Basic Economic Abbreviations-1

 Here is a list of few economic abbreviations you should know:

1. GDP – Gross Domestic Product

• Definition: The total value of all goods and services produced within a country's borders in a specific time period, often used as a measure of a country's economic performance.

2. GNP – Gross National Product

• Definition: The total market value of all goods and services produced by a country's residents in a given period, both domestically and abroad. Unlike GDP, it includes income from foreign investments.

3. CPI – Consumer Price Index

• Definition: A measure of the average change over time in the prices paid by urban consumers for a basket of goods and services. It's often used to measure inflation.

4. PPI – Producer Price Index

• Definition: A measure of the average change over time in the selling prices received by domestic producers for their output. It can signal inflationary trends before they reach consumers.

5. FDI – Foreign Direct Investment

• Definition: Investment made by a firm or individual in one country into business interests located in another country, typically by acquiring a business or establishing new operations.

6. FPI – Foreign Portfolio Investment

• Definition: Investments in financial assets, such as stocks and bonds, in a foreign country. It differs from FDI because it doesn't involve control over the companies invested in.

7. PPP – Purchasing Power Parity

• Definition: A theory and method of comparing different countries' currencies by taking into account the relative cost of living and inflation rates. It suggests that in the absence of transportation costs and other trade barriers, identical goods should sell for the same price in different countries when expressed in a common currency.

8. M2 – Money Supply

• Definition: A measure of the total money supply within an economy that includes cash, checking deposits, and easily convertible near money, such as savings deposits and money market securities.

9. LTV – Loan-to-Value Ratio

• Definition: A financial term used by lenders to express the ratio of a loan to the value of an asset purchased. It’s commonly used in real estate and mortgage lending.

10. NDP – Net Domestic Product

• Definition: The value of all goods and services produced by a country's residents during a specific period, minus depreciation on capital goods. It accounts for the wear and tear on infrastructure and machinery.

11. NFA – Net Foreign Assets

• Definition: The difference between a country's foreign assets (investments, holdings) and its foreign liabilities. It reflects the net international investment position.

12. IRR – Internal Rate of Return

• Definition: A financial metric used to evaluate the profitability of an investment. It represents the discount rate that makes the net present value (NPV) of the cash flows from an investment equal to zero.

13. ROA – Return on Assets

• Definition: A financial ratio that shows the percentage of profit a company earns in relation to its total assets. It’s used to assess how efficiently a company uses its assets to generate profit.

14. ROI – Return on Investment

• Definition: A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. It's calculated by dividing the return by the cost of the investment.

15. P/E Ratio – Price-to-Earnings Ratio

• Definition: A valuation ratio of a company’s current share price compared to its earnings per share (EPS). It’s commonly used to gauge whether a stock is over or under-valued.

16. BOP – Balance of Payments

• Definition: A comprehensive record of a country’s economic transactions with the rest of the world, including trade, investment, and financial transfers.

17. TAR – Tariff

• Definition: A tax or duty imposed on imported goods and services to protect domestic industries and raise government revenue.

18. S&P 500 – Standard & Poor’s 500

• Definition: A stock market index tracking the performance of 500 of the largest publicly traded companies in the U.S., often used as a benchmark for the overall U.S. stock market.

19. CAGR – Compound Annual Growth Rate

• Definition: The rate of return (growth) that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits are reinvested at the end of each period.

20. ECB – European Central Bank

• Definition: The central bank for the eurozone, responsible for monetary policy within the European Union and maintaining the euro’s stability.

21. IMF – International Monetary Fund

• Definition: An international financial institution that provides financial assistance and advice to member countries facing economic instability or crisis.

22. WB – World Bank

• Definition: An international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing development projects.

23. OECD – Organisation for Economic Co-operation and Development

• Definition: An international organization that promotes policies aimed at improving the economic and social well-being of people around the world.

24. R&D – Research and Development

• Definition: A business or government activity that seeks to develop new products or improve existing products through research and experimentation.

25. FOMC – Federal Open Market Committee

• Definition: A component of the Federal Reserve, responsible for overseeing and adjusting U.S. monetary policy by managing open market operations, such as the buying and selling of government bonds.

26. CBO – Congressional Budget Office

• Definition: A federal agency within the United States that provides nonpartisan analyses of economic and budgetary issues to assist Congress in decision-making.

27. WTO – World Trade Organization

• Definition: An international organization that regulates global trade, ensuring that trade flows as smoothly, predictably, and freely as possible.

28. NAFTA – North American Free Trade Agreement

• Definition: A trade agreement between Canada, Mexico, and the United States aimed at eliminating tariffs and reducing trade barriers between the three countries (replaced by the USMCA in 2020).

29. USMCA – United States-Mexico-Canada Agreement

• Definition: A trade agreement between the U.S., Canada, and Mexico, replacing NAFTA, designed to support fairer trade and adjust to new economic realities.

30. ECB – European Central Bank

• Definition: The central bank responsible for managing the euro, the eurozone's monetary policy, and ensuring price stability across member states.

31. MNC – Multinational Corporation

• Definition: A company that operates in multiple countries, often with facilities and assets in more than one nation.

32. TARP – Troubled Asset Relief Program

• Definition: A U.S. government program created in 2008 to stabilize the economy during the financial crisis by purchasing toxic assets and equity from financial institutions.

33. KYC – Know Your Customer

• Definition: A process used by financial institutions to verify the identity of their clients to prevent fraud, money laundering, and other illicit activities.