ආර්ථික විද්‍යාව 101

Six ideas that explain almost every number on this site.

1. GDP — the size of the economy

Gross Domestic Product is the total value of all goods and services a country produces in a year. Divide it by the number of people and you get GDP per person — a rough measure of average income.

2. Inflation — how fast prices rise

Inflation of 5% means things that cost Rs 1,000 last year cost about Rs 1,050 now. A little inflation is normal; too much eats away what your money can buy.

3. Government debt — what the state owes

Governments borrow to spend. We measure debt against the size of the economy (debt-to-GDP), because a big country can carry more debt than a small one. Too much becomes hard to repay.

4. Reserves — the country's savings in foreign money

Foreign-currency reserves let the country pay for imports (fuel, medicine, food) and repay foreign debt. We often measure them in “months of imports”.

5. Exchange rate — the price of a dollar

The LKR/USD rate is how many rupees one US dollar costs. When the rupee weakens, imported things get more expensive, which can push up inflation.

6. The budget — revenue vs spending

If the government spends more than it collects, it runs a deficit and must borrow the difference — which adds to debt. More revenue (mostly tax) makes debt easier to manage.