This document provides information on key macroeconomic concepts and metrics including: 1. It defines national income as the net value of all goods and services produced by a country's residents during a financial year. 2. It explains the importance of studying national income for economic policy, planning, understanding economic structure, and more. 3. It distinguishes between national income measured at current prices versus constant prices, and how this impacts understanding economic growth. 4. It provides definitions and explanations of related concepts like GDP, GVA, business cycles, aggregate demand, aggregate supply, and more.

1. BUSINESS ENVIRONMENT
IMPORTANT BASIC CONCEPTS

2. We all would like to express our gratitude and sincere
thanks to Mrs. Sujata Pandey madam for the guidance and
support.
NAME ROLL NO
Mithila Gadhire 21
Aakanksha Gaikwad 22
Priyanka Holkar 27
Monika Maurya 39
Ruchita Meher 40
Priyanka Palve 53

3. NATIONAL INCOME
• National Income is the net value of all the goods and services produced by the
residents of the country, operating within or outside the country, during a
financial year.

4. NEED TO STUDY NATIONAL INCOME
• 1. Economic policy- With the analysis of NI figures future economic policy of a
country can be formulated.
• 2. Economic planning-NI statistics are important tool for long term and short
term economic planning. The Planning Commission of India formulates five year
plans keeping in view the estimates.
• 3. Structure of Economy- It enables to know the contribution of various sectors of
economy towards the national income.

5. • 4. Inflationary and Deflationary gaps- Regular estimates of NI
figures are needed to formulate the anti inflationary and
deflationary policies.
• 5. Budgetary Policies.
• 6. Standard of living.
• 7. It enables to know the relative roles of public and private sector
in economy.
• 8. It enables the business firms in forecasting future demand for
their products.

6. NATIONAL INCOME AT
CURRENT PRICE
• Goods and services produced in a
year are valued at current prices
• Current prices refer to the prices
prevailing at that particular year.
• Eg : Measurement of India’s National
income of 2014-15 at the prices of
2014-15
• It is also known as NOMINAL
NATIONAL INCOME
• Does not show true picture of
economic growth of a country.
CONSTANT PRICE
• Goods and services produced in a
year are valued at prices of the base
year.(Prices prevailing in the base
year)
• The base year is taken as 2011-12
• Eg : Measurement of India’s National
income of 2014-15 at the prices of
2011-12
• It is also known as REAL NATIONAL
INCOME

7. SIGNIFICANCE OF THE DIFFERENCE BETWEEN THE
CURRENT AND CONSTANT PRICE
• National income at current price is affected by two factors:
• National income at constant prices is affected by only one factor:
• Continuous rise in National income at constant price for a number of years means
there is an economic growth for the country.
Changes in Prices
Changes in Physical Output
Change in Physical output

8. ILLUSTRATIVE EXAMPLE OF NATIONAL INCOME
Commodity Quantity
Produced
(2015-16)
Q1
Current
Price in Rs.
(2015-16)
Market
Value at
Current
Price in Rs.
Base Year
Price in Rs.
(2011-12)
Market
Value at
Base Price
Rs.
WHEAT 1500 Kg 15/Kg 22500 12/Kg 18000
CLOTH 150 M 10/M 1500 8/M 1200
MILK 250 L 13/L 3250 11/L 2750
Total
Market
Value
27250 21950

9. WHAT IS GDP?
• The value of all goods and services produced within the country .
• The measures of all final goods and services produce in an period

10. IN GDP THERE ARE THREE THINGS
• GROSS
• DOMESTIC
• PRODUCT

11. GROSS
• In the production of goods there are several factors such has labour, machinery,
land & building
• All the above factors should be excluded in the pricing of goods only the final
product should be count.

12. DOMESTIC
• Value of goods and services produced within the country.
• Income from abroad should not be added in GDP

13. FOR WHAT PURPOSE GDP IS USED ?
• GDP Determine the economic performance of whole country or region & to make
international comparison

14. METHODS TO CALCULATE GDP
• PRODUCTION APPROACH:Estimate the gross value of domestic
output out of the many various economic activities;Determine the
intermediate consumption, i.e., the cost of material, supplies and
services used to produce final goods or services.Deduct intermediate
consumption from gross value to obtain the gross value added.
• INCOME APPROACH : Wages, salaries, and supplementary labour
income,Corporate profits,Interest and miscellaneous investment
income Farmers' incomes.Income from non-farm unincorporated
businesses
• EXPENDITURE APPROACH:Market goods which are produced are
purchased by someone. In the case where a good is produced and
unsold, the standard accounting convention is that the producer has
bought the good from themselves. Therefore, measuring the total
expenditure used to buy things is a way of measuring production.
This is known as the expenditure method of calculating GDP.

