Question

Briefly summarize the key elements of Quesnay’s Tableau Economique. In what way did this table foreshadow the contemporary circular flow diagram and national income accounting? Could one table be derived from the other? Explain. 10 points

Answer 1

Explanation of economic table :

Divided into three classes :

1. Productive expenditures are employed in agriculture , pastures , etc. To perpetuate riches in form of grains.

2. Sterlite expenses are made on handicrafts.

3. Proprietary class was only of landowners.

Farmer used to retain 600 of food when he produced 1500 food on a leased land .

Artisans used to produce 300 units of food for himself , 150 units for foreign , 150 for subsistence and other 150 for future needs.

Landlord does not produced anything he just only used to consume food. His contribution was $600 in land in which he used 300 to buy food and other 300 to buy crafts.

Merchant was used to export food in return for foreign imports of goods. Merchant buys food from market with the money earned by the artisan .

Despite of economy producing surplus food, farmer or artisans are not able to afford to consume for than subsistence level.

This table looks like a circular flow of income because income keeps on rotating from one person to other systematically , because of this only table looks like a circular flow .

This table also records all incomes amd expenditure of the economy , so it foreshadows the national income accounting.

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