Absenteeism—The absences of workers from the work is called absenteeism. It reflects the working conditions prevailing in the firm and moral among the workers in that firm and affects the firm’s productivity.
Advertisement—It is a means of stimulating demand for a product, it is used to inform the prospective buyers to persuade them that our brand is superior to competitor’s offerings.
Arbitration—It is a procedure for setting disputes, mainly industrial for setting disputes, mainly industrial disputes in which a third party or arbitrator, after hearing presentations from all sides in dispute, issues an award binding upon each side.
Autonomous consumption—Consumption expenditure includes induced consumption and autonomous consumption represents some minimum level of consumption expenditure which is necessary to sustain a basic standard of living and which consumers would therefore need to undertake even at zero income.
Balanced Budget—The budget where government expenditure is equal to taxation and other receipts is called Balanced Budget.
Where the government spends more than it receives in Taxation then a BUDGET DEFICIT is incurred. Where the government spends less than it receives in taxation than a BUDGET SURPLUS ensues.
Barter System—It is a system under which, the exchange of one economic good or service for another took place.
Base-Rate—Base rate is the interest rate which is used by the commercial banks to calculate rates of interest to be charged on loans and overdraft to their customers.
Bilateral Flows—Bilateral flows means movements of money between sectors of economy to match opposite flows of goods and services. For example, income in return for factor inputs supplied, and consumption expenditure in payment for goods and services consumed.
Bilateral Trade—Bilateral trade means the trade between two countries. Bilateral trade is a part of the International trade.
Birth Rate—Birth rate is the number of people born into a POPULATION per thousand per year. In 2001, for example crude birth rate is projected at 24.8 as against crude death rate of 8.9. The difference between birth rate and death rate is used to calculate the rate of growth of the population of a country over time. The birth rate tends to decline as a country attains higher levels of economic development.
Black Economy—The activity which does not pass through the market place is called the Black Economy. This is also an illegal thing. Examples may be the purchase and sale of illegal drugs on the street, or alcohol in the Indian Prohibition Act. In a black economy the price of a commodity is not determined by the forces of demand and supply. Most references to the black economy refer to the illegal situation of people working without declaring their income.
Black Market— Black Market is an ‘un-official’ market which often arises when the government holds down the price of a product below its equilibrium rate and is then forced to operate a RATIONING system to allocate the available supply between the buyers. Given that some buyers are prepared to pay a higher price, some dealers will be tempted to diver supplies away from the official market by creating an illegal market.
Bonus Scheme—It is a form of incentive pay scheme whereby an individual’s or group’s wages are based on achievement of individual or group output targets. Bonus schemes often provide for a guaranteed basic wage for employees.
Boom—Boom is phase of business cycle characterised by the full employment levels of output and some upward pressure on the general price level.
Borrower—A person, firm or institution who obtains a loan from a LENDER in order to finance his consumption or investment is called the Borrower. Borrowers are usually required to offer some collateral security to lenders. For example, property deeds, which the lenders have to get back their money in case the borrowers fail to repay their loan.
Brand—Brand means the name, or symbol given to a product by a supplier in order to distinuguish his product from that of similar products supplied by the competitors.
Brand names and trade marks are required to be registerd with a central authority so as to ensure that they are uniquely applied to a single, specific product. This makes the purchase very easy for the buyers especially sometimes for the illetrate buyers too.
Brand Value—Brand value is the money value of an established Brand name.
Budget Deficit—It the government expenditure is in excess of the government receipts in any one fiscal year, this is called budget deficit.
Buffer Stock—it is a stock of a commodity which is held by a trade body or government as a means of regulating the price of that commodity. An ‘official’ price for the commodity is established and if the open-market price falls below this because there is excess supply at the fixed price, then the authorities will buy the surplus and add it to the buffer stock in order to force the price back up.
Bull—The person who expects future prices in a stock exchange or in a market to rise and who seeks to make money by buying shares or commodities is called Bull.
Bullion—Precious metals such as gold, silver, platinum, etc. which are traded commercially in the form of bars and coins, and are used to produce jewellery. Some items of bullion, especially gold, are used as International Reserves to finance balance of payments imbalances.
Bullion Market—A market engaged in buying and selling of precious metals such as gold and silver coins is called bullion market. The London Bullion market is a leading for such transactions.