15. FINAL CALCULATION OF GDP
C is (consumption) is normally the largest GDP component in the
economy, consisting of private expenditures in the economy
(household final consumption expenditure). These personal
expenditures fall under one of the following categories: durable
goods, nondurable goods, and services.
I (investment) includes, for instance, business investment in
equipment, but does not include exchanges of existing assets.
G (government spending) is the sum of government expenditures
on final goods and services.
X (exports) represents gross exports.
M (imports) represents gross imports.

16. DESPITE DEMONETISATION, INDIA’S GDP GROWTH
STAYS 7 PER CENT
• GDP growth was pegged at 7.9 per cent in the previous financial
year.
• The Economic Survey for 2016-17 had projected India’s GDP
growth rate to reduce by 0.25-0.5 per cent in 2016-17 owing to
cash squeeze in the economy following demonetisation.

17. NET NATIONAL PRODUCT
(NNP)
• The total value of goods produced and services provided
in a country during one year, after depreciation of capital
goods has been allowed for.
• Formula Of NNP:-
NNP = GNP –
Depreciation

18. FEW MORE POINTS ABOUT NNP
• For India, NNP has always been less than GNP and
GDP.
• It is taken as the most preferable or the purest income
that Nation earns.
• Per Capita Income(PCI) can be found by dividing NNP
by the population of the nation.
• The problem with NNP is that different countries use
different scales to decide depreciation.
• In India depreciation is decided by Ministry of Commerce
and Industry.

19. DIFFERENCE BETWEEN GDP & NNP
Gross Domestic Product
(GDP)
Net National Product
(NNP)
1. It is the total value of the goods
and services produced in the
economy within the domestic
boundary.
1. It includes the total value of
goods and services produced in
the economy, after accounting
for Depreciation
2. It does not include Net Factor
Income from Abroad. It does
not account for depreciation
2. It includes net factor income
from Abroad. It includes
accounting for Depreciation.
3. It is assumed that GDP at
market prices.
3. It is assumed that NNP is at
factor prices.

20. GROSS VALUE ADDED (GVA)
• Gross value added (GVA) is the measure of the value
of goods and services produced in an area, industry or sector of
an economy, in economics.
• Total value of good and services produced through economic
activity in any particular period.
• GVA = GDP - taxes on products + subsidies on products

21. • GVA at basic price- For arriving at the new gross value added (GVA)
at basic prices, production taxes, such as property tax, are added
and subsidies are subtracted from GDP at factor cost.
• GVA at factor cost includes no taxes and excludes no subsidies.
GVA at factor cost= GVA at basic price –production taxes
less production subsidies

22. BUSINESS CYCLE MEANING
• Business cycle is also called as economic cycle.
• It is the upward and downward movement of gross domestic
product(GDP)
• It is usually measured by considering the growth rate of real gross
domestic product(GDP).

23. PHASES OF BUSINESS CYCLE
Expansion
Peak
Recession
Trough

25. FEATURES
Cover the whole economy
Time period is not fixed
Different types
Movement in economic
activity
International nature

26. MACRO ECONOMICS
 Macroeconomics deals with the performance, structure,
behaviour and decision-making of an economy as a
whole.

27. MACRO ECONOMIC CONCEPTS
1. Human capital :
• Knowledge
• Talent
• Skills
• Experience.
2. Scarcity :
• is the problem of having unlimited human wants in a world of limited
resources.
• It states that society has insufficient productive resources to fulfill all human
wants and needs.

28. 3. Market Failure.
• the quantity of a product demanded by consumers does not equate to the
quantity supplied by suppliers.
• Market Failure can be complete or partial.
• There are also positive and negative factors for contribution of market
failure.
4. Roles of Government.
• Provides public goods & services.
• Provides public well-being by assisting specific groups.
• Gives aids to needy people.
• Helps to reduce market failure.

29. 5. Productive Resources :
• Something we rely on or use to accomplish goals.
• All business that sell goods and services use
productive resources.
• 4 types of productive resources-
Land, Labour, Capital ,Enterprise Skills.
6. Risk & Returns :
• also known as risk-reward.
• it is the relationship between
the amount of return gained
on an investment and the
amount of risk undertaken
in that investment.

30. 7. Decision Making and Cost-benefit analysis.
• A systematic process for calculating and comparing benefits and costs of a
decision, policy.
• It is calculated to decide which solution makes most sense from financial point of
view.
• To determine weather the benefit is more then the cost incurred.

31. 8. Aggregate Demand :The total amount of goods and services demanded
in the economy at a given overall price level and in
a given time period.
• It is represented by the aggregate-demand curve,
which describes the relationship between price levels
and the quantity of output that firms are willing to provide.
• Normally there is a negative relationship between
Aggregate demand and the price level. Also known
as "total spending".
9. Aggregate Supply :
• The total supply of goods and services produced
within an economy at a given overall price level
in a given time period.
• It is represented by the aggregate-supply curve, which describes
the relationship between price levels and the quantity of output
that Firms are willing to provide.
• Rising prices are usually signals for businesses to expand
production to meet a higher level of aggregate demand.

32. THANK YOU !!!!!