Macroeconomics

Macroeconomics : Study of economy as a whole and addresses many topical issues

GDP : Market value of all final goods and services produced within a country within a given time

Y = C + I + G + NX

C – consumption expenditure, I – investment expenditure, G – Government expenditure, NX – Net

Exports

GDP Deflator = 100 * Nominal GDP/Real GDP

CPI : Measure of overall level of prices faced by consumers = 100 * (Cost of basket in that month)/
(Base cost of basket)

WPI : Measure of overall level of market prices (Changes in wholesale prices)

Types of inflation : Hyperinflation (Extremely high inflation), Deflation (Sustained decrease in price
level), Disinflation (Decrease in inflation), Stagflation (High inflation and low growth)

PPP : Theory that purchasing power in different countries should be the same when stated in a
common currency  It states that countries with low inflation will have higher appreciation of
currencies because demand would be higher

Sources of unemployment : Real wage unemployment, Frictional unemployment, Seasonal

unemployment, Structural unemployment, Cyclical unemployment

Disposable income : Income that remains after once consumers have paid taxes

Marginal propensity to consume : the effect of an additional rupee of DI on consumption

Financial
Institutions

Regulatory Commercial
Institutions Institutions

RBI Banks Non-banks

SEBI, IRDA,
Retail banks NBFCs
PFRDA, FMC

Wholesale Insurance
banks companies

Cooperative Mutual funds,

banks Pension funds

Open Market Operations : Outright purchase or sale of government bonds by RBI

Cash Reserve Ratio : RBI Regulation that requires banks to hold a minimum cash reserve-deposit
ratio

Repo Rate : interest rate that RBI charges on short-term loans