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30-10-2018 Macroeconomics 2
GDP
• GDP is the monetary value of all goods
and services produced in the economy
in a given time period.
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Types of GDP
Total value of all goods & services produced at
Nominal current market prices(Includes changes in price
due to inflation or deflation)
Income GDP=Total National Income + Sales Tax + Depreciation + Net Foreign Income
Approach
Production or GDP= Sum of the value added to products during production process
Value-Added
Approach
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Calculation of GDP in India:
• Production or Value -added Approach
• Expenditure
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Sector wise trend
2016-17
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Expenditure Method CIS-Change in stocks
Table 2
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Previous method vs Current method:
Table 3
Parameters Previous Current
Price Cost of production Market price
Base year 2004-2005 2011-12
Table 4
Year Old definition & base(GDP growth %) New definition & base(GDP growth %)
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Results of the change:
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Employment and unemployment trend:
• Labour force participation rate
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• Proportion unemployed
𝑛𝑜.𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛𝑠
PU = ∗ 1000
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
• Unemployment rate
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Approaches
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Unemployment trend (India)
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Employment trend
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Major Employment sector in India
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Consumer Price Index (CPI)
• A statistical estimate of the level of prices of goods and services
bought for consumption purposes by households
• Macroeconomic indicator of inflation
• Link: https://courses.lumenlearning.com/boundless-
economics/chapter/cost-of-living/
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Market basket
Groups for the revised CPI (Rural/Urban)
Groups Description
1. Food and Beverages
2. Pan, tobacco and intoxicants
3. Clothing and Footwear
4. Housing
5. Fuel and light
6. Miscellaneous(Transportation, Education, Personal care etc)
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Trend of cost of living in India(2010-2018)
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Wholesale Price Index(WPI)
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Fiscal Deficit
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Government Fiscal Deficit:
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Fiscal deficit
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Fiscal deficit
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Steps taken to reduce fiscal deficit
• Reduce Public Expenditure
• Increasing Revenue from Taxation
• Link: http://www.yourarticlelibrary.com/economics/measures-to-be-
followed-to-reduce-fiscal-deficits/38126
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India’s Debt and Trend
• Accumulated government deficits are called Debt
• India ranks 22nd in world with debt of $5290 Billion
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Internal debt
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External debt
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References:
• http://mospi.nic.in/
• https://courses.lumenlearning.com/boundlesseconomics/chapter/cos
t-of-living/
• https://tradingeconomics.com/
• http://www.mospi.gov.in/central-statistics-office-cso-0
• https://labour.gov.in/annual-reports
• https://data.worldbank.org/
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Q&A
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