Bull Market—The market where the prices of financial securities or commodities are tending to rise as a result of persistent buying and only limited selling.
Business—The purchase and sale of goods and services is called business.
Capacity—Generally capacity means the maximum amount of output that a firm or industry is physically capable of producing, with the full and most efficient use of its existing plant. Here the output is used to be the maximum in any economy.
Capital—Capital is one of the four factors of production, the other three are land, labour and entrepreneur. Physical capital make a significant contribution towards Economic Growth.
Capital Formation—The process which results in adding to the net physical stock of an economy to achieve the greater output is know as the capital formation. To increase the level of capital formation the need is that present level of consumption in the economy has to decreased or has to be foregone.
Cardial Utility—Cardial utility means the utility or satisfaction that a consumer derives from consuming a product. Measured on a absolute scale. Thus we can say that the exact amount of utility derived from consuming a product can be measured.
Cash discount—Discount means a deduction from the published list price of a good or service allowed by a supplier to a customer.
The discount could be offered for prompt payments in cash (cash discount) or for bulk purchases (trade discount). Trade discounts may be given to enable suppliers to achieve large sales volumes.
Cash Flow—The money coming into a business from sales and other receipts and going out of the business in the form of cash payments to suppliers, workers etc.
Cash Reserve Ratio—The proportion of a Commercial Bank’s total assests which it keeps in the farm of hightly liquid assests to meet day-to-day currency withdrawls by its customers and other financial commitments.
Census—Census means a comprehensive official survey of households or businesses undertaken at regular intervals in order to obtain socio-economic information. For example, After every 10 years the population census is carried out in our country.
Central Bank—Central Bank is the country’s leading bank which acts as a banker to the government and the banking system. Central Bank is also responsible for implementing the government’s monetary policy.
Commercial Banks holds banks with the Central Bank and its role as banker to the banking system. The Central Bank makes it possible for banks to settle their indebtedness with one another by adjusting their accounts as appropriate.
The Central Bank is also responsible for managing the country’s exchange rate and holding the country’s stock of international reserve to be used in financing of balance of payments deficits.
Centralization—Centralization is the situation where the authority of decision making is kept at the centre.
Certificate—A certificate means a document signifying the ownership of a financial security. Such certificates are issued in the person or company recorded in the company’s register of shareholders as the owner of these shares, new certificates are being issued to buyers when shares are sold.
Closed Economy—A closed economy is that which does not have any relationship with the outside world. This is not influenced by any form of international trade, there are no experts or imports of any kinds.
Collateral Security—This is the assests pledged by a borrower as security for a loan. For example, the title deeds of a house. In the event of the borrower defaulting on the loan the lender can claim these assests in lieu of the sum owed.
Clearing Bank—A clearing bank is a bank with accepts depostis of money from customers and provides them with a payments transmission service (cheque) together with saving and loan facilities.
Commission—Commission means payments to agents for performing services on behalf of a seller or buyer. Commissions are usually based on the value of the product being sold or bought. Examples of commissions include salesperson’s commissions, agent’s fees, and insurance broker’s commissions.
Commodity—Basically commodity means raw materials rather than goods in general.
Commodity Market—A market for buying and selling agricultural produce and minerals such as coffee and tin. Commodity market provide an organisaional framework for the establishment of market prices and ‘clearing’ deals between buyers and sellers.
Competition—A form of market structure in which the number of firms supplying the market is used to indicate the type of market it is.
Complementary Products—Goods or services whose demands are interrelated, so that an increase in the price of one of the goods results in a fall in the demand for the other. For example, if the price of tennis rackets goes up, this results not only in a decrease in the demand for rackets but, because less tennis is now played a fall also in the demand for tennis balls.
Compound Interest—Compound interest is the interest on a loan which is based not only on the original amount of the loan but the amount of the loan plus previous accumulated interest. This means that over time interest charges grow exponentially.
Consumer—Consumer is the basic consuming or demanding unit of economic therory. In economics, a consuming unit can be either an individual purchaser of a goods or services, a household, or a government.
Consumer Durables—The consumer goods such as houses, care, televisions which are ‘consumed’ over relatively long periods of time rather than immediately, are known as consumer durables.
Consumer Goods—Any products such as washing machines, beer, toys, that are purchased by consumers.
