Distinguish between Consumption goods and Capital goods. Distinguish between net export and net factor income from abroad.

Question

Accepted Answer

Distinguish between Consumption goods and Capital goods:

Consumption goods: Goods used for final consumption by households. They satisfy direct wants. Example: Food, clothing, electronics.

Capital goods: Goods used for further production. They help in producing other goods. Example: Machinery, equipment, factories.

Distinguish between Net Export and Net Factor Income from Abroad:

Net Exports (X-M): Difference between value of exports and imports of goods and services. It represents trade balance.

Net Factor Income from Abroad (NFIA): Difference between factor income earned by residents from abroad and factor income earned by foreigners within the country.