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Definition: Asset turnover ratio is the ratio between the value of a company’s sales
or revenues and the value of its assets. It is an indicator of the efficiency with
which a company is deploying its assets to produce the revenue. Thus, asset
turnover ratio can be a determinant of a company’s performance. The higher the
ratio, the better is the company’s performance. Asset turnover ratio can be different
from company to company. Usually, it is calculated on an annual basis for a
specific financial year.
Definition of 'Bailout'
Definition: Bailout is a general term for extending financial support to a company
or a country facing a potential bankruptcy threat. It can take the form of loans,
cash, bonds, or stock purchases. A bailout may or may not require reimbursement
and is often accompanied by greater government oversee and regulations.
1. The transaction in goods, services and income between an economy and the rest
of the world,
3. Unrequited transfers
Definition of 'Brexit'
Definition: It is an abbreviation for the term “British exit”, similar to “Grexit” that
was used for many years to refer to the possibility of Greece leaving the Eurozone.
Brexit refers to the possibility of Britain withdrawing from the European Union
(EU). The country will hold a referendum on its EU membership on June 23.
Definition: Call money rate is the rate at which short term funds are borrowed and
lent in the money market.
Definition: Duties that are imposed in order to counter the negative impact of
import subsidies to protect domestic producers are called countervailing duties.
Definition of 'Deflation'
Definition: When the overall price level decreases so that inflation rate becomes
negative, it is called deflation. It is the opposite of the often-encountered inflation.
Definition of 'Depreciation'
Definition: The monetary value of an asset decreases over time due to use, wear
and tear or obsolescence. This decrease is measured as depreciation.
Definition: A labour market is the place where workers and employees interact
with each other. In the labour market, employers compete to hire the best, and the
workers compete for the best satisfying job.
Definition: The law of demand states that other factors being constant (cetris
peribus), price and quantity demand of any good and service are inversely related
to each other. When the price of a product increases, the demand for the same
product will fall.
Definition of 'Law Of Supply'
Definition: Law of supply states that other factors remaining constant, price and
quantity supplied of a good are directly related to each other. In other words, when
the price paid by buyers for a good rises, then suppliers increase the supply of that
good in the market.
Definition of 'Macroeconomics'
Definition of 'Microeconomics'
Definition: Microeconomics is the study of individuals, households and firms'
behavior in decision making and allocation of resources. It generally applies to
markets of goods and services and deals with individual and economic issues.
Definition of 'Monetary Policy'
Definition: Monetary policy is the macroeconomic policy laid down by the central
bank. It involves management of money supply and interest rate and is the demand
side economic policy used by the government of a country to achieve
macroeconomic objectives like inflation, consumption, growth and liquidity.
Definition of 'Poverty Trap'
Definition: Price ceiling is a situation when the price charged is more than or less than the
equilibrium price determined by market forces of demand and supply. It has been found that
higher price ceilings are ineffective. Price ceiling has been found to be of great importance in the
house rent market.
Definition of 'Price Floor'
Definition: Price floor is a situation when the price charged is more than or less than the
equilibrium price determined by market forces of demand and supply. By observation, it has
been found that lower price floors are ineffective. Price floor has been found to be of great
importance in the labour-wage market.
Definition of 'Privatization'
Definition: Property tax is the annual amount paid by a land owner to the local
government or the municipal corporation of his area. The property includes all
tangible real estate property, his house, office building and the property he has
rented to others.
Definition: The theory aims to determine the adjustments needed to be made in the
exchange rates of two currencies to make them at par with the purchasing power of
each other. In other words, the expenditure on a similar commodity must be same
in both currencies when accounted for exchange rate. The purchasing power of
each currency is determined in the process.
Definition: Real Economic Growth Rate is the rate at which a nation's Gross
Domestic product (GDP) changes/grows from one year to another. GDP is the
market value of all the goods and services produced in a country in a particular
time period.
Definition of 'Recession'
Definition: Under this system of taxation, the tax rate diminishes as the taxable
amount increases. In other words, there is an inverse relationship between the tax
rate and taxable income. The rate of taxation decreases as the income of taxpayers
increases.
