Economics Terms

ARBITRATION

Referring dispute to disinterested party called arbitrator

for decision, which will be binding.

ANNUITY

Payment of a fixed amount periodically for a limited

time. It is an investment on which the owner receives not
only interest on his money but also return of his capital.

BALANCE OF TRADE

The difference between the value of imports and exports.

It is favourable when the value of exported goods
exceeds the value of imported goods. If it is reverse
balance is unfavourable.

BALANCE SHEET

Statements of accounts, generally os a business house

prepared at the end of a year, showing debits and credits
under broad heads, in order to find out the profit and loss
positions in the outgoing year.

BARTER

Exchange of commodity with other commodities

without the interface of any form of currency.

BOND

Document by which a government, a company or a

person agrees to pay a sum of money in a certain time.

BUDGET

Annual estimate of expenditure and revenue of a country

or a subordinate authority like a corporation.

BILL OF EXCHANGE

Written order by a drawer to pay sum on given date ot

named payee.

BUYER'S MARKET

An economic phenomenon where there are more goods

in market than demanded and so the buyers can dictate
the prices of goods.

CLEARING HOUSE

Place where officials of the banks meet daily to exchange

cheques drawn on the respective banks and settle the
account by the payment of balances only.

Joint farming wherein farmers pool their land, capital and

resources and divide the produce at the end of the
COOPERATIVE FARMING
harvest in proportion to their land put in the pool. The
farmers retain their proprietary rights.
CEILING ON LAND AND Imposition of a maximum limit of the land which an
HOLDING
individual should have. Its purpose is rational distribution

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of land.
DEATH
DUTY)

DUTY (ESTATE A sort of tax imposed on the property inherited at death

of its previous owner.

DEVALUATION

Government's step to reduce the value of its own

currency relatively to a foreign currency. It aims to
increase exports and reduce imports.

DEFLATION

A monetary state characterised by decrease in the supply

of money and bank deposits and falling profits, wages,
incomes
and
employment
accompanied
by
unemployment and falling prices.

DEMONETISATION

The governmental measure of depriving metallic coins or

paper currency od specified denominations of its status
money. It is meant to unearth the hidden money which is
unaccounted for purpose of income tax assessment.

EXCISE DUTY

Duty levied on goods manufactured within the country.

FOREIGN EXCHANGE

Transfer of money of one country to another.

INFLATION

Increase in the quality of money in circulation without

any corresponding increase in goods; so, it leads to rising
prices spiral.

LAISSEZ FAIRE

An individualistic theory advocating private initiative in

trade and non-interference by State in commercial or
business ventures.

LOCKOUT

Closure of a factory by owners to force the workers to

accept the imposed terms.

It states that the food supply increase in arithmetical

MALTHUSIAN
THEORY
progression while population increase by geometrical
OF POPULATION
progression resulting in over-population.
OCTROI

Tax imposed on articles coming inside a city.

PUBLIC SECTOR

Applies to State enterprises or undertaking.

RECESSION

An economic phenomenon characterised by excessive

production, less demand, tight money market.

SOFT CURRENCY

Currency of a country with which we have favourable

balance of trade.

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STERLING AREA

Group of countries of Commonwealth (except Canada)

keeping their reserves in sterling and not gold or dollars.

TARIFFS

Measures undertaking by one country to protect industry

against trade competition from outside.

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