FINANCIAL TERMS FOR IBPS CLERK

Gross domestic product - GDP is the total of all economic activity in one country, regardless of who owns the productive assets. For example, India’s GDP includes the profits of a foreign firm located in India even if they are remitted to the firm's parent company in another country.

GDP=TOTAL INCOME OF NATION - TOTAL EXPENDITURE OF THE NATION.

GDP is a perfect Indicator of health of economy,if it remain low for more time then it is a matter of concern.
Moody GDP estimate for 2012-2013-5.5%
Morgan stanley estimates 5.5 for 2013,6.5% for 2014.

Omissions in GDP
Deliberate omissions: There are many things which are not in GDP, including the following.

Transfer payments - For example, social security and pensions.
Gifts. For example, $10 from an aunt on your birthday.
Unpaid and domestic activities. If you cut your grass or paint your house the value of this productive activity is not recorded in GDP, but it is if you pay someone to do it for you.
Barter transactions. For example, the exchange of a sack of wheat for a can of petrol.
Second-hand transactions. For example, the sale of a used car (where the production was recorded in an earlier year).
Intermediate transactions. For example, a lump of metal may be sold several times, perhaps as ore, pig iron, part of a component and, finally, part of a washing machine (the metal is included in GDP once at the net total of the value added between the initial production of the ore and its final sale as a finished item).
Leisure. An improved production process which creates the same output but gives more recreational time is recorded in the national accounts at exactly the same value as the old process.
Depletion of resources. For example, oil production is recorded at sale price minus production costs and no allowance is made for the fact that an irreplaceable part of the nation's capital stock of resources has been consumed.
Environmental costs. GDP figures do not distinguish between green and polluting industries.
Allowance for non-profit-making and inefficient activities. The civil service and police force are valued according to expenditure on salaries, equipment, and so on (the appropriate price for these services might be judged to be very different if they were provided by private companies).
Allowance for changes in quality. You can buy very different electronic goods for the same inflation-adjusted outlay than you could a few years ago, but GDP data do not take account of such technological improvements.

Unrecorded transactions
GDP may under-record economic activity, not least because of the difficulties of keeping track of new small businesses and because of tax avoidance or evasion.
Deliberately concealed transactions form the black, grey, hidden or shadow economy. This is largest at times when taxes are high and bureaucracy is heavy. Estimates of the size of the shadow economy vary enormously. For example, differing studies put America's at 4-33%, Germany's at 3-28% and Britain's at 2-15%. What is agreed, though, is that among the industrial countries the shadow economy is largest in Italy, at perhaps one-third of GDP, followed by Spain, Belgium and Sweden, while the smallest black economies are in Japan and Switzerland at around 4% of GDP.
The only industrial countries that adjust their GDP figures for the shadow economy are Italy and America and they may well underestimate its size.

Expenditure
The expenditure measure of GDP is obtained by adding up all spending:
consumption (spending on items such as food and clothing)+ investment (spending on houses, factories, and so on)= total domestic expenditure+ exports of goods and services (foreigners' spending)= total final expenditure- imports of goods and services (spending abroad)= GDP