Consumption—Consumption means the goods and services eaten up or used by the consumers. Certain consumer goods like washing machine, fridge, etc. are consumed over a longish period of time, while other products like cakes, breads are consumed immediately after purchase.
Contribution—Contributionis the difference between the product’s sales revenue and its variable costs. If total contribution are just large enough to cover fixed costs then the producer Breaks-even; of contributions are less than fixed costs the producer makes a loss; while if contributions exceeds fixed costs then the producer makes a profits.
Convertibility—The extent to which one foreign currency or international reserve assest can be exchanged for some other foreign currency or international reserve assest.
International trade and investment oppotunities are maximized when the currencies used to finance them are fully convertible, i.e. free of foreign exchange control restrictions.
Copyright—The ownership of the rights to a publication of book, manual newspaper etc. giving legal entitlement and power of redress against theft and unauthorised publication or copying.
Corporate Sector—That part of the economy concerned with the transactions of businesses. Businesses receive income from supplying. Goods and services are influence the working of the economy through their use of, and payment for, factor inputs and ivnestment decisions.
Corporation Tax—A direct tax levied by the government on the profits accuring to businesses. The rate of corporation tax charged is important to a firm so far as it determines the amount of after-tax profit it has available to pay dividends to shareholders or to reinvest in the business.
Cost—Cost is the payments incurred by a firm in producing its output.
Cost of Capital—This is the payments made by a firm for the use of long-term capital employed in its business.
Cost of Sales—It is the relevant cost that is compared with sales revenue in order to determine goss profit in the Profit and Loss Account. To calculate cost of sales, purchase of goods must be added to stocks at the start of the trading period to determine the goods available for sale, then the stocks left at the end of the trading period must be deducted from this to determine the cost of the goods which have been sold during the period.
Cost Price—Cost price is the price of the product which just covers its production and distribution costs with no profit margin added.
Coupon—Coupon is a means of promoting the sale of a product by offering coupons to buyers of the product which can be redeemed for cash, gifts or other goods.
Credit—This is a financial facility which enables a person or business to borrow money to purchase products, raw materials and components etc. Credit facilities come in a variety of forms, including Bank loans and overdrafts, instalment credit, credit cards and trade credit. Interest charges on credit may be fixed or variable according to the type of facilitie offered or, in some cases, ‘interest free’as a means of stimulating business.
Credit Card—A plastic card or token used to finance the purchase of products by gaining point-of-sale credit.
Currency—The Bank notes and coins issued by the monetary authorities which forms part of an economy’s moeny supply. The term ‘currency’ is often used interchangeably with the term cash in economic analysis and monetary policy.
Customs Duty—This is a tax levied on imported products. Customs duties are used primarily as a means of raising revenue for the government.
Death-Rate—The number of people in a population who die per thousand per year. The difference between this rate and the birth rate is used to calculate the rate of growth of the population of a country over time. The death rate tends to decline as a country attains higher levels of economic development.
Decentralisaion—In a firm, decentralisation involves delegating authority to make decisions ‘down the line’ to particular divisions and departments.
Deflation—A reduction in the level of national income and output, usually accompanied by a fall in the general price level.
A deflation is often deliberately brought about by the authorities in order to reduce inflation and to improve the Balance of Payments by reducing import demand. Instruments of deflationary policy includes fiscal measures and monetary measures.
Demand—This is also called effective demand. This means the want, need or desire for a product backed by the money to purchase it. In economic analysis, demand is always based on ‘willingness and ability to pay’ for a product, not merely want or need for the product.
Demand Schedule—A table listing various prices of a product and the specific quantities demanded at each of these prices. The information provided by a demand schedule can be used to construct a Demand curve showing the price-quantity demanded relationship is graphical form.
Departmental Store—A large retail outlet. Departmental store may be under single shop ownership, or run as a multiple chain store business. Unlike most other retailers who tend to specialise in relatively narrow ranges of products, the essential characteristic of a departmental store is the great variety of products it store: ‘everything under one roof’.
Deposit Account—This is an individual’s or company’s account at a Commercial Bank into which the customer can deposit cash or cheques and from which he can draw out money subject to giving notice to the bank. Deposit accounts are mainly held as a form of personal and corporate saving and used to finance irregular ‘one-off’ payments. Interest is payble on deposit accounts, normally at rates above those paid on current accounts in order to encourge clinets to deposit money for longer periods of time. Cheques cannot generally be drawn against deposit accounts.
