Economics

• Gross Domestic Product (GDP) measures the value of all final goods and services produced within a country's borders during a specific period.
• Economic growth refers to an increase in the size of the economy over time, measured as real GDP per capita.
• Consumption refers to household purchases of goods and services.
• The GDP is calculated by adding up the total expenditure on consumption, investment, government spending, and net exports.
• Investment includes business capital investments such as machinery or buildings.
• The circular flow diagram illustrates how money flows between households, firms, government, and foreign countries through production, consumption, investment, saving, taxes, and spending.
• Income is earned by individuals or businesses from their work or investments, while expenditure is the amount spent on goods and services.
• Investment is spending on capital equipment by businesses or households.
• Saving occurs when income exceeds expenditure, resulting in excess funds being set aside for future use.
• Net exports are the difference between what a country sells abroad and buys from other countries.
• Investment includes capital outlays such as machinery, equipment, buildings, and infrastructure.
• Fiscal policy involves changing taxation levels to increase or decrease disposable income, affecting consumer demand and business profitability.
• Governments spend money on public goods like education, healthcare, defense, and infrastructure.
• Taxes are paid to the government based on income levels.
• Government spending is public sector spending on goods and services.
• Governments can influence economic activity through fiscal policy (taxes and government spending) and monetary policy (interest rates).
• Borrowing involves taking out loans to finance current expenses or investments.
• Net exports refer to the difference between what a country imports and exports.
• Saving occurs when income exceeds expenditure, resulting in excess funds being put aside for future use.
• Taxes are collected by governments from businesses and individuals to fund public services and infrastructure.
• Real GDP is adjusted for inflation using deflators.
• Saving occurs when individuals choose not to spend their income but instead save it for future use.
• Government Spending includes public sector spending on goods and services.
• Imports and industrial relations availability of factors of production, infrastructure facilities, etc., remain the same
• The law of supply states that "Other things being constant, higher the price of a commodity, more is the quantity supplied and lower the price of a commodity, the lesser the quantity supplied"
• Exceptions to the law of supply

  • AGRICULTURAL GOODS
  • URGENT NEED FOR CASH
  • PERISHABLE GOODS
  • RARE GOODS
  • LABOUR SUPPLY
• Agricultural goods are an exception to the law of supply due to dependency on weather conditions and specific seasons
• In the case of urgent need for cash, a seller may supply more quantity even at a low price, possibly below the market price
• Perishable goods may see more quantity supplied even at low prices to avoid losses, e.g., vegetables, fruits, bread, fish, etc.
• Rare goods have fixed supply regardless of price changes, e.g., rare coins, antique goods, rare paintings, etc.
• Labour supply refers to the total number of hours a labourer is willing to work at a given wage rate
• Labourers may work more hours if earning higher wages per hour, leading to an upward-sloping supply curve
• Beyond a certain point, as the wage rate rises further, the supply of labour may decrease as labourers prefer leisure to work, resulting in a backward-sloping supply curve