Economic Terms – Nagaland TET (Teacher Eligibility)
Subject: General Awareness & Current Affairs
Exam Focus: IIT‑JEE / Competitive exam style – depth, derivations, formulas & tricky points
Tip: For the TET, you must know the term, its definition, the formula (if any), and be able to explain why it matters for India’s economy.
1. Macro‑Economic Terms
| Term | Definition | Formula (if applicable) | Why it matters |
|---|---|---|---|
| GDP (Gross Domestic Product) | Total value of all final goods & services produced within a country’s borders in a given period. | GDP = C + I + G + NX where C = Consumption I = Investment G = Government expenditure NX = Net exports (X–M) |
Main indicator of economic activity. |
| GNP (Gross National Product) | Value of all final goods & services produced by citizens (domestic & abroad) in a period. | GNP = GDP + Net income from abroad | Shows national income beyond borders. |
| NGDP (Net Domestic Product) | GDP after depreciation of capital. | NGDP = GDP – Depreciation | Gauges real productive capacity. |
| Real GDP | GDP adjusted for price changes (inflation/deflation). | Real GDP = Nominal GDP ÷ (GDP deflator ÷ 100) | Measures true growth. |
| GDP Deflator | Price level of all domestically produced goods & services. | Deflator = (Nominal GDP ÷ Real GDP) × 100 | Used to convert nominal to real. |
| CPI (Consumer Price Index) | Average price change of consumer basket. | CPI = (Cost of basket in current year ÷ Cost in base year) × 100 | Basis for inflation & cost‑of‑living adjustments. |
| PPI (Producer Price Index) | Price change of goods at the producer level. | Same as CPI but for producers. | Signals future CPI changes. |
| Inflation | Sustained rise in general price level. | Inflation rate = (CPI_t – CPI_{t‑1}) ÷ CPI_{t‑1} × 100 | Impacts purchasing power. |
| Deflation | Sustained fall in general price level. | Same formula as inflation but negative result. | Harms borrowers & reduces growth. |
| Stagflation | Stagnation (low growth) + Inflation. | — | Rare but severe economic condition. |
| Fiscal Deficit | Government’s total expenditure > total receipts. | Fiscal Deficit = (Total Expenditure – Total Revenue) ÷ GDP × 100 | Indicates fiscal health. |
| Current Account Balance (CAB) | Net of trade, services, income & unilateral transfers. | CAB = (Exports + Services + Income + Transfers) – (Imports + Services + Income + Transfers) | Indicator of external position. |
| Exchange Rate | Value |