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Important Economic Terms
A compact, tabular glossary of high-yield economics terms (macro, fiscal, monetary, trade and market) with one-line meanings, for CAPF Paper I Indian Economy
CAPF wiki•4 min read•7 sections
At a glance
SubjectEconomy
RevisionEconomyTermsGlossaryPaper 1
One screen per section. Cover the right column and test yourself. These are the recurring terms CAPF Paper I expects you to recognise and define in a line. For numeric thresholds (deficit targets, slab rates), treat figures here as the standard reference and verify the latest from the Budget or Economic Survey.
| Term |
One-line meaning |
| GDP |
Market value of all final goods and services produced within a country in a year |
| GNP |
GDP plus net factor income from abroad |
| NDP |
GDP minus depreciation |
| Per capita income |
National income divided by population |
| Nominal vs Real GDP |
At current prices vs at constant (base-year) prices, adjusting for inflation |
| GDP deflator |
Ratio of nominal to real GDP; an inflation measure |
| Economic growth vs development |
Rise in output vs broad-based rise in welfare and capabilities |
| Recession |
Two consecutive quarters of negative growth |
| Stagflation |
High inflation with stagnant growth and high unemployment |
| Term |
One-line meaning |
| Inflation |
Sustained rise in the general price level |
| Deflation |
Sustained fall in the general price level |
| Disinflation |
Slowing rate of inflation (prices still rising, but more slowly) |
| Demand-pull inflation |
Prices rise because demand outpaces supply |
| Cost-push inflation |
Prices rise due to higher input costs |
| CPI / WPI |
Consumer Price Index (retail) and Wholesale Price Index |
| Core inflation |
Inflation excluding volatile food and fuel prices |
| Headline inflation |
Overall inflation including all items |
| Term |
One-line meaning |
| Fiscal deficit |
Total expenditure minus total receipts excluding borrowings |
| Revenue deficit |
Revenue expenditure minus revenue receipts |
| Primary deficit |
Fiscal deficit minus interest payments |
| Direct tax |
Tax on income or wealth, borne by the payer (income tax, corporate tax) |
| Indirect tax |
Tax on goods and services, passed to the consumer (GST, customs) |
| Subsidy |
Government financial support to lower a price or cost |
| Disinvestment |
Sale of government equity in public sector undertakings |
| Fiscal consolidation |
Reducing deficits and debt over time |
| Term |
One-line meaning |
| Repo rate |
Rate at which the RBI lends to banks against securities |
| Reverse repo rate |
Rate at which the RBI borrows from banks |
| CRR |
Cash Reserve Ratio: share of deposits banks keep with the RBI |
| SLR |
Statutory Liquidity Ratio: share of deposits in liquid assets |
| Bank rate |
Rate at which the RBI lends without collateral, longer term |
| Open market operations |
RBI buying or selling government securities to manage liquidity |
| Liquidity |
Ease of converting an asset into cash |
| NPA |
Non-Performing Asset: a loan on which interest or principal is overdue |
| Term |
One-line meaning |
| Balance of trade |
Difference between exports and imports of goods |
| Balance of payments |
Record of all economic transactions with the rest of the world |
| Current account deficit |
Excess of imports of goods, services and transfers over exports |
| Devaluation |
Deliberate lowering of a fixed currency's value |
| Depreciation |
Market-driven fall in a floating currency's value |
| Forex reserves |
Foreign currency, gold and IMF assets held by the central bank |
| FDI vs FPI |
Foreign Direct Investment (lasting control) vs Foreign Portfolio Investment (financial assets) |
| Tariff |
Tax on imports or exports |
| Term |
One-line meaning |
| Bull vs Bear market |
Rising prices and optimism vs falling prices and pessimism |
| Inflationary gap |
Excess of demand over full-employment output |
| Laffer curve |
Tax revenue first rises then falls as tax rates increase |
| Gini coefficient |
Measure of income inequality (0 equality to 1 maximum inequality) |
| Demographic dividend |
Growth potential from a large working-age population |
| Crowding out |
Government borrowing reducing private investment |
| Multiplier effect |
Initial spending generating larger total income |
| Capital flight |
Rapid outflow of money from a country |