Formula Vault

What it means: National income equals net domestic product at factor cost plus net factor income earned from abroad. It is the income earned by a country's normal residents.

What it means: Add net factor income from abroad to GDP to move from a domestic (territory-based) concept to a national (resident-based) concept.

What it means: Subtract the wear-and-tear of capital to move from gross to net product.

What it means: Subtract depreciation from gross national product.

What it means: Market price includes indirect taxes less subsidies; factor cost is what producers actually receive.

What it means: Real GDP is nominal GDP adjusted for price changes using the base-year price level.

What it means: The deflator measures the overall price level; 100 means no change since the base year, >100 means inflation.

What it means: National income equals total final expenditure: private consumption, gross domestic capital formation, government spending and net exports.

What it means: Each producing unit contributes value equal to output minus the inputs bought from other units. Sum all units to get GDP.

What it means: The net of incomes residents earn abroad and foreigners earn within the country. Bridges domestic and national income.

What it means: The money multiplier shows how many times the initial deposit expands into total deposits through credit creation.

What it means: Banks lend excess reserves; loans return as deposits; the process multiplies money up to this limit.

What it means: Narrow money — currency plus instantly spendable deposits.

What it means: Broad money includes time (fixed) deposits, the most-used money measure in India.

What it means: Consumption equals autonomous consumption plus the marginal propensity to consume times income.

What it means: Saving is income not consumed; derived from Y = C + S.

What it means: Marginal propensity to consume — extra consumption out of an extra rupee of income. 0 < MPC < 1.

What it means: Marginal propensity to save — extra saving out of an extra rupee of income.

What it means: Average propensity to consume — total consumption per unit of income. APC + APS = 1.

What it means: Average propensity to save.

What it means: The multiplier is the ratio of change in income to the change in investment. Higher MPC → larger multiplier.

What it means: A change in autonomous investment changes equilibrium income by the multiplier times the investment change.

What it means: Solve Y = C + I for the two-sector equilibrium income level.

What it means: Planned output equals planned expenditure, equivalently planned saving equals planned investment.

What it means: The gap between day-to-day spending and revenue income — how much the government borrows for regular operations.

What it means: Fiscal deficit equals the government's total borrowing requirement for the year.

What it means: Borrowing needed after servicing interest on past debt — the 'fresh' deficit.

What it means: Breaks fiscal deficit into its revenue and capital parts.

What it means: Trade balance in visible items only.

What it means: Net earning from ongoing transactions with the rest of the world.

What it means: A current account deficit is financed by capital inflows or by drawing down forex reserves.

What it means: If more rupees are needed per dollar, the rupee has fallen in value.