ECONOMICS TERM

Ante date : To give a date prior to that on which it is written, to any cheque, bill or any other document.

Appreciation of Money : It is a rise in the value of money caused by a fall in the general price level.

.Assets : Property of any kind available towards the discharge of the liabilities of a testator, intestate debtor or company.

At Sight : A form of notification written on bills or notes denoting that they are not payable on demand but after expiry of a specified period and allowing three days of grace there after.

Arbitration : A method for compounding dispute, generally of an industrial nature, between the employer and his employees by reference to disinterested parties-called arbitrators.

Advice : Any notification of a business transaction, apprising an agent, correspondent, or customer that a certain thing has been done.

Bear : A speculator in the market who believes that price will go down.

Bill of Credit : A letter authorising the advance of money to a specified person, implying thereby the obligation on the part of the writer to repay that amount.

Black Money : Unaccounted money on which no Income-tax has been paid. The main reason for accumulation of black money has been the steep rise in rate of taxation : tax evasion becomes attractive and profitable. The business community, politicians and bureaucrats all have accumulated black money during the last few years. The Government of India demonetised high denomination notes in Jan. 1978 in order to reduce the evil or black money. Voluntary Disclosure Income Scheme was introduced in 1977 by the Govt. Over Rs. 10,000 crores were netted by the Govt. by Feb 28, 1998.

Bond : A written monetary agreement between two persons, or between two governments or between a person and a government or corporation, or between a corporation and a government.

Bull : A speculator in the stock market who buys goods, in some cases without money to pay with, anticipating that prices will go up.

Balance of Trade : The difference between the imports and exports of a country. It is favourable when the value of exported goods exceeds the value of imported goods. And it is unfavourable if the imports exceed exports.

Bankers' Cheque : A cheque drawn by one bank on its own branch.

Bank Rate : The rate at which the Central Bank (Reserve Bank of India) will discount first class bills of exchange.

Basket Currencies : 14 currencies whose average value has been taken to calculate the value of S.D.R. Similarly, the rupee exchange rate is announced on the basis of average value of half a dozen basket currencies.

Buyers' Market : An area in which the supply of certain goods exceeds the demands, so that purchasers can drive hard bargains.

Carat : Measure or weight for precious stones, about 4 grains; 24 carat gold is the purest gold, thus 22 carat gold means a piece of gold in which 22 .parts are pure gold and 2 parts of an alloy, usually copper.

Caution Money : It is money deposited as security for the fulfilment of a contract of obligation.

Central Bank : A bank which is (a) banker to the Government, (b) banker to the commercial banks, and (c) manages the currency and credit policy of that country. The Reserve Bank of India is the Central Bank.

Clearing House : The place where clerks from the different banks meet daily, bringing with them all bills cheques drawn on each other bank on that day. The bills/cheques are then exchanged and outstanding differences settled.

Letter of Credit : A letter from a bank, firm or one person to another authorising payment to a third person of a specific sum, for which the sender assumes full responsibility.

Crossed Cheque : A cheque is crossed for protection. In a crossed cheque two parallel lines are drawn across its face and the words 'and Co'. are written between the lines. Such a cheque must be paid into one's own account in the ban} and then realised.

Debentures : A debenture is a certificate issued by a company to its creditors promising the payment of a stated sum at fixed rate of interest, after a specified period of time. A debenture is the first charge on the assets of the company.

Deflation : A state in monetary market when money in circulation has decreased and is characterised by low prices, unemployment, etc.

Demand Draft : An instrument drawn by one bank on any of its own branches or on another bank under agency arrangement is payble on demand.

Devaluation : A deliberate reduction in the value of the home currency to foreign currency. It is done always by a governmental action, and is resorted to in order to reduce imports and increase exports. India devalued her currency by 37 per cent on 6th June, 1966. Of late so many countries, viz., U.K., U.S.A., and France have resorted to this expedient to balance their payment positions.

Draft : A cheque drawn by one bank on another.

Estate Duty : A form of death duty and a method of direct taxation, imposed when the property is transferred on the death of its owner. It has been abolished in India but was reintroduced in a limited way in 1988.

EURO : The European Union declared to introduce a common currency for its member countries, called EURO. Eleven of the fifteen countries agreed to become members of the common currency introduced on Jan. 1, 1999. Four countries are likely to become members later. By 2002, it is hoped that the local currencies will disappear and replaced by EURO.

Excise Duty : It is the duty charged on goods manufactured within the country; excise duties on alcohol, tobacco, sugar, match-box, cIoth, etc., have been levied by the Government of India.

Floating Currency : On account of too wide a fluctuation between the official and unofficial rates for various currencies of the world, some of the countries decided not to fix any particular rate of the currency vis-a-vis others and let the value be determined on a daily basis.

Foreign Exchange : The method by which transactions in international trade are financed.

Fixed Exchange Rate : When the exchange rate of the currency is fixed by the concerned government and it can only be changed either by devaluation or revaluation.

Floating Exchange Rate : A situation in which the exchange rate of any currency is determined by the forces of demand and supply for this currency. Today rupee is also floating and its exchange rate with other currencies is determined by the demand and supply. Periodically the Reserve Bank of India announces the exchange rates of rupee with other currencies. The exchange rate is calculated by taking average value of basket currencies.