Depression—A phase of the business cycle characterised by a servere decline in the level of economic activity. Real output and investment are at very low levels and there is a very high rate of unemployment. A depression is caused mainly by a fall in aggregate demand, and can be reversed provided that the authorities evoke expansionary fiscal policy and monetary policy.
Derived Demand—The demand for a particular factor input or product that is dependent on there being a demand for some other product. For example, the demand for labour to produce motor cars is dependent on their being a demand for motor cars in the first place; the demand for the tea cups is dependent on their being a demand for tea.
Developed Country—An econo-mically advanced country whose economy is characterised by a large industrial and service sectors and high levels of income per head.
Developing Country—A country in which the level of gross domesic product and income per head is presently inadequate to generate the savings necessary to embark upon substantial agricultural and industrial investment programmes. Such countries are typically characterised by a large primary sector in which the majority of the population exists at or near subsistence levels, producing barely enough for their immediate needs and thus being unable to release the amounts required to support a large urbanised industrial population.
Development Economics—That branch of economics that seeks to explain the processes by which a developing country increases in productive capacity, both agricultural and industrial, in order to achieve sustained economic growth.
Direct Labour—That part of the labour force in a firm which is directly concerned with the manufacture of a good or the provision of a service.
Direct Tax—A tax leived by the government of the income and wealth received by households and businesses in order to raise revenue and as an instrument of fiscal polilcy. Examples of direct tax are income tax, corporation tax and wealth tax.
Disequilibrium—A situation where a state of equilibrium has not been attained, or having been attained, ceases to be maintained. If there is a natural tendency towards equilibrium the system is said to be stable. If the reverse is true, the system is said to be unstable.
Disgused Unemployment—A form of unemployment in which people able and willing to work to not register as unemployed and seeking work, which results in their absence from the official unemployment figures.
Disposable Income—The amount of current income available to households after payment of personal income taxes and national insurance contributions. Disposable income may be reduced further where households enter into longterm contractual payments such as pension contributions and mortgage payments. Disposable income is an important determinant of the level of consumption expenditure and saving in the economy.
Distribution—The process of storing and moving products to customers, often through intermediaries such as wholesalers and retailers.
Distribution Channel—The route used to distribute a good from the producer to the ultimate consumer of that good. Generaly a distribution channel is used to be as follows:
Manufacturing (M)—Wholesaling (W)—Retailing (R)—Buyers.
Disutility—The dissatisfaction or pain them an individual encounters in consuming a product or in working.
Distribution Costs—The cost involved in the physical distribution of products. They include packaging and transport costs, warehousing and stockholding costs.
Dividend—A payment made by a joint-stock company to its shareholders for providing share capital. Dividends are a distribution of the profits of company.
Earnings—The return accruing to factors of production, such as wages, salaries, fees and commissions, profitss, Rents dividends and interest payments.
Economic Aid—The provision of financial and physical forms of assistance to the developing countries as a means of strengthening their economies.
Economic Growth—The growth of the real output of an economy over time. Economic growth is usually measured in terms of an increase in real Gross National Product (GNP) of Gross Domestic Product (GDP) over time or an increase in income per head over time.
Economy—Economy means a country defined in terms of the total and composition of its economic activities.
Elasticity of Demand—This is a measure of the degree of responsiveness of quantity demanded of a particular product to a given change in one of the independent variables which affect demand for that product. The responsiveness of demand to a change in price is referred to as price-elasticity of demand; the responsiveness of demand to a change in income is known as income elasticity of demand; and the responsiveness in the prices of other related products is called cross-elasticity of demand.
Elasticity of Supply—The degree of responsiveness of quantity supplied of a particular product to changes in the products price.
Embargo—The prohibition of the imports and exports of particular types of product or a complete ban on trade with a particular country as an adjunct to the political policies pursued by the government.
Employee—A person who is hired by another person or firm to provide labour services as a factor input in the production of a good or service.
Employer—A person or firm which hires labour as a factor input in the production of a good or service.
Employment—The use of labour as a factor input in the production of a good or service.
