1. REVIEW
OF
FIVE MAJOR ECONOMIC
VARIABLES
PRESENNTED BY:
Abhinandan Mohanty
ROLL-201310333

2. 
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“Too much money chasing too few goods.”
Decrease purchase power and increase value of
goods.
India-7.52%,Usa-1.2%
Rise of 2-3% per annum-Developed country, Rise of
4-5% per annum-Developing Country.
Demand pull inflation , Cost push inflation
2 ways to calculate (Price index number , Gnp
Deflator).

3. WPI (Wholesale price index)
Price of goods at wholesale stage.
 It’s a measure of inflation.(676 commodities)
 WPI is calculated on a base year.
 weekly Basis.
 For general
Rate of inflation.
 Max. value of
145.78 in 2011

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Min. value of
4.15 in 1960.

4. CPI (Consumer price index)
Measures changes in price level of consumer goods
and services.
 Best barometer for the rate of inflation.
 Inclusion of Services makes it stronger than CPI.
 Gives idea about cost of living.
 Periodic jump of 3% is
acceptable during inflation
 Calculated on current
year.
maximum - 165.37 in 2011
minimum - 3.93 in 1960.


5. MONEY SUPPLY
Total amount of monetary assets available in an economy at a specific
time.
 As per the RBI , the measures of money supply can be given as:

1. M0 = Currency in Circulation + Bankers' Deposits with RBI +
Other deposits with RBI
2. M1 = Currency with public + Demand deposits with the Banking
system + Other deposits with RBI
3. M2 = M1 + Time Liabilities Portion of Savings Deposits with the
Banking System +
Certificates of Deposit issued by Banks + Term
Deposits matured within a year(excluding CDs)
M0
4. M3=M1+Time deposits with bank
M1
Monetary
aggregates
M2
M3

6. (BOP)Balance Of Payments
Summary of all economic transaction between the
residents of a country and the rest of world.
 Double entry book keeping system.
 BOP is always in balance.

BOP
Current a/c transaction
Short term
capital
movement
Capital a/c transaction
Long term
capital
movement
Inflow n outflow of
gold n foreign
exchange reserves