Free Trade : A tariff system which treats foreign imports and home produced articles on the same basis, either taxing both equally or exempting both.

Gold Standard : It is a system of currency based on the free coinage of gold. It presupposes that the state will sell and buy gold at fixed price in terms of the local currency; For all practical purposes, the system is dead now.

Green Revolution : The term applied for the steep rise in the production of agricultural products, during the past few years. The Green Revolution was made possible by : (i) better use of fertilizers {ii) intensive cultivation, (iii) latest varieties of seeds and especially the hybrid varieties (iv) pesticides and insecticides and (v) availability of assured means of irrigation green revolution turned gray in 1973-74 when food production was considerably lower. The main reason, according to a few, is not the non-availability of food articles, but faulty distribution. There were food grain shortages in 1980 on account of severe drought in 1979. In 1998, the country reaped a large harvest of over 194 million tones and over 200 million tones in 1999.

Hard Currency : The currency of a country in relation to which we have an adverse balance of payment, i.e., which is hard to be obtained.

Hot Money : Money which moves from one place to another to seek profit or higher rate of interest is called hot money.

Index Number : A statistical method of indicating approximately the variations in the prices of essential commodities over certain periods of time.

Inflation : It is an increase in the quantity of money in circulation without any corresponding increase in goods, and, therefore, it leads to an abnormal rise in the price level.

Key Currency : A currency which is internally acceptable and is used in international payments.

Laissez-faire : It is the other name of individualistic theory which advocates private initiative in trade and non-intervention by state in commercial or business enterprises.

Lead Bank : The Banking Commission has recommended that the nationalised banks should be asked to take over the complete development activity of backward areas. Each bank was to be attached with a certain backward region of a district. It was to be the responsibility of the bank to look after the development of the backward region. The bank was to undertake more or less a techno-economic survey in order to take overall the financial and developmental needs.

Legal Tender : Any form of money which is legal quittance of a debt, and which cannot be refused by the creditors.

Limited Company : A company in which the shareholder's responsibility is limited to the extent of the value of the shares in it.

Lock-out : The factory is closed by employers to force the employers to accept the imposed terms.

Mixed economy : A mixed economy is one in which both public and private sectors have an important role to play, India has opted for a mixed economy with a provision that a few industrial fields of vital national importance have been reserved for the public sector.

Mutual Funds : There have been times when to purchase the minimum sized trading lot a good growth shares, one has to invest more than Rs. 25,000. For a small saver, the only way to take advantages of the prosperity of such companies is by subscribing to a mutual fund. This enables him to subscribe to a diversified portfolio, not only offering him the advantages of growth in scripts that he would otherwise not have been able to invest in but also helping him to get a balanced portfolio which would reduce his exposure to risk. Despite floating of a large number of Mutual funds, the public has got disillusioned due to very bad returns in these funds. Unit Trust of India (UTI) is the leader in this financial activity.

National Debt : The amounts borrowed at different times by the Government for the expenditure which cannot be met from ordinary revenues. The money so raised may be for productive purpose or other nation-building activities or for unproductive purpose, such as war.

Open Credit : Credit given by a banker to a customer without guarantee or security.

Overhead Cost : The cost over and above the fixed costs such as machinery, plants and land.

Paper Gold : Also known as Special Drawing Rights (S.D.R.) allotted to members of the International Monetary Fund, in proportion to their quota in the fund, so that the expanding world trade can be financed changing hands only on ledger sheets, but the members of the Fund are obliged to accept it as payment.

Patents : A patent is an exclusive right granted under the Patents Act to the inventor for anew and useful technical invention. This is done with a view to encouraging new inventions.

Public Company : A limited company whose capital consists of shares publicly subscribed.

Public Sector : A term which is generally applied to State enterprises or undertakings, i.e., those concerns or industries which are nationalised and run by the State.

Rebate : It is the refundable part of payment made, or commission. say, towards insurance policy or the like.

Reflation : A state of affairs when money market ist1ght;so more money is put into circulation by creating more jobs or by providing cheap credit.

Royalty : It is a lump sum payment for certain kind of ownership or privilege, e.g., royalty paid for extracting oil from oilfields or mining coal from a coal-mine, or a share of the sale price of book, paid by the publisher to the author.

Security : Any article pledged to cover a loan and the interest thereon, for the stipulated period.

SDR : It is a unit of an account (Special Drawing Rights)–adopted by the International Monetary Fund. Its value is determined by an average value of 14 basket countries. Currently, the value of SDR is equal to U.S.A. $1.17.

Sit-down Strike : A form of strike in which the workers put down tools, but refuse to leave the premises of the factory.

Soft Currency : It is the currency of the country in relation to which we have a favourable balance of payment.

State Trading: When the state undertakes the purchase and sale of certain commodities, so as to control market prices, and to assure a fair deal, both to the product and consumer. In India, State Trading Corporation was set up in 1956 to take over the sale and distribution of cement. The S. T .C. now helps the economy in a number of ways by increasing overseas trade.

Sterling : It is the paper currency of England, i.e., one pound currency.

Tariff : It is protection for indigenous industry , or measures undertaken by any country to protect its own industry against trade competition from outside.