Fifteen Important Concepts of Macroeconomics

Fifteen Important Concepts of Macroeconomics:
1. Balanced Budget: A budget in which taxes are equal to government spending.
2. Budget deficit: The excess of government expenditures over government revenues.
3. Bond: A financial asset that promises a stream of known payments over some period of time.
4. Balance of payments: A systematic record of a country’s transactions with the rest of the world.
5. Autonomous spending: That component of the demand for goods that does not depend on the level of output.
6. Aggregate production function: The relation between the quantity of aggregate outut produced and the quantities of inputs used in production.
7. Aggregate output: Total amount of output produced in the economy.
8. Gross domestic product (GDP): The sum of values of all final goods and services produced within the geographical limit of a country.
9. Gross National Product (GNP): The sum of values of all final goods and services produced by the citizens of a country within the country and the rest of the world. Gross National Product (GNP) = Gross Domestic Product (GDP) + Net Factor Income from Abroad (NFIA)
10. Gross domestic product at market price (GDPMP): While deriving GDP of a country we estimate value added at the market prices. The estimate of GDP obtained this way is known as GDP at market price.
11. Gross domestic product at factor cost (GDPFC): Market prices normally include indirect taxes net of subsidies. Gross national product at factor cost {GNPFC) is simply, Gross national product at market price (GNPMP) minus net indirect taxes (Net IT), i.e. GNPFC = GNPMP – Net IT
12. Net National Product (NNP): Net National Product (NNP) is simply obtained as gross national product (GNP) minus depreciation (D) i.e. Net National Product (NNP) = Gross National Product (GNP) -- Total Depreciation (D)
13. Net national product (NNP): Net National Product (NNP) is simply obtained as gross national product (GNP) minus depreciation (D) i.e. Net National Product (NNP) = Gross National Product (NDP) -- Total Depreciation (D). Fixed capitals have their own life-time and depreciates in value every period of time after their participation in the productive process. Depreciation of fixed capital takes place because of their normal ‘wear and tear’.
14. Gross national product at factor cost (GNPFC) : Gross national product at factor cost {GNPFC) is simply, Gross national product at market price (GNPMP) minus net indirect taxes (Net IT), i.e.GNPFC = GNPMP – Net IT
15. National income (NI): Net national product at factor cost is equivalent to the notion of national income {NI), which the accrual of income to all normal residents in a country due to their participation in production anywhere in the world. Therefore, National Income(NI) = NNPFC