CLASS-12 MACRO ECONOMICS, NCERT
CBSE BOARDS
Chapter-1 (CIRCULAR FLOW OF INCOME)
Meaning of macroeconomics:
Macroeconomics deals with that part of the economic theory which studies the behaviour of aggregates
of the economy as a whole. For e.g., national income, national output, aggregate consumption,
aggregate demand etc.,
Difference between Microeconomics and Macroeconomics
Basis Microeconomics Macroeconomics
It is that part of the economics theory It is that part of the economic theory
Meaning which studies the behaviour of the which studies the behaviour of
individual units of an economy. aggregates of the economy as a
whole.
Demand and supply. Aggregate demand and Aggregate
Tools supply.
Basic It aims to determine the price of a It aims to determine the income and
commodity or factors of production. employement level of the economy.
objective
Degree of It involves a limited degree of It involves the highest degree of
aggregation. For example, market aggregation. For example, aggregate
aggregation demand is derived by aggregating demand is derived for the entire
individual demands of all buyers in economy.
the particular market .
Other name It is also known as ’price theory’. It is also know as ‘ income and
employment’.
Examples Individual income, individual output. National income, national output.
Circular flow of income
It refers to the cycle of generation of income in the production process,
its distribution among the factors of production and finally , its
, circulation from households to firms in the form of consumption
expenditure on goods and services produced by them.
Phases of circular flow of income
There are 3 different phases in circular flow of income:
1. Generation phase: In this phase, the firms produced goods and
services with the help of factor services.
2. Distribution phase: This phase involves the flow of factor income
(rent, wages, interest and profit) from firms to the households).
3. Disposition phase: In this phase, the income received by factors of
production, is spent on the goods and services produced by firms.
Stock
Stock variables refers to that variable, which is measured at a
particular point of time. For example., Population of India as on
31st January, 2026. It means stock variables are not time
dimensional. some more examples national wealth, national
capital, money supply etc.
Flow
Flow variable refers to that variable, which is measured over a
period of time. For example., the production of goods during the
month of January 2026, national income in the year 2024 are flow
variables. The ‘period of time’ could be a day, a week, a year, etc.
CBSE BOARDS
Chapter-1 (CIRCULAR FLOW OF INCOME)
Meaning of macroeconomics:
Macroeconomics deals with that part of the economic theory which studies the behaviour of aggregates
of the economy as a whole. For e.g., national income, national output, aggregate consumption,
aggregate demand etc.,
Difference between Microeconomics and Macroeconomics
Basis Microeconomics Macroeconomics
It is that part of the economics theory It is that part of the economic theory
Meaning which studies the behaviour of the which studies the behaviour of
individual units of an economy. aggregates of the economy as a
whole.
Demand and supply. Aggregate demand and Aggregate
Tools supply.
Basic It aims to determine the price of a It aims to determine the income and
commodity or factors of production. employement level of the economy.
objective
Degree of It involves a limited degree of It involves the highest degree of
aggregation. For example, market aggregation. For example, aggregate
aggregation demand is derived by aggregating demand is derived for the entire
individual demands of all buyers in economy.
the particular market .
Other name It is also known as ’price theory’. It is also know as ‘ income and
employment’.
Examples Individual income, individual output. National income, national output.
Circular flow of income
It refers to the cycle of generation of income in the production process,
its distribution among the factors of production and finally , its
, circulation from households to firms in the form of consumption
expenditure on goods and services produced by them.
Phases of circular flow of income
There are 3 different phases in circular flow of income:
1. Generation phase: In this phase, the firms produced goods and
services with the help of factor services.
2. Distribution phase: This phase involves the flow of factor income
(rent, wages, interest and profit) from firms to the households).
3. Disposition phase: In this phase, the income received by factors of
production, is spent on the goods and services produced by firms.
Stock
Stock variables refers to that variable, which is measured at a
particular point of time. For example., Population of India as on
31st January, 2026. It means stock variables are not time
dimensional. some more examples national wealth, national
capital, money supply etc.
Flow
Flow variable refers to that variable, which is measured over a
period of time. For example., the production of goods during the
month of January 2026, national income in the year 2024 are flow
variables. The ‘period of time’ could be a day, a week, a year, etc.
