Definition of 'Asset Turnover Ratio'

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.

Definition of 'Balance of Payment'

Definition: According to the RBI, balance of payment is a statistical statement that
shows

1. The transaction in goods, services and income between an economy and the rest
of the world,

2. Changes of ownership and other changes in that economy’s monetary gold,

special drawing rights (SDRs), and financial claims on and liabilities to the rest of
the world, and

3. Unrequited transfers

Definition of 'Bank Rate'

Definition: Bank rate is the rate charged by the central bank for lending funds to
commercial banks.

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 '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 of 'Broad Money to Reserve Money'

Definition: It is a measure of money multiplier. Money multiplier shows the

mechanism by which reserve money creates money supply in the economy. It is
again dependent on two variables, namely currency deposit ratio and reserve
deposit ratio.

Definition of 'Call Money Rate'

Definition: Call money rate is the rate at which short term funds are borrowed and
lent in the money market.

Definition of 'Capacity Cost'

Definition: An expenditure or cost incurred by a company in order to expand its

business operations. In other words, these are expenses incurred by an organization
to increase its capacity to conduct business operations.

Definition of 'Capital Account'

Definition: Capital account can be regarded as one of the primary components of

the balance of payments of a nation. It gives a summary of the capital expenditure
and income for a country.

Definition of 'Consumer Price Index'

Definition: A comprehensive measure used for estimation of price changes in a

basket of goods and services representative of consumption expenditure in an
economy is called consumer price index.

Definition of 'Contractionary Policy'

Definition: A contractionary policy is a kind of policy which lays emphasis on

reduction in the level of money supply for a lesser spending and investment
thereafter so as to slow down an economy.

Definition of 'Core Inflation'

Definition: An inflation measure which excludes transitory or temporary price
volatility as in the case of some commodities such as food items, energy products
etc. It reflects the inflation trend in an economy.

Definition of 'Countervailing Duties'

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 of 'Human Development Index'

Definition: The Human Development Index (HDI) is a statistical tool used to

measure a country's overall achievement in its social and economic dimensions.
The social and economic dimensions of a country are based on the health of
people, their level of education attainment and their standard of living.

Definition of 'Labour Market'

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 'Law Of Demand'

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: Macroeconomics is the branch of economics that studies the behavior

and performance of an economy as a whole. It focuses on the aggregate changes in
the economy such as unemployment, growth rate, gross domestic product and
inflation.

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: Poverty trap is a spiraling mechanism which forces people to remain

poor. It is so binding in itself that it doesn't allow the poor people to escape it.
Poverty trap generally happens in developing and under-developing countries, and
is caused by a lack of capital and credit to people.

Definition of 'Price Ceiling'

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: The transfer of ownership, property or business from the government

to the private sector is termed privatization. The government ceases to be the
owner of the entity or business.

Definition of 'Property Tax'

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 of 'Public Distribution System'

Definition: Public distribution system is a government-sponsored chain of shops

entrusted with the work of distributing basic food and non-food commodities to the
needy sections of the society at very cheap prices.
Definition of 'Purchasing Power Parity'

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 of 'Real Economic Growth Rate'

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: Recession is a slowdown or a massive contraction in economic

activities. A significant fall in spending generally leads to a recession.

Definition of 'Regressive Tax'

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 'Repo Rate'

Definition: Repo rate is the rate at which the central bank of a country (Reserve
Bank of India in case of India) lends money to commercial banks in the event of
any shortfall of funds. Repo rate is used by monetary authorities to control
inflation.
Definition of 'Service Tax'

Definition: Service tax is a tax levied by the government on service providers on

certain service transactions, but is actually borne by the customers. It is categorized
under Indirect Tax and came into existence under the Finance Act, 1994.

Definition of 'Sovereign Risk'

Definition: A nation is a sovereign entity. Any risk arising on chances of a

government failing to make debt repayments or not honouring a loan agreement is
a sovereign risk.

Definition of 'Speculation'

Definition: Speculation involves trading a financial instrument involving high risk,

in expectation of significant returns. The motive is to take maximum advantage
from fluctuations in the market.

Definition of 'Union Budget'

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 'Broad Money To Reserve Money'

Definition: It is a measure of money multiplier. Money multiplier shows the

mechanism by which reserve money creates money supply in the economy. It is
again dependent on two variables, namely currency deposit ratio and reserve
deposit ratio.
Definition of 'Capital Account'

Definition: Capital account can be regarded as one of the primary components of

the balance of payments of a nation. It gives a summary of the capital expenditure
and income for a country.

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 'Clearing Price'

Definition: Clearing price is that price of a commodity or a security at which the

market clears a commodity or a security. Quantity supplied is equal to quantity
demanded and buyers and sellers conduct the trade.

Definition of 'Contagion'

Definition: In economics and finance, a contagion can be explained as a situation

where a shock in a particular economy or region spreads out and affects others by
way of, say, price movements.
Definition of 'Cost Benefit Analysis'

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 of 'Credit Default Swaps'

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 of 'Currency Deposit Ratio'

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 of 'Dividend Signaling'

Definition: This is a theory which asserts that announcement of increased dividend
payments by a company gives strong signals about the bright future prospects of
the company.
Definition of 'Ease Of Doing Business'

Definition: Ease of doing business is an index published by the World Bank. It is

an aggregate figure that includes different parameters which define the ease of
doing business in a country.
Definition of 'Exchange Rate'

Definition: Exchange rate is the price of one currency in terms of another

currency.
Definition of 'Gross Domestic Saving'

Definition: Gross Domestic Saving is GDP minus final consumption expenditure.

