Page 49 - DECO402_Macro Economics

Macroeconomic Theory

Notes of mistake or not, then it is necessary for it that the addition of every rows is equally to the total of it
equivalent column.
by Account
Receipts 1 2 3 4 5
To Production Consumption Capital External Total
Payable
1 Production 16 4 20
2 Consumption 18 18
3 Capital 2 6 8
4 External
5 Total 20 22 4 46
The record in above table (1) is related with production field. Its also call the National Production
and Income Account. In it all transaction are include initiations by firms and government
(2) Consumption sector is related which divided Records- (i). Private income and expenditure record
(ii) government income and expenditure records. Business and house holder are payment for the
fulfillment of their needs, other side the government expenditure is for the fulfillment the need of public
health, administration, police, education and justice. At the side of rows the business and house income
is get by the public borrowings, wages, salary, profit, interest and revenue and government get income
by taxes. (3) Record is related to collection point and it also calls national capital account. It also calls
capital transaction. At the side of row get the capital transfer as reduce the capital transaction price. (4)
Is related to external sector. It call the rest of the world account and external account, in it involve the
transaction of all country and debtors, in it things and services involve are net creditors and debtors
and current transfers. There will be balance three records in a close economy. In an open economy
should be the calculation of transaction with external records for balance the social records.

Task Give your views on the account of total savings and exchange.

Self Assessment

State whether the following statement are True or False:
7. Social accounting describes the economic activities of whole economy as statistics
description.
8. We did not get knowledge of economic structure by the use of social accounts.
9. By the help of national income accounting can evaluate easily the effect of government
policies.
10. In an open economy should be the calculation of transaction with external records for balance
the social records.

4.8 Social Accounting’s Laws

The main methods of social accounting are following-
a. Present method by Saiman Kuznets.

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