Unemployment rate: One of the key indicators of the
health of an economic system is its ability to provide a
job for any one who wants to work.
Unemployment rate is the percentage of people in the
labour force who are not working but are actively
looking employment and willing to work.
Unemployment rate = (Unemployed Popn./Labor force)*100
46% (2008 est.)
42% (2004 est.)
Inflation: It means a sustained increase in the
average level of prices of all goods and services. The
most widely used measure of inflation is the
consumers price index (CPI). Price stability- the
absence of inflation- is a second major sign of the
health of an economy.
The rate at which the general level of prices for goods
and services is rising, and, subsequently, purchasing
power is falling. Central banks attempt to stop severe
inflation in an attempt to keep the excessive growth of
prices to a minimum.
Economic growth: It is a third major sign of
economic health. The economy must grow to
provide jobs for new workers and to provide every
one with a rising standard of living.
An increase in the capacity of an economy to
produce goods and services, compared from
one period of time to another.
For comparing one country's economic growth to
another, GDP or GNP per capita should be used
Growth rate = (This year GDP – Last year GDP)/Last
Gross Domestic Products (GDP): Gross
domestic product is the main measurement of
aggregate economic activity.
It is defined as the value of all final goods and
services produced within a country in a given year.
It means quantities of goods and service multiplied
by the market price of the goods and services.
Nominal GDP refers to unadjusted for the effects of
inflation where as real GDP is the data adjusted for
the effects of inflation.
Business cycle: The recurring and fluctuating
levels of economic activity that an economy
experiences over a long period of time.
The five stages of the business cycle are growth
(expansion), peak, recession (contraction), trough
At one time, business cycles were thought to be
extremely regular, with predictable durations, but
today they are widely believed to be irregular,
varying in frequency, magnitude and duration.
Since the World War II, most business cycles
have lasted three to five years from peak to peak.
The average duration of an expansion is 44.8
months and the average duration of a recession is
As a comparison, the Great Depression - which
saw a decline in economic activity from 1929 to
1933 - lasted 43 months.
Note: these data are based on US economy
Expansion: The phase of the business
cycle when the economy moves from a trough to a
peak. It is a period when business activity surges
and gross domestic product expands until it
reaches a peak. Also known as an "economic
Peak: The highest point between the end of an
economic expansion and the start of a contraction
in a business cycle.
Recession: A period in which real output falls for
6 months or more.
A significant decline in activity across the
economy, lasting longer than a few months. It is
visible in industrial production, employment, real
income and wholesale-retail trade.
The technical indicator of a recession is two
consecutive quarters of negative economic growth
as measured by a country's gross domestic
Depression: Recession merges into depression
when there is a general decline in economic
activity. There is a considerable reduction of
output, employment, income, demand and price.
A severe and prolonged recession characterized
by inefficient economic productivity, high
unemployment and falling price levels.
Trough: The stage of the economy's business
cycle that marks the end of a period of declining
business activity and the transition to expansion.
Recovery: A period of renewed growth of real
output following a recession.
A period of increasing business activity signaling
the end of a recession. Much like a recession, an
economic recovery is not always easy to
recognize until at least several months after it has
Economists use a variety of indicators, including
GDP, inflation, financial markets and
unemployment to analyze the state of the
economy and determine whether a recovery is in
Consumption: The purchase of consumer
goods and services
Marginal propensity to consume: The
change in consumption expenditure divided by the
change in disposable income.
MPC represents the proportion of an aggregate
raise in pay that is spent on the consumption of
goods and services.
Marginal propensity to save: The change in
saving divided by the change in disposable
income or (1- MPC)
Injection: The part of total expenditure that does
not originate from domestic household - that is
investment, government purchase, and export.
Leakages: The part of domestic income not
devoted to consumption. (saving, taxes, plus
domestic expenditure on foreign made goods
Saving: The part of household income not used
to purchase goods and services or to pay taxes.
Dissaving: Negative saving, which occurs when
consumption exceeds disposable income.
Spending an amount of money greater than
available income. Dissaving is considered the
opposite of saving.
Fixed Investment: Purchases by firms of newly
produced capital goods, such as plant and
machinery, newly built structures and office
Inventory Investment: Changes in the stocks
of finished product and raw material that firms
keep on hand. If stock are increasing , investment
inventory is positive, if they are decreasing , it is
Consumption function: The relationship
between consumer expenditure and disposable
Autonomous Consumption: The part of
consumption expenditure that is independent of
the level of disposable income.
GDP - real growth rate Commercial bank prime lending rate
4.6% (2010 est.) 8% (31 December 2010 est.)
4.9% (2009 est.) 8% (31 December 2009 est.)
6.1% (2008 est.)
Agriculture - products
GDP - per capita
pulses, rice, corn, wheat, sugarcane, jute, root crops;
milk, water, buffalo meat, etc
$1,200 (2010 est.)
$1,200 (2009 est.) Industries
$1,200 (2008 est.)
tourism, carpets, textiles; small rice, jute, sugar, and
oilseed mills; cigarettes, cement and brick production
note: data are in 2010 US dollars
Oil - consumption
GDP - composition by sector 20,000 bbl/day (2010 est.)
agriculture: 32.8% (I bbl = 115.63 liters)
industry: 14.4% Exports - commodities
services: 52.8% (2010 est.)
clothing, pulses, carpets, textiles, juice, pashima, jute
Population below poverty line Exports - partners
India 61.7%, US 7.5%, Germany 4.6%, Bangladesh
Labor force Imports - commodities
petroleum products, machinery and equipment, gold,
electrical goods, medicine
note: severe lack of skilled labor (2009
Imports - partners
Labor force - by occupation India 56.2%, China 22.5% (2010)
industry: 7% Exchange rates
services: 18% (2010 est.) Nepalese rupees (NPR) per US dollar -
Unemployment rate 77.44 (2009)
46% (2008 est.) 65.21 (2008)
42% (2004 est.) 70.35 (2007)
Inflation rate (consumer prices) Central bank discount rate
10.4% (2010 est.) 6.5% (31 December 2010)
11.6% (2009 est.) 6.5% (31 December 2009)