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Current Category » Introduction to Agriculture Economics

Income, Savings and Investment

Income: What wealth yields called income. Income is possible if wealth is there. Hence wealth is pre-requisite for income. Income may be money income and real income. When income expressed it terms of money, called money income. But real income refers to goods and services that a person purchases with his money income. Real income depends upon prices. Real income is inversely related with prices.

Savings: Saving refers to the excess of income over consumption. A person consumes some part of his current income and after it whatever income remains in his hands it is called saving.

Investment: Investment means an addition made to the physical stock of capital i.e. amount utilized for constructing building, dam, new factory etc.

I = Investment, Y = Income, S = Savings, C = consumption

1. Y = C + C         2.  S = Y-C      3.  C = Y – S

4.  Y = C + I , Provided S = I

Current Category » Introduction to Agriculture Economics