Entrepreneur—An individual who assembles and organizes factors of production to undertake a venture with a view to profit. The individual may supply one or more of the three factors of production himself, or may hire or buy any of all factors in the expectation of future profits. The entrepreneurial function is called a fourth factor of production.
Equlibrium—A state of balance with no tendency to change.
Equilibrium Market Price—The price at which the quantity demanded of a good is exactly equal to the quantity supplied. The demand curve depicts the quantity that consumers are prepared to buy at particular price; the supply cureve depicts the quantity that producers are prepared to sell at particular prices.
Excess Capacity—Asitutation where a firm of industry has more plant to supply a product than is currently being demanded. As a result a proportion of the firm or industry’s capacity is left idle. Excess capacity can result from a temporary downtum in demand, or from the indsutry having overinvested in new plant relative to long-run demand potential.
Excess Supply—A situation in which the quantity supplied of a product exceeds the quantity demanded of the product at the existing market price.
Exchange—The act of buying and selling goods and services either in the form of Barter or through a market.
Exchange Rate—The price of one currency expressed in terms of some other currency.
Expectations—Anticipations of future events which influence present economic behaviour. A major unresolved problem in economics is how to deal with the uncertainty the future holds, esspecially when each individual has a different subjective perception of that future.
Explicit Cost—A payment made by a firm for the use of factor inputs not owned by the firm. Explict costs involve the firm in purchasing inputs from outside factor markets.
Factor—A factor input which is used in production.
Factor cost—The value of goods and services produced measured in terms of the cost of the factor inputs used to produce them.
Factor input—Factors of production which are combined to produce output of goods and services.
Factor Market—A market in which factors of production are bought and sold, and in which the prices of labour and other factor inputs are determined by the interplay of demand and supply forces.
Fees—The payments to professional persons such as lawyers and accountants for performing services on behalf of clinets.
Final Products—Goods and services which are consumed by end-users, as opposed to intermediate products which are used a factor inputs in producing other goods and services. Thus purchases of bread count as part of final demand but not the flour used to make this bread.
Financial Institution—An institution that acts primarily as a financial intermediary in channelising funds from lenders to borrowers or from savers to investors.
Fiscal Policy—An instrument of demand management which seeks to influence the level of economic activity in an economy through the control of taxation and government expenditure.
Fixed Cost—Any costs that, in the short run, do not vary with the level of output of the product. They include such items as rent and depreciation of fixed assests, whose total costs remains unchanged regardless or changes in the level of activity.
Forecasting—The process of making predictions about future general economic and market conditions as a basis for decision-making by government and business.
Foreign Investment—Investment by domestic residents in the aquisition of overseas financial securities and physical assests.
Foreign Sector—That part of the economy concerned with transactions with overseas countries.
Franchise—The assignment by one firm to another firm (exclusive franchise) or other (non exclusive frachise) of the rights to supply its product. A franchise is a contractual arrangement which is entered into for a specified period of time, with the franchisee paying a royalty to the franchisor for the rights assigned.
Free Goods—Goods such as air and water which are abundant and thus not regarded as scarce economic goods. Such goods are demanded or consumed in large quantities because their supply price is zero.
Freehold Property—A property which is legally owned outright by a person or firm.
Free Trade—The international trade that takes place without bariers such as tariffs, quotas and foreign exchange controls, being placed on the free movements of goods and services between countries. The aim of free trade is to secure the benefits of international specialisation.
Frictional Unemployment—This menas the unemployment associated with people changing jobs. In some cases people who leave one job may start another job the next day. In other cases, people may be temporarily unemployed between jobs while they explore possible job opportunities. The latter case constitutes ‘frictional’ unemployment in-so-far as labour markets do not operate immediately in matching the supply of and demand for labour.
Full Employment—The full utilisation of all available labour resources that the economy is able to produce at the limits of its potential gross national product. Full employment is one of the main objectives of Macro economic policy.
Funding—The process by which a government or company converts its short-term, fixed-interest debts into long-term, fixed-interest debts. This invloves persuading holders of securities by offering a more attractive rate.
Giffen Good—A good for which quantity demanded increases as its price increases, rather than falls. It only applies in the highly exceptional case of a good.
Gold—A monetary assest that is held by the countries as a part of their international reserves and used to finance balance of payments deficits.
