Economy & Finance • Topic 1 of 4

Basic Economic Concepts

GDP (Gross Domestic Product) is the value of all final goods and services produced within a country in a year; GNP adds net income from abroad. An economy has three sectors — primary (agriculture), secondary (industry) and tertiary (services); services contribute the largest share of India's GDP.

The three sectors of the economy

Primary farming, mining, fishing (raw materials) Secondary industry & manufacturing (makes goods) Tertiary services: banking, IT, transport (largest in India)
India's largest share of GDP comes from the tertiary (services) sector.

GDP vs GNP, and inflation

  • GDP = value of final goods & services produced within the country in a year.
  • GNP = GDP + net income earned from abroad.
  • Inflation = a sustained rise in the general price level (measured by CPI, WPI).
  • Microeconomics studies individual units; macroeconomics studies the whole economy.

✅ Solved examples

1. What does GDP stand for?
Gross Domestic Product.
2. Which sector contributes the largest share to India's GDP?
The tertiary (services) sector.
3. A sustained rise in the general price level is called?
Inflation.
4. Agriculture belongs to which sector?
The primary sector.

✏️ Practice — try these, take hints as needed

1. The branch of economics studying the whole economy is?
Macro/micro.
—
—
Macroeconomics
2. Industry and manufacturing form the ___ sector.
Second.
—
—
Secondary
3. CPI measures changes in?
Consumer prices.
—
—
Inflation / price level
4. GDP plus net income from abroad equals?
Add "National".
—
—
GNP (Gross National Product)
5. The services sector is the ___ sector.
Third.
—
—
Tertiary

📝 Topic test — 8 questions

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