.
Ans 3. Basically, Domestic Product and National Product are distinguished on the basis of the Net factor Income From Abroad (NFIA). While Domestic Product includes factor income paid only to the domestic residents of the native country with the domestic territory of a country, on the other hand, National product besides including the factor income paid to the domestic residents, also includes the factor income paid to the domestic residents residing on the foreign lands. In simple words, Domestic Product excludes NFIA, whereas, National Product includes NFIA.
Algebraically, Domestic Product = National Product – NFIA**
⇒National Product – (Factor Income earned by the domestic residents – Factor Income paid to the foreign residents)
and National Product = Domestic Product + NFIA**
⇒ Domestic Product + (Factor Income Earned by the domestic residents – Factor Income paid to the foreign residents)
** where, NFIA refers to the difference of factor income earned from foreign and the factor income paid to the foreigners.