Goods or Commodities—Any tangible economic products that contribute directly or indirectly to the satisfaction of human wants.
Goodwill—The difference at a particular point of time between the market valuation of a firm and the sum of its (net) assests recorded in a Balance Sheet. If another firm wishes to acquire this firm, goodwill represents the premium which the buyer must be preapred to pay for the firm, over and above its assest value because of its reputation.
Government—The primary decision-making body in a nation state which is responsible for national defence, mainting law and order etc.
Graph—Graph is means of portraying data in pictorial form that shows the relationship between an independent variable and a dependent variable by labelling and scaling the two axis of the graph torepresent the two variables, plotting joint values of the two in the space between the axis, and joining these values with a line.
Green Product—A product which is designed and manufactured in such a manners to minimise the adverse environmental impact involved in its prodcution, consumption and distribution.
Grey-market—An ‘unofficial’ market in newly issued shares prior to their being formally listed and traded on the stock exchange.
Gross Domestic-Fixed-Capital Formation—The total spending on fixed investment in an economy over a period of one year. Gross domestic fixed capital formation is one of the component of Gross National Product.
Gross Domestic Product—The total money value of all final goods and services produced in an economy over a period of one year.
Gross National Product—The total money value of all final goods and services produced in an economy over a period of one year (GDP) plus net income from abroad.
Gross Profit—The difference between sales revenue and the cost of goods sold. Gros profit less the operating expenses of the business equals net profit.
Hidden Price Reduction—An increase in the amount or quality of a product offered at an unchanged price, e.g. a increase in the weight of crisps per packet sold at the same price as before.
Hidden Price Rise—A reduction in the quality or amount of a product offered at an unchanged price, e.g. a reduction in the wieght of a bar of chocolate sold at the same price as before.
Hidden Unemployment—A situation in which although people are technically in employment, their productivity is negligible or zero.
Hierarchy—The organisation of economic activities within the firm.
Hire—The use by an individual or business of an assest which is leased to them by the owner of the assest in return for a financial payment. Hiring provides a means for consumers or firms to make use of assests without having to make large cash payments to purchase them.
Historic Cost—The original cost of purchasing an assest. For accountancy purposes, the assest is entered into the Balance Sheet of the firm at historic cost.
Hoarding—The non productive retention of money or products. A certain amount of money is kept in currency form to finance day to day tranactions but this is turned over on a regular basis. Hoarding involves a deliberate abstention from current spending and investing, and may occur because of an increase in liquidity preference. Hoarding often occurs in less-developed countries where people are unfamiliar with using the banking system as a saving repository.
Homogeneous Product—Any indentical goods offered in a market by competing suppliers. Homogenity results in all suppliers having no ability to charge other than a common rice for their products.
Household—A group of individuals whose economic decision-making is interrelated.
Hyper Inflation—A situation of high and accelerating rates of inflation. Hyper inflation reflects the situation where people begin to lose confidence in the value of money and revert to Barter. Hyper inflation is a rare phenomenon, but when in does occur its causes as much political as economic. At this point there is a serious danger of economic collapse accompanied by growing social order.
Hypothesis—A prediction derived from theoretical analysis that is couched in a form precise enough to be subjected to testing against empirical data. In economics, hypothesis are generated by a process of logical deduction from sets of initial assumptions about the behaviour of consumers, producers etc. and are generally tested by collecting economic data and using statistical techniques to analyse them.
Illegal Activities—Any activities which because they are prohibited by law are excluded from a country’s National Income accounts. Drug smuggling, for example, is illegal and therefore not included as part of legitimate economic activity.
Implicit Cost—This is the opportunity cost to a firm of using resources owned by the firm itself to produce its output. For example, rent of own building will not be needed to given. Thus, implicit costs represent the sacrifice of income that could have been earned by renting out or selling the firm’s resources to others.
Import Duty—It is a tax levied by the government on the imported goods. Import duties are used to raise revenue for the government and as a means of protectig domestic industries from foreign competition.
Import substitution—A strategy aimed at reducing imports in order to ecourage the production of domestic substitutes. Import substitution is pursued in particular by developing countries as a means of promoting domestic industrialization.
Income—Money received by individuals and firms in the form of wages, salaries, rent, interest, profit, etc, together with unemployment benefit, old age pensions etc.
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