{"id":6713,"date":"2020-02-29T14:34:45","date_gmt":"2020-02-29T09:04:45","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=6713"},"modified":"2020-02-29T14:34:45","modified_gmt":"2020-02-29T09:04:45","slug":"basic-economic-terms-most-often-in-news","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/basic-economic-terms-most-often-in-news\/","title":{"rendered":"BASIC ECONOMIC TERMS MOST OFTEN IN NEWS"},"content":{"rendered":"

Relevance: Prelims: Economy <\/strong><\/span><\/p>\n

\u25baNATIONAL INCOME:<\/em> <\/strong><\/span>\u00a0National income or Gross Domestic Product (GDP) refers to the money value of all final goods and services produced in an economy in an accounting year.<\/p>\n

\u25baCAPITAL CONSUMPTION<\/strong>:<\/em> <\/span>The capital that is consumed by an economy or a firm in the production process. Also known as depreciation.<\/p>\n

\u25baINCREMENTAL CAPITAL OUTPUT RATIO<\/strong>:<\/em><\/span> \u00a0A measure of how much additional capital is needed to produce each extra unit of output. It reflects the efficiency of new investment.<\/p>\n

\u25baCROWDING OUT EFFECT<\/strong>:<\/em> <\/span>A concept of public finance which means an increase in the government expenditure which has an effect of reducing the private sector expenditure.<\/p>\n

\u25baECONOMIES OF SCALE:<\/em><\/span> \u00a0<\/strong>The long run reduction in average\/unit cost as the scale of firm\u2019s output increases.<\/p>\n

\u25baFISCAL DRAG<\/strong>:<\/em><\/span> \u00a0The negative effect of the progressive taxation that economies feel on their expansion \u2013 fall in the aggregate demand of the economy due to people moving from lower to higher tax brackets.<\/p>\n

\u25baINVESTMENT:<\/em> <\/strong><\/span>\u00a0Investment refers to the addition to the physical stock of capital. It is inversely related to the rate of interest in the economy. An increase\/decrease in interest rate will result in decrease\/increase in investment in the economy.<\/p>\n

\u25baLIQUID ASSETS<\/strong> :<\/em> <\/span>The monetary assets that can be used directly as payments.<\/p>\n

\u25baLIQUIDITY TRAP<\/strong>:<\/em> <\/span>\u00a0A situation when interest rate is so low that people prefer to hold money rather than invest it.<\/p>\n

\u25baNET WORTH<\/strong>:<\/em> <\/span>\u00a0Net worth for a company is total assets minus total liabilities.<\/p>\n

\u25baPREDATORY PRICING<\/strong>:<\/em><\/span> \u00a0The pricing policy of a firm with the purpose of harming rivals or exploiting the consumer.<\/p>\n

\u25baPURCHASING POWER PARITY<\/strong>:<\/em> <\/span>\u00a0It is an economic theory that compares different countries currency through a market basket of goods approach. According to this concept, two currencies are in equilibrium or at par when a market basket of goods (taking into account the exchange rate) is priced the same in both countries.<\/p>\n

\u25baSEIGNORAGE: <\/strong><\/em><\/span>\u00a0It is the profit made by the RBI by issuing currency especially the difference between the face value of currency and their production costs.<\/p>\n

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