General Awareness & Current Affairs
Economic Terms – Delhi PSC
Why these terms matter
Economic terms form the backbone of any public‑service exam. They help you understand policy announcements, news reports, and the economic context of the questions you face in the exam.
1. Simple Explanation
| Term | Definition (in one line) |
|---|---|
| GDP | Total value of all final goods & services produced inside a country in a year. |
| GNP | GDP plus net income from abroad (income earned by residents abroad minus income earned by foreigners domestically). |
| CPI | Index that measures average price changes of a fixed basket of consumer goods. |
| PPI | Index that tracks price changes at the producer level (input prices). |
| Inflation | Sustained rise in general price level, reducing purchasing power. |
| Deflation | Sustained fall in general price level. |
| Unemployment | Proportion of the labor force that is job‑seeking but unemployed. |
| Fiscal Deficit | Expenditure > Revenue (excluding borrowings). |
| Fiscal Surplus | Revenue > Expenditure. |
| Budget Deficit | (Fiscal Deficit) + (Borrowing). |
| Debt‑to‑GDP Ratio | Total public debt expressed as a percentage of GDP. |
| Current Account Balance (CAB) | Net trade in goods & services + income flows + unilateral transfers. |
| Capital Account Balance | Net capital flows (investments, loans, etc.). |
| Balance of Payments | Sum of CAB and Capital Account (plus errors & omissions). |
| Exchange Rate | Value of one currency relative to another. |
| Devaluation | Official downward adjustment of a currency’s value. |
| Appreciation | Official upward adjustment of a currency’s value. |
| Interest Rate | Cost of borrowing money (set by RBI or market). |
| Monetary Policy | RBI’s actions (interest rates, reserve requirements) to influence money supply. |
| Fiscal Policy | Government’s use of taxes & spending to influence the economy. |
| Direct Tax | Tax on income (e.g., Income Tax). |
| Indirect Tax | Tax on goods & services (e.g., GST, VAT). |
| GST | Unified tax on goods & services, subsuming multiple indirect taxes. |
| Income Tax | Tax on individual / corporate income. |
| Corporate Tax | Tax on profits earned by companies. |
| Capital Gains Tax | Tax on profit from sale of assets. |
| RBI | Central bank of India, regulator of monetary policy. |
| SEBI | Securities & Exchange Board of India, regulator of securities market. |
2. Key Points (Detailed)
2.1 GDP & Related Measures
- GDP = Consumption + Investment + Government Spending + Net Exports
- GNP = GDP + Net Income from Abroad
- GSDP = State‑level GDP (important for state‑level policy analysis)
2.2 Price Indices
- CPI: Used to calculate inflation, cost‑of‑living, and index‑based subsidies.
- PPI: Helps gauge inflation at the production level; often precedes CPI