Definition of 'Speculation'
Definition: According to Article 112 of the Indian Constitution, the Union Budget
of a year, also referred to as the annual financial statement, is a statement of the
estimated receipts and expenditure of the government for that particular year.
Definition of 'Casa'
Definition: CASA stands for Current Account and Savings Account which is
mostly used in West Asia and South-east Asia. CASA deposit is the amount of
money that gets deposited in the current and savings accounts of bank customers. It
is the cheapest and major source of funds for banks. The savings accounts portion
pays more interest compared to current accounts.
Definition of 'Contagion'
Definition: It can be explained as a procedure for estimating all costs involved and
possible profits to be derived from a business opportunity or proposal.
Definition: Credit default swaps (CDS) are a type of insurance against default risk
by a particular company. The company is called the reference entity and the default
is called credit event. It is a contract between two parties, called protection buyer
and protection seller. Under the contract, the protection buyer is compensated for
any loss emanating from a credit event in a reference instrument. In return, the
protection buyer makes periodic payments to the protection seller.
Definition: The currency deposit ratio shows the amount of currency that people
hold as a proportion of aggregate deposits.
Definition of 'Deflation'
Definition: When the overall price level decreases so that inflation rate becomes
negative, it is called deflation. It is the opposite of the often-encountered inflation.
Definition: A labour market is the place where workers and employees interact
with each other. In the labour market, employers compete to hire the best, and the
workers compete for the best satisfying job.
Definition of 'Libor'
Definition: LIBOR, the acronym for London Interbank Offer Rate, is the global
reference rate for unsecured short-term borrowing in the interbank market. It acts
as a benchmark for short-term interest rates. It is used for pricing of interest rate
swaps, currency rate swaps as well as mortgages. It is an indicator of the health of
the financial system and provides an idea of the trajectory of impending policy
rates of central banks.
Definition of 'Liquidity Trap'
Definition of 'Monopoly'
Definition: Net interest income (NII) is the difference between the interest income
a bank earns from its lending activities and the interest it pays to depositors.
Definition: A non performing asset (NPA) is a loan or advance for which the
principal or interest payment remained overdue for a period of 90 days.
Definition of 'Pareto's Efficiency'
5. Consumers have perfect knowledge about the market and are well aware of any
changes in the market. Consumers indulge in rational decision making.
6. All the factors of production, viz. labour, capital, etc, have perfect mobility in
the market and are not hindered by any market factors or market forces.
7. No government intervention
8. No transportation costs
9. Each firm earns normal profits and no firms can earn super-normal profits.
10. Every firm is a price taker. It takes the price as decided by the forces of demand
and supply. No firm can influence the price of the product.
Definition of 'Preferences'
Definition: Price mechanism refers to the system where the forces of demand and
supply determine the prices of commodities and the changes therein. It is the
buyers and sellers who actually determine the price of a commodity.
Definition of 'Producer Surplus'
Definition: Producer surplus is defined as the difference between the amount the
producer is willing to supply goods for and the actual amount received by him
when he makes the trade. Producer surplus is a measure of producer welfare. It is
shown graphically as the area above the supply curve and below the equilibrium
price.
Wheat, rice, kerosene, sugar, etc. are a few major commodities distributed by the
public distribution system.
Definition: Real Economic Growth Rate is the rate at which a nation's Gross
Domestic product (GDP) changes/grows from one year to another. GDP is the
market value of all the goods and services produced in a country in a particular
time period.
Definition: This is a situation wherein the real GDP is lower than the potential
GDP at the full employment level. The economy operates below the full
employment level in a recessionary gap.
Definition of 'Risk'
Definition: Risk implies future uncertainty about deviation from expected earnings
or expected outcome. Risk measures the uncertainty that an investor is willing to
take to realize a gain from an investment.
Definition: A consumer behaving rationally strives hard to opt for better products
or services. The costs involved in searching such products/services are search
costs.
