Static Quiz 14 August 2024 (Economy)

Real GDP
• Real GDP is the value of all goods and services generated by an economy in a given year (expressed in base-year prices).
• Real GDP is also known as constant-price GDP, inflation-corrected GDP, etc.
Nominal GDP
• Nominal GDP is a measurement of economic output in a country that takes current prices into account.
• In other words, it does not account for inflation or the rate at which prices rise, both of which might overstate the growth rate.
• All products and services that are counted in nominal GDP are valued at the prices at which they are actually sold in that year.
GDP Purchasing Power Parity (PPP)
While purchasing power parity (PPP) is not a direct measure of GDP, economists use it to see how one country’s GDP compares to other countries’ GDP in “international dollars” using a method that adjusts for differences in local prices and costs of living to make cross-country comparisons of real output, real income, and living standards.
Importance of GDP
• GDP is often recognized as the most essential of the metrics used by economists throughout the globe to determine an economy’s growth.
• It considers the country’s overall output over the course of a year. It is a crucial criterion for assessing an economy’s performance and a vital determinant in influencing the economy’s development.
Limitations of GDP
• Non-market transactions are not included in GDP.
• It is unable to determine if a country’s growth is sustainable.
• It ignores the influence on human health and the environment that may develop as a result of the output’s creation or use as externalities.

Reserve Bank of India
• The Reserve Bank of India is the central bank of the country. RBI is a statutory body. It is responsible for printing of currency notes and managing the supply of money in the Indian economy.
• The Reserve Bank of India is the highest monetary authority of India.
• It also acts as the representative of the Government in the International Monetary Fund and represents the membership of India.
• RBI has four zonal offices: New Delhi for North, Chennai for South, Kolkata for East, and Mumbai for West.
• The Reserve Bank of India has 19 regional offices and 11 sub-offices at present.
• The Reserve Bank of India’s important publication: Financial Stability Report; Monetary Policy Report; Report on Financial Review.
• Under the Section 22 of the RBI Act 1934, RBI has the sole right to issue Bank notes of all denominations except one rupee note.
• The One Rupees notes, and coins are issued by the Central Government., The Ministry of Finance.

What is Open Market Operation?
• Open Market Operations (OMO) is the selling and purchase of government securities and treasury bills by the RBI.
• Selling of G-Secs by RBI will reduce the liquidity in the market and Buying of G-Secs by RBI will increase the liquidity.
• All Scheduled Commercial Banks and Financial institutions can participate in OMO.
• The RBI has allowed even the retail investors to invest in G-secs by opening gilt accounts with the Central Bank.
• In April 2021, the RBI performed a simultaneous buying and selling of Government securities through Open Market Operations of nearly Rs. 10000 crores each.

Bank Rate
• It is the rate at which the Reserve Bank is willing to purchase or rediscount bills of exchange or other commercial papers.
• Section 49 of the Reserve Bank of India Act, 1934 mandates the publication of the Bank Rate.
• This rate has been aligned with the MSF rate and, as a result, changes automatically when the MSF rate and the policy repo rate change.

The UPI was launched in 2016 and is operated by the National Payments Corporation of India (NPCI). It operates on top of the Immediate Payment Service (IMPS) which was created by the NPCI for immediate fund transfers.