KSEAB SSLC JTS Economics cheat sheet

Economics studies how scarce resources are allocated to satisfy unlimited wants; scarcity forces choice and every choice has an opportunity cost.

Microeconomics analyses individual units (households, firms, prices in one market); macroeconomics studies aggregates (national income, inflation, unemployment).

Central problems of every economy: what to produce, how to produce, and for whom to produce.

Market economy solves the three problems through price signals; command economy through central planning; mixed economy (India) through both market and state.

Production possibility frontier (PPF): downward-sloping, concave to origin; points on the curve are efficient, inside are underutilisation, outside are unattainable with current resources.

Law of demand: other things equal, quantity demanded falls as price rises; movement along the curve is caused by price, a shift by income, tastes, or prices of related goods.

Elasticity of demand = percentage change in quantity demanded ÷ percentage change in price; demand is elastic if the value exceeds 1, inelastic if below 1.

Law of variable proportions (short run): total product rises, then rises at a diminishing rate, then falls; marginal product cuts average product at its maximum.

Four factors of production and rewards: land–rent, labour–wages, capital–interest, entrepreneurship–profit.

GDP is the money value of all final goods and services produced within a country's domestic territory in a year; it excludes intermediate goods to avoid double counting.

GNP = GDP + net factor income from abroad (NFIA); National Income (NNP at factor cost) = GNP − depreciation − net indirect taxes.

Three measurement methods: product/value-added (sum of GVA by sectors), income (rent + wages + interest + profit + mixed income), and expenditure (C + I + G + (X − M)).

Value added = value of output − intermediate consumption; summing value added across all firms gives GDP and avoids double counting.

Personal income = national income − corporate taxes − undistributed profits + transfer payments; disposable income = personal income − direct taxes − non-tax payments.

Nominal vs real GDP: real GDP is measured at constant (base-year) prices; GDP deflator = (nominal GDP ÷ real GDP) × 100.

Per capita income = national income ÷ population; it is an average and ignores distribution, so it is an imperfect measure of welfare.

In India, national income estimates are prepared by the National Statistical Office (NSO, formerly CSO); base year for GDP series is 2011-12.

Leakages from the circular flow (saving, taxes, imports) reduce income; injections (investment, government spending, exports) expand it.

Functions of money: medium of exchange, unit of account, store of value, standard of deferred payment; money removes the double coincidence of wants of barter.

Money supply measures in India: M1 = currency with public + demand deposits + other deposits with RBI; M2 = M1 + savings deposits with post office banks; M3 = M1 + time deposits (broad money); M4 = M3 + total post office deposits.

RBI is the central bank: issues currency, banker to government and banks, lender of last resort, custodian of foreign exchange, and conducts monetary policy.

Bank rate, repo rate, reverse repo rate, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) are quantitative tools of monetary policy.

Credit creation by commercial banks: total deposits = primary deposits × 1 ÷ reserve ratio; a lower CRR raises the money multiplier.

Repo rate is the rate at which RBI lends short-term funds to banks against securities; raising it is contractionary, lowering it is expansionary.

Commercial banks accept deposits (demand and time), lend, and perform agency functions such as transfers and collections; a cheque is a negotiable instrument.

Inflation is a sustained rise in the general price level; it redistributes income from creditors to debtors and hurts fixed-income earners.

Public finance deals with government revenue, expenditure and debt; the budget is the annual statement of estimated receipts and expenditure.

Revenue receipts (tax and non-tax, e.g., income tax, GST, dividends) do not create liabilities or reduce assets; capital receipts (borrowings, disinvestment) do.

Revenue expenditure (salaries, subsidies, interest) does not create assets; capital expenditure (roads, dams, shares) does.

Revenue deficit = revenue expenditure − revenue receipts; fiscal deficit = total expenditure − total receipts excluding borrowings; primary deficit = fiscal deficit − interest payments.

Fiscal deficit is financed mainly by market borrowings and indicates the government's total borrowing requirement.

Direct taxes (income tax, corporate tax) are progressive and cannot be shifted; indirect taxes (GST, customs) are regressive and can be shifted to the consumer.

Deficit financing can raise demand and growth but persistent high fiscal deficits crowd out private investment and raise interest and inflation.

GST in India (from 1 July 2017) is a destination-based value-added tax on goods and services with slabs and is shared between Centre and States.

Agriculture contributes roughly 15–18% of India's GDP but employs nearly 45% of the workforce, showing low labour productivity.

Green Revolution (from mid-1960s) used HYV seeds, irrigation, fertilisers and credit, mainly for wheat and rice; it raised food output but widened regional inequality.

Sources of agricultural credit: cooperative banks, regional rural banks (RRBs, from 1975), commercial banks, NABARD (1982) as apex refinancing agency, and microfinance/SHGs.

Minimum Support Price (MSP) is announced by the government on the recommendation of the CACP for major crops to protect farmers from price crashes.

Food Corporation of India (FCI) procures and stores food grains for the Public Distribution System (PDS); the National Food Security Act 2013 covers about two-thirds of the population.

Rural development programmes include MGNREGA (rural employment guarantee), PMGSY (rural roads), PMAY-G (housing) and Deendayal Antyodaya Yojana-NRLM (self-help groups).

