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Economic Terms

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Economic Terms

  • Imports: commodities (goods or services) bought from a foreign country

  • Inflation: Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is more demand and less supply of the goods.

  • Investment: Investment means the use money in the hope of making more money.

  • Infrastructure:  Basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function.

  • Labor: Labor is the services and efforts of humans that are used for production.

  • Loan:  The borrower initially borrows an amount of money, called the principal, from the lender, and is obligated to pay back an equal amount of money to the lender at a later time. The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan.

  • Market: The organized exchange of commodities (goods, services, or resources) between buyers and sellers within a specific geographic area and during a given period of time.

  • Mutual Fund: There are accumulation and collection of many different types of shares. It is when investors together want to buy securities as a group, this fund can be called a mutual fund. Each and every investor of this group has a proportional stake in the shares based on the amount he has contributed.

  • Monetary policy: It is the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest

  • Nifty: It is an indicator of all the major companies of the NSE.

  • NGO: NGOs as autonomous non-profit and non-party/politically-unaffiliated organizations that advance a particular cause or set of causes in the public interest.

  • Per Capita Income: The total national income divided by the number of people in the nation, It means the share of each individual when the income from the productive activities is divided equally among the citizens.

  • Purchasing power: It is the number of goods/services that can be purchased with a unit of currency.

  • Poverty Line: The official measure of the income needed by a family based on family size, location, and characteristics of the head of the household.

  • Portfolio: It’s a list of the financial assets held by an individual or a bank or other financial institution

  • Quota: A limit on the quantity of some sort of activity. Two of the more noted quotas are for employment and imports.

  • Recession: GDP (Gross Domestic Product) growth is negative for a period of two or more consecutive quarters.

  • Repo Rate: Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which banks borrow money from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.

  • Reverse Repo Rate:  Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to these attractive interest rates. It can cause the money to be drawn out of the banking system.

  • Socialist economy: It is a structure of the economy which aims at providing greater equality and giving the “proletariat” or working class greater ownership over the means of production.

  • Sense: It is an indicator of all the major companies of the BSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up.

  • Supply: The willingness and ability to sell a range of quantities of a good at a range of prices, during a given time period. Supply is one half of the market exchange process; the other is demand.

  • Subsidy: Subsidy is a financial assistance paid by government to private producers or distributors to prevent the decline of that industry or to lift them from a situation of crisis.

  • Tariff: A tariff is a duty imposed on goods when they are moved across a political boundary.

  • Stocks: Stocks are a share of the ownership of a company, which are sold initially by the original owners of a company to gain additional funds to help the company grow.

  • Tax: A fee charged by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax.

  • Utility: A company that performs a public service; subject to government regulation

  • VAT:  VAT is the indirect tax on the consumption of the goods, paid by its original producers upon the change in goods or upon the transfer of the goods to its ultimate consumers. It is based on the value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by the transferor and not just a profit. All over the world, VAT is payable on the goods and services as they form a part of national GDP.

  • Wholesale Price Index (WPI): The Wholesale Price Index (WPI) takes into account the wholesale prices of identified commodities for calculating rate of inflation.
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