| Gross Domestic Product (GDP) |
A giant doughnut showing how much the country eats in a year. |
Total value of all food (goods & services) made in the country in one year. |
If India makes 100 units of rice + 200 units of wheat in a year, GDP = 300 units. |
| Gross National Product (GNP) |
Your personal savings account that records all the money you earn, even if you’re abroad. |
GDP + money earned by citizens abroad – money earned by foreigners in the country. |
Indian worker in USA sends 10,000 rupees home → added to GNP. |
| Inflation |
When the price of a loaf of bread goes up because everyone wants it. |
General rise in prices of goods & services over time. |
Bread cost 50 rupees in 2023 → 55 rupees in 2024. |
| Deflation |
When the price of a loaf of bread falls because there’s too much bread in the market. |
General fall in prices over time. |
Bread cost 50 rupees in 2023 → 45 rupees in 2024. |
| Interest Rate |
The fee you pay for borrowing a friend’s bike. |
The percentage paid to borrow money. |
Borrow 10,000 rupees at 10% → pay 1,000 rupees interest. |
| Reserve Bank of India (RBI) |
The chief of the kitchen who decides how much food to keep in the pantry. |
India’s central bank. Controls money supply & interest rates. |
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| Monetary Policy |
The kitchen’s rule book on how many spoons (money) to use. |
RBI’s actions to control money supply & interest rates. |
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| Fiscal Policy |
The kitchen’s yearly budget: how much to spend and how much to collect. |
Government’s decisions on taxes & spending. |
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| Budget Deficit |
When you spend more milk than you have. |
Government spending > revenue in a year. |
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| Budget Surplus |
When you collect more milk than you spend. |
Government revenue > spending in a year. |
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| Public Debt |
A list of all the friends you owe money to. |
Total amount the government owes. |
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| Tax |
The toll you pay to use the road. |
Money taken by government from people/businesses. |
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| Export |
Sending your homemade sweets to a neighbour. |
Selling goods/services to other countries. |
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| Import |
Buying sweets from a neighbour. |
Buying goods/services from other countries. |
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| Balance of Trade (BOT) |
Difference between sweets you send out and sweets you receive. |
Export value – Import value. |
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| Current Account |
Your overall shopping bill (exports + imports + services). |
BOT + services (like tourism, business). |
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| Foreign Exchange (Forex) |
The special coins used when you travel abroad. |
Currency of other countries (USD, EUR, etc.). |
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| Exchange Rate |
The price of one coin in terms of another. |
1 USD = 75 INR. |
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| Liberalization |
Opening the kitchen door so anyone can bring in their own utensils. |
Making economy more open to private and foreign participation. |
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| Privatization |
Selling a public water pump to a private company. |
Government sells state-owned assets to private owners. |
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| Import Duty |
A toll you pay on goods entering from outside. |
10% tax on imported cars. |
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| Subsidy |
Giving friends free snacks to encourage them to eat. |
Government gives money to producers to lower prices. |
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| Gross Margin |
Difference between the price you sell at and the price you bought it. |
Sell bread for 30 rupees, buy ingredients for 20 → 10 rupees profit. |
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| Depreciation |
A car losing value over time. |
Asset value falls as it ages. |
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| Recession |
The kitchen gets less busy; fewer orders. |
Economic slowdown for 2 consecutive quarters. |
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| Growth Rate |
How fast the kitchen size expands each year. |
GDP growth of 6% means economy is 6% bigger than last year. |
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| Liquidity |
How easily you can use your money for buying groceries. |
Cash or assets that can be sold quickly. |
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| Unemployment |
Kitchen staff who are ready but have no work. |
People able to work but cannot find jobs. |
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| Inflation Target |
RBI’s aim to keep the price of food stable. |
RBI keeps inflation around 4% ± 2%. |
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