CSEET Economic and Business Environment Syllabus

Give the formula for price elasticity of supply (PES).

PES = (% change in quantity supplied) / (% change in price). It is normally positive due to the direct price-supply relationship.

What is the main factor that makes supply more elastic over time?

Time period: supply is more elastic in the long run because producers have time to adjust capacity, inputs, and production, whereas in the short run supply is relatively inelastic.

Define Gross Domestic Product (GDP).

The total market value of all final goods and services produced within a country's domestic territory during a given period (usually one year), regardless of who owns the resources.

Define Gross National Product (GNP) and its relation to GDP.

GNP is the total value of final goods and services produced by a country's nationals (residents) in a year, including net factor income from abroad. GNP = GDP + Net Factor Income from Abroad (NFIA).

Define Net National Product (NNP) at market price.

NNP at market price = GNP − Depreciation (consumption of fixed capital). It is the net value of output after deducting wear and tear of capital.

How is National Income (NNP at factor cost) derived?

NNP at factor cost = NNP at market price − Indirect Taxes + Subsidies. This is the standard measure of National Income.

What is the relationship between market price and factor cost?

Factor Cost = Market Price − Indirect Taxes + Subsidies; conversely Market Price = Factor Cost + Indirect Taxes − Subsidies.

Name the three methods of calculating National Income.

The Product (Output/Value-Added) Method, the Income Method, and the Expenditure Method.

Explain the Product (Value-Added) Method of computing National Income.

It sums the value added at each stage of production across all sectors (value of output minus value of intermediate goods) to avoid double counting, giving the total value of final goods and services.

What components are summed under the Income Method of National Income?

Rent, wages and salaries, interest, profit, and mixed income of the self-employed — i.e., the total of factor incomes earned by households (plus NFIA for national income).

State the Expenditure Method formula for GDP.

GDP = C + I + G + (X − M), i.e., private Consumption + Investment + Government expenditure + Net Exports (Exports − Imports).

List key problems in the measurement of National Income.

Double counting, non-monetized/subsistence transactions, the black/parallel economy, lack of reliable data, treatment of transfer payments, self-consumed output, and inclusion of illegal income.

Why are transfer payments excluded from National Income?

Transfer payments (pensions, scholarships, subsidies, gifts) are not made in exchange for any current production of goods or services, so including them would overstate national income.

What is double counting and how is it avoided?

Double counting is counting the value of intermediate goods more than once in National Income. It is avoided by using either the value-added method or by counting only final goods and services.

Define the money market.

The market for short-term funds and financial instruments with maturity of one year or less, used to manage short-term liquidity needs of governments, banks, and businesses.

Name common instruments traded in the money market.

Treasury Bills (T-Bills), Commercial Paper, Certificates of Deposit, Call/Notice Money, Commercial Bills, and Repurchase Agreements (Repos).

Define the capital market.

The market for long-term funds (maturity over one year), where securities like shares, debentures, and bonds are issued and traded to finance long-term investment.

Distinguish between the primary market and the secondary market.

The primary market is where new securities are issued for the first time (e.g., IPOs) to raise fresh capital; the secondary market is where existing/issued securities are bought and sold among investors (e.g., stock exchanges).

What is a stock exchange?

An organized and regulated marketplace where existing securities such as shares, bonds, and debentures are bought and sold, providing liquidity, price discovery, and a continuous market for investors.

Name the two major stock exchanges of India and their benchmark indices.

Bombay Stock Exchange (BSE) with the SENSEX index, and the National Stock Exchange (NSE) with the NIFTY 50 index.

Which body regulates the securities market (stock exchanges) in India and when was it established?

The Securities and Exchange Board of India (SEBI), established in 1988 and given statutory status by the SEBI Act, 1992; it protects investors and regulates the securities market.

Which body is the regulator of the banking sector and money market in India?

The Reserve Bank of India (RBI), the central bank, which controls monetary policy, currency issue, and the banking and money markets.

Name the regulators of the insurance and pension sectors in India.

IRDAI (Insurance Regulatory and Development Authority of India) for insurance, and PFRDA (Pension Fund Regulatory and Development Authority) for pensions.

Differentiate between the micro environment and the macro environment of business.

The micro environment consists of forces close to and controllable/influenceable by the firm (customers, suppliers, competitors, intermediaries); the macro environment consists of broad uncontrollable external forces (economic, political, social, technological factors).

List the main components of a firm's micro environment.

Customers, suppliers, competitors, marketing intermediaries, the public, and the organization itself (employees/shareholders).

What does the acronym PESTEL stand for?

Political, Economic, Social, Technological, Environmental (Ecological), and Legal factors — a framework for analyzing the macro/external business environment.

What is the purpose of PESTEL analysis?

To identify and assess the external macro-environmental factors affecting an organization, helping it understand opportunities and threats and make strategic decisions.

What does SWOT analysis stand for, and how are its elements classified?

Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are internal factors; Opportunities and Threats are external factors.

How do SWOT and PESTEL analyses differ in focus?

SWOT analyzes both internal (strengths/weaknesses) and external (opportunities/threats) factors of a specific organization; PESTEL focuses only on the external macro-environmental factors.

Define globalization and state two of its key impacts on business.

Globalization is the integration of national economies into a single world economy through trade, capital, technology, and labour flows. Impacts include increased competition and access to wider markets, plus technology transfer, foreign investment, and greater interdependence among economies.