Economics Ready Reference Macroeconomics Budget at a glance.

UNION BUDGET 2009-2010 AT A GLANCE

A. RECEIPTS (10,20,838)

B. EXPENDITURE (10,20,838)

Target Variables: Economic growth, social Justice, price stability, Self-reliance and Non-dependence Instrument Variables: Fiscal, Monetary, trade, income, Sector specific (related to industry, agri, labor) Intermediate Variables: Money supply, Interest rate, savings rate, Investment, bank credit, import, export Indicative Variables: Monsoon, stock index, Fiscal deficit, political stability, social harmony, FE reserves

Also,

Phillips curve: is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of increase in nominal wages.

Stagflation: high levels of both inflation and unemployment also known as stagflation. Inflation: Deflation: deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money allowing one to buy more goods with the same amount of money. This should not be confused with disinflation, a slow-down in the inflation rate (i.e. when inflation

decreases, but still remains positive).[2] As inflation reduces the real value of money over time, conversely, deflation increases the real value of money Microeconomics: International trade: 1) If production is increasing at an increasing rate, it makes sense for one country to specialize in one comodity and trade with the other. 2) If production is increasing at a decreasing rate, it makes sense for each country to produce its own. Price Elasticity of demand: The percentage change of quantity demanded by the percentage change in price of the same commodity or the sensitivity of quantity demanded to changes in price. It is measured as the ratio of percentage changes between quantity demanded of a good and changes in its price. Price elasticity is almost always negative, although analysts tend to ignore the sign. Only goods which do not conform the law of demand, such as Veblen and Giffen goods, have a positive PED.

A number of factors can affect the elasticity of a good: * Substitutes: * Percentage of income: * Necessity: * Duration * Breadth of definition:

Cross Price elasticity Demand: Cross elasticity of demand and cross price elasticity of demand measures the responsiveness of the demand of a good to a change in the price of another good. For example, if, in response to a 10% increase in the price of fuel, the demand of new cars that are fuel inefficient decreased by 20%, the cross elasticity of demand would be 20%/10% = 2. If goods are complements; that is, one is used with the other. In these cases the cross elasticity of demand will be negative, as shown by the decrease in demand for cars when the price of fuel increased. In the case of perfect complements, the cross elasticity of demand is negative infinity. Where the two goods are substitutes the cross elasticity of demand will be positive, so that as the price of one goes up the demand of the other will increase. For example, in response to an increase in the price of carbonated soft drinks, the demand for non-carbonated soft drinks will rise. In the case of perfect substitutes, the cross elasticity of demand is equal to infinity. Where the two goods are independent, the cross elasticity of demand will be zero: as the price of one good change, there will be no change in demand for the other good.