Important Economic Terms for UPSC IAS Exam

Economics is a topic that can be an anathema to many IAS aspirants. But, this is an essential part of the IAS prelims and the mains exam in which one reveals it in the GS paper 3.

Far from being a ‘boring’ and ‘complicated’ problem, economics can be a laugh to study in case you understand it nicely.

Learn more about economics in ExamPariksha’s Economics Study Material.

Some basic important terms that are indispensable for your economics study for the UPSC exam are:

GDP: Gross Domestic Product (GDP)
GNP: Gross National Product (GNP)
NDP: Net Domestic Product: NDP = GDP – Depreciation
NNP: Net National Product: NNP = GNP – Depreciation
Depreciation: A decrease in the value of an asset over time due to wear and tear.
Monetary Policy: Process by which the central bank in a country controls the supply of money. In India, the central bank is the Reserve Bank of India (RBI).
REPO rate: Re-Purchase Option (REPO): Rate at which the RBI gives loans to other banks.
Reverse REPO rate: Rate at which the RBI borrows from other banks. It is lower than the REPO rate.
CRR: Cash Reserve Ratio (CRR)
SLR: Statutory Liquidity Ratio (SLR)
MSF: Marginal Standing Facility (MSF)
Bank Rate
CRAR: Capital to Risk Weighted Assets Ratio (CRAR)
Fiscal Policy
Fiscal Deficit
Balance of Payments (BOP)
Balance of Trade (BOT)
Capital: It is the sum of money invested in a business to generate a profit.
Carbon Tax: It is an environmental tax imposed on products that use carbon-based materials and cause greenhouse pollution.
Inflation: The rate at which the prices of goods and services rise in a country. Thus, it causes a fall in the purchasing power of the currency.
Depression: It is a prolonged and severe downturn in the economic activity of a country. It is more severe than a recession.
FDI: Foreign Direct Investment (FDI)
Free Trade Agreement
Progressive Tax
Tariff: It is the tax imposed on imported goods and services. So, tariffs make imported goods costlier.
SEZ: Special Economic Zone (SEZ)