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  • Why Base year are changed after certain interval ?

    The base year of GDP is often changed after 5 year interval, the simple reason is new Production units enter/begin in the meantime or delivery of NEW goods and service starts. Illustration through example: Suppose in an economy only cow are ... Read More

  • Consumer Price Index

    CPI or Consumer Price index is a general price level index prepared by taking price of commodities paid by consumers in retail market. This Price index tells inflation effect direct on consumers. Whereas WPI price quotations are taken from wholesale ... Read More

  • Nominal & Real Interest Rate

    Nominal Interest rate: The rate of interest borrower pay to lender for the use of money. Example: You borrow 1000 rs from bank, at 10% rate of interest for 1 year. After 1 year you will repay 100 rs as interest above 1000 rs borrowed. This rate ... Read More

  • Everything about Basel Norms (I, II, III)

    Let us Discuss this topic point to point in interactive manner. Q) What is BIS or ‘Bank for international settlement’ ? A) BIS is a private company owned by central banks Q) Why Central banks own BIS ? A) All chief of Central banks (RBI, ... Read More

  • Non Accelerating Inflation Rate of Unemployment

    Phillips curve says More the Inflation, lower the unemployment in economy. That is introduce more and more money in economy which will lower the rate of unemployment. But during 1970, this notion changed after stagflation was witnessed. Now ... Read More

  • Base Effect

    Base effect is easy to be understood if we know how to calculate inflation. 2010 (Base year) Price level = 100 Inflation = 0% 2011 Price level = 110; Inflation = 110-100/100 * 100 = 10% 2012 Price level = 120; Inflation = 120-110/110 * 100 = ... Read More

  • GDP Deflator

    Imagine 2005 currency talking to 2015 currency. 2005 currency: You know i can buy double quantity of wheat, 1.5x gasoline & many more things compared to what you can buy. 2015 currency: That means, in term of wheat your purchasing power is ... Read More

  • Mudra Bank & Micro finance in India

    Introduction – 1) Out of 577 lakhs small businesses only 4% able to get institutional finance (Say loan from Commercial banks, Rural banks et al.) Reason - Huge paper work, collateral, less branches etc. 2) If given proper finance, India GDP ... Read More

  • Phillips curve and Stagflation

    Alban William Phillips, professor at London School of Economics, observed and mentioned in his paper "The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957", that various economies between this ... Read More

  • Deflationary Gap

    Deflationary gap is situation when economy is producing less than it's potential. It means that actual output sink below the potential output. Whereas in Inflationary gap we saw, the actual output above potential output. Why this situation can take ... Read More