It is the ratio of money held by the public in currency to that they hold in bank deposits.

Money is the most liquid form of capital. In other words, capital in the form of money can be put to any use.

The value of total output of goods and services produced in an economy in a year

The following are the criticisms against Say’s law:
1. According to Keynes, supply does not create its demand. It is not applicable where demand does not increase as much as production increases.
2. Automatic adjustment process will not remove unemployment. Unemployment can be removed by increase in the rate of investment

Gross National Product at market price is Gross Domestic Product at market price plus net factor income from abroad.
GNP_MP is the money value of all final goods and services produced in the domestic territory of a country during a year plus Net factor income from abroad. i.e.,
GNP_MP = GDP_MP + (X - M)
Where,
GNP_MP = Gross National Product at market price
GDP_MP = Gross Domestic Product at market price
(X - M) = Net factor income from abroad

1. Accurate and reliable data are not adequate, as farm output in the subsistence sector is not completely informed.
2. Different languages, customs, etc., also create problems in computing estimates.

Nominal GDP measures gross domestic product in current rupees. Real GDP measures gross domestic product by adjusting Nominal GDP for price changes

GNP = NNP + depreciation; depreciation
= gross investment - net investment (dollar 1 trillion - dollar 500 billion)
Therefore GNP = dollar 7 trillion + dollar 500 billion
= dollar 7.5 trillion.

GDPMP = Private Final Consumption + Government Final Consumption Expenditure + Gross Domestic Capital Formation + Net Exports (Exports – Imports)

(i) Real GDP could be increased even though there is no more output produced if output that is currently produced in the home or in the underground economy is included.
(ii) If activities that are currently illegal are declared legal, real GDP could increase

i. The cost of the capital asset
ii. The expected rate of return from during its lifetime
iii. The market rate of interest.

The rate of discount which makes the discounted present value of expected income stream equal to the cost of capital.

groups: households and firms (the private sector), the government (the public sector), and the rest of the world (the external sector.

(i) Saving is consumption forgone.
(ii) The portion of the income not spent on consumption is saving.
(iii) If saving rises, consumption will fall.

(i) Monetary and fiscal policy
(ii) Technological progress
(iii) Resource availability.

(i) Gross Domestic Product (GDP) is the total value of output (goods and services) produced by the factors of production located within the country's boundary in a year.
(ii) The factors of production may be owned by anyone-citizens or foreigners.
GDP = GNP - Net income earned from abroad

National Income is a measure of the total value of the goods and services (Output) produced by an economy over a period of time (normally a year).

Per capita income = \(\frac{National\ Income}{Population}\)

(i) Creeping inflation is slow-moving and very mild.
(ii) The rise in prices will not be perceptible but spread over a long period.
(iii) This is also known as mild inflation or moderate inflation.

PT = MV + MlVl
\(P=\cfrac { { MV1 }+{ MV 1} }{ T } \)

(i) Planning is an integral part of a socialist economy.
(ii) In socialist economy all decisions are undertaken by the Central Planning Authority.

There are three models of circular flow of income. They are,
(i) Two sector model
(ii) Three sector model
(iii) Four sector model

(i) Central planning authority is the controlling authority in a socialistic economy.
(ii) All the decisions are under taken by the central planning authority.
(iii) It means all factors of production are nationalized and managed by public authority.