Quick Revision of Economics topics from UPSC syllabus

The Story of Village Palampur

By Rohit Parihar

Updated May 13, 2024

Tabular Representation

Village Details
Population	Around 450 families
Main Activity	Farming
Land Ownership	80 families of upper caste
Other Activities	Dairy, transport, small-scale manufacturing, etc.
Connectivity	Well-connected with neighboring towns, all-weather roads
Electricity	Many houses equipped; used for tube wells, small businesses, education, and healthcare

Production Stages
Factors	Land, capital, labor, enterprise
Natural Resources	Forests, minerals, water
Labor	Varies from manual labor to highly educated workers
Physical Capital	Machines, tools, buildings (fixed capital), money, materials (working capital)
Enterprise	Knowledge, human capital

Farming in the Village
Significance	Most important activity; 75% of working population involved
Cultivation	No idle land; multiple cropping; use of electricity for irrigation; modern farming methods

Green Revolution and Sustainable Use of Land
Impact	Record production of food items; increased greenery; reduced soil fertility and groundwater

Solved Question for You:

A. Transfer earning
B. Future earning
C. Present earning
D. None of these

Solution: The correct option is A. Transfer earning. Transfer earning require a minimum payment to keep the factor of its production in its present use. It is an opportunity cost of an individual forgoes when deciding to work in one job rather than the next best alternative.

GDP vs. GNP: What's the Difference?

By Rohit Parihar

Updated May 15, 2024

Comparative Analysis

+ Event Details

GDP (Gross Domestic Product)	GNP (Gross National Product)
Measure of Economic Activity
Measures the value of goods and services produced within a country's borders. [ By Citizens + Foreign Nationals]	Measures the value of goods and services produced by a country's citizens, both domestically and abroad.[ By Citizens Only]
Utilization in Global Economies
Most commonly used by global economies. The United States abandoned the use of GNP in 1991, adopting GDP as its measure to compare itself with other economies.	The 1993 System of National Accounts replaced the term GNP with GNI, or Gross National Income.
Calculation Method
Adding together private consumption or consumer spending, government spending, capital spending by businesses, and net exports (exports minus imports).	Adding together consumption, government spending, capital spending by businesses, net exports, and net income by domestic residents and businesses from overseas investments.
Basic Indicator of Economic Health
GDP is the most basic indicator to measure the overall health and size of a country's economy.	GNP is another metric used to measure a country's economic output.
Nominal GDP vs. Real GDP
Nominal GDP is generally used to compare different quarters in the same year because inflation will usually not be a significant factor.	Examples of GDP and GNP: A quick look at the absolute GDP and GNP numbers of a particular country over the past two years indicates they mostly move in sync.
Impact on Economy
When the GDP rises, it means the economy is growing. Conversely, if it drops, the economy is shrinking and may be in trouble.	For instance, many American businesses, entrepreneurs, service providers, and individuals who operate across the globe have helped the nation secure a positive net inflow from overseas economic activities and assets.
Comparision in International Trade
GDP is often used to compare the performance of two or more economies in international trade agreements and negotiations.	GNP represents how a country's nationals are contributing to the country's economy, which can influence trade policies.
Inflation Impact
Real GDP accounts for inflation, providing a more accurate measure of economic growth.	The calculation of GNP does not directly consider inflation, which can affect its interpretation.
Net Income from Overseas Investment
Net income from overseas investments is not directly factored into GDP calculations.	GNP includes net income earned by domestic residents and businesses from overseas investments, providing a broader view of a country's economic performance.
Government Spending
Government spending is included in GDP calculations, reflecting the overall economic activity within a country's borders.	GNP accounts for government spending by a country's citizens, regardless of location, giving insights into the contribution of nationals to the economy.
Foreign Trade Balance
Net exports are a component of GDP, indicating the balance of trade between a country and its trading partners.	GNP considers the net income earned by domestic residents from overseas investments, which can influence a country's foreign trade balance.
Policy Formulation
GDP data is used by governments to formulate economic policies aimed at stimulating growth or managing inflation.	GNP provides insights into the economic contribution of a country's nationals, informing policies related to taxation, investment, and trade.

What are the Different Theories of Growth?

By Rohit Parihar

Updated May 15, 2024

Comparative Analysis

+ Event Details

Classical Growth Theory	Neoclassical Growth Model	Endogenous Growth Theory
Basic Theory
The Classical Growth Theory postulates that a country’s economic growth will decrease with an increasing population and limited resources.	The Neoclassical Growth Theory outlines how a steady economic growth rate results from labor, capital, and technology.	The Endogenous Growth Theory states that economic growth is generated internally in the economy through endogenous forces.
Production Function
Production function of the classical growth theory describes the relationship between labor and technology and their impact on output.	The Neoclassical Growth Model emphasizes the role of capital accumulation and technology in determining economic growth.	Endogenous Growth Theory focuses on the internal generation of economic growth, suggesting that policies fostering innovation and competition are crucial.
Assumptions
Assumes diminishing returns to capital and the impact of population growth on economic growth.	Assumes capital subject to diminishing returns and a steady-state equilibrium in the long term.	Assumes endogenous technological progress and increasing returns to scale from investments in knowledge industries.
Key Conclusions
Economic growth slows due to diminishing returns and reaches a stationary state.	Total output is a function of capital, labor, and technology; long-term growth is determined by technological progress.	Policies promoting innovation and competition can enhance economic growth; private sector investment in R&D is crucial.

What is Keynesian Economic Theory?

By User

Updated May 15, 2024

Reviewed by Team sTube

Comparative Analysis

+ Event Details

Keynesian Economic Theory
Main Principles
Keynesian Economic Theory asserts that government intervention is crucial to mitigate economic recessions and control the volatility of economic cycles inherent in free-market economies.
Government Intervention
The theory suggests that governments should closely monitor and intervene in three main areas: interest rates, tax rates, and social programs.
Interest Rates
During boom cycles, central banks should raise interest rates to curb excessive borrowing, while during recessions, interest rates should be lowered to stimulate borrowing and investment.
Tax Rates
Keynesian theory advocates for raising income tax rates during booms to fund public initiatives and lowering taxes during recessions to stimulate private sector investment.
Social Programs
It proposes decreasing spending on social programs during boom cycles and increasing spending during recessions to bolster the labor market and support skilled workers.

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