Agricultural marketing reforms: e-NAM (electronic National Agriculture Market) links mandis; contract farming and FPOs (Farmer Producer Organisations) improve bargaining power.

Landholding is dominated by small and marginal farmers (over 85% of holdings), limiting mechanisation and access to institutional credit.

Industrial classification: primary (mining, agriculture), secondary (manufacturing, construction), tertiary (services); India's services sector contributes over half of GVA.

Industrial policy milestones: 1956 Industrial Policy Resolution (public sector core), 1991 New Industrial Policy (deregulation, FDI, delicensing).

MSME sector (Micro, Small and Medium Enterprises) contributes about 30% of GDP and around 45% of exports and employs a large workforce; Udyam registration is the current portal.

Make in India (2014) and Production Linked Incentive (PLI) schemes aim to raise manufacturing share and attract investment.

Infrastructure includes transport (roads, railways, ports, airports), power, telecom, water and sanitation; it is a public good with large externalities.

Public-private partnership (PPP) shares risk between government and private firms; Build-Operate-Transfer (BOT) is a common model.

Services sector includes trade, transport, banking, insurance, IT and tourism; India is a major exporter of software and business services.

Disinvestment is the sale of government equity in public sector undertakings to raise resources and improve efficiency.

Demographic transition moves from high birth and death rates to low birth and death rates through falling death rates first, then birth rates.

Census 2011: population about 1.21 billion, literacy rate 74.04% (male 82.14%, female 65.46%), sex ratio 943 females per 1000 males, decadal growth 17.7%.

Demographic dividend: a rising share of working-age population (15–59 years) can boost growth if jobs and skills exist; otherwise it becomes a liability.

Poverty lines in India are estimated by the NITI Aayog (formerly Planning Commission) using consumption expenditure; Tendulkar and Rangarajan committees gave different estimates.

Human Development Index (HDI) of UNDP combines life expectancy (health), mean and expected years of schooling (education) and GNI per capita (income) in a geometric mean.

Karnataka's HDI is above the national average; Bengaluru urban district ranks high while some northern districts lag on human development indicators.

Poverty alleviation programmes include MGNREGA, National Rural Livelihoods Mission, PMAY and Ayushman Bharat (health insurance).

Population policy aims to stabilise population, improve female education and health, and reduce infant and maternal mortality.

Karnataka is a leading state in IT and biotechnology, with Bengaluru as the 'Silicon Valley of India'; the sector drives services exports and employment.

Karnataka's economy is service-dominated; agriculture remains important for employment, with crops such as ragi, rice, sugarcane, coffee, arecanut and horticulture.

Karnataka is India's largest coffee producer (Kodagu, Chikkamagaluru, Hassan) and a major producer of silk (sericulture) and horticultural products.

Karnataka's GSDP is among the top five in India; per capita income is above the national average, but regional disparities exist between Bengaluru and north Karnataka.

Karnataka has a strong start-up ecosystem and hosts many public sector units such as HAL, BEML, and ISRO centres.

Key development issues: inter-district inequality, rural unemployment, drought in the northern districts, urban infrastructure stress in Bengaluru, and groundwater depletion.

Karnataka's fiscal policy is guided by the Karnataka Fiscal Responsibility Act; the state budget is presented annually by the Finance Minister.

Karnataka was the first state to enact the Karnataka Industrial Areas Development Board and promotes industrial estates and SEZs.

Globalisation is the integration of national economies through trade, capital flows, technology and migration; India adopted liberalisation in 1991.

Balance of trade = exports − imports; balance of payments records all external transactions including trade, services, income and capital flows.

Current account covers goods, services, income and transfers; capital account covers foreign investment, loans and reserves.

Exchange rate: appreciation makes exports dearer and imports cheaper; depreciation does the opposite.

WTO (from 1995, replacing GATT) regulates international trade, settles disputes and promotes trade liberalisation; India is a founding member.

IMF (1944, Bretton Woods) provides short-term balance-of-payments support and surveillance; World Bank provides long-term development finance.

FDI brings long-term capital and technology; FPI is short-term portfolio investment and more volatile.

India's major exports include petroleum products, gems and jewellery, pharmaceuticals and software services; major imports include crude oil, gold and electronics.

Sustainable development meets present needs without compromising the ability of future generations to meet theirs (Brundtland Report, 1987).

Sustainable Development Goals (SDGs): 17 goals adopted by the UN in 2015 with a 2030 target, covering poverty, health, education, environment and institutions.

Environmental problems: pollution, deforestation, soil erosion, biodiversity loss, ozone depletion and climate change.

Renewable energy sources (solar, wind, hydro, biomass) are non-exhaustible; fossil fuels are exhaustible and emit greenhouse gases.

Consumer rights in India under the Consumer Protection Act 2019: right to safety, information, choice, be heard, seek redressal and consumer education.

Consumer Protection Act 2019 established the Central Consumer Protection Authority (CCPA) and covers e-commerce and misleading advertisements.

A consumer can file complaints in District, State and National Commissions based on the value of goods or services.

Green accounting adjusts national income for depletion of natural resources and environmental degradation; it corrects GDP's blindness to ecological costs.