Definition of 'Securitization'
Definition: Securitization is a process by which a company clubs its different
financial assets/debts to form a consolidated financial instrument which is issued to
investors. In return, the investors in such securities get interest.
Definition of 'Service Tax'
Definition: In financial terms, social capital basically comprises the value of social
relationships and networks that complement the economic capital for economic
growth of an organization.
Definition of 'Sovereign Risk'
Definition: True cost economics is an economic model that includes the cost of
negative externalities associated with goods and services.
Definition of 'Unemployment Trap'
Definition: According to Article 112 of the Indian Constitution, the Union Budget
of a year, also referred to as the annual financial statement, is a statement of the
estimated receipts and expenditure of the government for that particular year.
Definition: Tulip mania was a period when tulips were recently introduced and
bought in large quantities by many people. This caused tulip prices to shoot up.
They were sold at prices higher than skilled workers' income. After reaching a
peak, tulip prices crashed, leaving tulip holders bankrupt. It was the first major
economic bubble.
Definition: Tender period refers to the time period before the expiry of the
contract. Tender period is generally a few days. Tender period gives members of
the contract the flexibility to make decisions till the time the contract expires.
Definition: Spot price refers to the current price of a security at which it can be
bought/ sold at a particular place and time.
Definition: This is a technique aimed at analyzing economic data with the purpose
of removing fluctuations that take place as a result of seasonal factors.
Definition of 'Satisficing'
Definition: A risk averse investor is an investor who prefers lower returns with
known risks rather than higher returns with unknown risks. In other words, among
various investments giving the same return with different level of risks, this
investor always prefers the alternative with least interest.
Definition: Real GDP is the nominal GDP after adjusting for any price changes
attributable to either inflation or deflation.
Definition of 'Rationing'
Definition: The principle agent problem arises when one party (agent) agrees to
work in favor of another party (principle) in return for some incentives. Such an
agreement may incur huge costs for the agent, thereby leading to the problems of
moral hazard and conflict of interest. Owing to the costs incurred, the agent might
begin to pursue his own agenda and ignore the best interest of the principle,
thereby causing the principal agent problem to occur.
Definition: A payments bank is like any other bank, but operating on a smaller
scale without involving any credit risk. In simple words, it can carry out most
banking operations but can’t advance loans or issue credit cards. It can accept
demand deposits (up to Rs 1 lakh), offer remittance services, mobile
payments/transfers/purchases and other banking services like ATM/debit cards, net
banking and third party fund transfers.
Definition of 'Paradox'
Definition: Paradox in economics is the situation where the variables fail to follow
the generally laid principles and assumptions of the theory and behave in an
opposite fashion.
Definition: Moral hazard is a situation in which one party gets involved in a risky
event knowing that it is protected against the risk and the other party will incur the
cost. It arises when both the parties have incomplete information about each other.
Definition: The law of demand states that other factors being constant (cetris
peribus), price and quantity demand of any good and service are inversely related
to each other. When the price of a product increases, the demand for the same
product will fall.
Definition: Gross National Product (GNP) is Gross Domestic Product (GDP) plus
net factor income from abroad.
Definition of 'Fair Trade Price'
Definition: In the commodities market, fair trade price is the minimum price that
importers must pay to the producers of some agricultural products such as coffee
and banana. It is the floor price that must be paid irrespective of the market price.
Definition of 'EMI'
Definition: EMI or equated monthly installment, as the name suggests, is one part
of the equally divided monthly outgoes to clear off an outstanding loan within a
stipulated time frame.
Definition of 'Domestic Institutional Investors (diis)'
Definition of 'Depreciation'
Definition: The monetary value of an asset decreases over time due to use, wear
and tear or obsolescence. This decrease is measured as depreciation.
Definition: The measure of responsiveness of the demand for a good towards the
change in the price of a related good is called cross price elasticity of demand. It is
always measured in percentage terms.
Definition: Call money rate is the rate at which short term funds are borrowed and
lent in the money market.
Definition of 'Base Rate'
Definition: Base rate is the minimum rate set by the Reserve Bank of India below
which banks are not allowed to lend to its customers.
Definition of 'Bailout'