It is expressed as a percentage of GDP.
Definition of 'Imperfect Competition'

Definition: Imperfect competition is a competitive market situation where there

are many sellers, but they are selling heterogeneous (dissimilar) goods as opposed
to the perfect competitive market scenario. As the name suggests, competitive
markets that are imperfect in nature
Definition of 'Infrastructure Investment Trusts'

Definition: An Infrastructure Investment Trust (InvITs) is like a mutual fund,

which enables direct investment of small amounts of money from possible
individual/institutional investors in infrastructure to earn a small portion of the
income as return. InvITs work like mutual funds or real estate investment trusts
(REITs) in features. InvITs can be treated as the modified version of REITs
designed to suit the specific circumstances of the infrastructure sector.
Definition of 'Labour Market'

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: Liquidity trap is a situation when expansionary monetary policy

(increase in money supply) does not increase the interest rate, income and hence
does not stimulate economic growth.
Definition of 'Market Capitalization'

Definition: Market capitalization is the aggregate valuation of the company based

on its current share price and the total number of outstanding stocks. It is
calculated by multiplying the current market price of the company's share with the
total outstanding shares of the company.

Definition of 'Monopoly'

Definition: A market structure characterized by a single seller, selling a unique

product in the market. In a monopoly market, the seller faces no competition, as he
is the sole seller of goods with no close substitute.

Definition of 'Net Interest Income (nii)'

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 of 'Non Performing Assets'

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'

Definition: Pareto's efficiency is defined as the economic situation when the

circumstances of one individual cannot be made better without making the
situation worse for another individual. Pareto's efficiency takes place when the
resources are most optimally used. Pareto's efficiency was theorized by the Italian
economist and engineer Vilfredo Pareto.

Definition of 'Perfect Competition'

Definition: Perfect competition describes a market structure where competition is
at its greatest possible level. To make it more clear, a market which exhibits the
following characteristics in its structure is said to show perfect competition:

1. Large number of buyers and sellers

2. Homogenous product is produced by every firm

3. Free entry and exit of firms

4. Zero advertising cost

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: Preferences refer to certain characteristics any consumer wants to have

in a good or service to make it preferable to him. This could be the level of
happiness, degree of satisfaction, utility from the product, etc.

Definition of 'Price Mechanism'

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.

Definition of 'Profitability Index'

Definition: Profitability index is a financial tool which tells us whether an

investment should be accepted or rejected. It uses the time value concept of money
and is calculated by the following formula.

Definition of 'Public Distribution System'

Definition: Public distribution system is a government-sponsored chain of shops

entrusted with the work of distributing basic food and non-food commodities to the
needy sections of the society at very cheap prices.

Wheat, rice, kerosene, sugar, etc. are a few major commodities distributed by the
public distribution system.

Definition of 'Quantity Demanded'

Definition: Quantity demanded is the quantity of a commodity that people are

willing to buy at a particular price at a particular point of time.

Definition of 'Rational Behaviour'

Definition: This is a part of decision making practice wherein an

individual/company exercises sensible choice making, which provides him with
the optimum amount of benefit.

Definition of 'Real Economic Growth Rate'

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 'Recessionary Gap'

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 'Rent Seeking'

Definition: When a firm uses its resources to procure an unwarranted monetary

gain from external elements, be it directly or indirectly, without giving anything in
return to them or the society, it is termed as rent-seeking.

Definition of 'Residual Claimant'

Definition: According to the residual claimant theory, after all factors of

production/service have received their remuneration, the person/agent supposed to
receive the left/residual amount is known as the residual claimant.

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 of 'Risk Management'

Definition: In the world of finance, risk management refers to the practice of

identifying potential risks in advance, analyzing them and taking precautionary
steps to reduce/curb the risk.
Definition of 'Search Costs'

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: Service tax is a tax levied by the government on service providers on

certain service transactions, but is actually borne by the customers. It is categorized
under Indirect Tax and came into existence under the Finance Act, 1994.
Definition of 'Social Capital'

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: A nation is a sovereign entity. Any risk arising on chances of a

government failing to make debt repayments or not honouring a loan agreement is
a sovereign risk.
Definition of 'Speculative Motive'

Definition: It is a tactic used by investors/ traders to hold cash so as to make the

best use of any investment opportunity that arises later on.
Definition of 'Stimulus Package'

Definition: Stimulus package is a package of tax rebates and incentives used by

the governments of various countries to stimulate economy and save their country
from a financial crisis.
Definition of 'True Cost Economics'

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: Unemployment trap is a situation when unemployment benefits

discourage the unemployed to go to work. People find the opportunity cost of
going to work too high when one can simply enjoy the benefits by doing nothing.

Definition of 'Venture Capital'

Definition: Start up companies with a potential to grow need a certain amount of
investment. Wealthy investors like to invest their capital in such businesses with a
long-term growth perspective. This capital is known as venture capital and the
investors are called venture capitalists.

Definition of 'Windfall Gains'

Definition: Windfall gain (or windfall profit) is an unexpected gain in income

which could be due to winning a lottery, unforeseen inheritance or shortage of
supply. Windfall gains are transitory in nature.
Definition of 'Union Budget'

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 'Tulip Mania'

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 of 'Tender Period'

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 of 'Spot Price'

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 of 'Special Drawing Rights'

Definition: This is a kind of reserve of foreign exchange assets comprising leading

currencies globally and created by the International Monetary Fund in the year
1969.
Definition of 'Soft Currency'

Definition: Soft currency is a currency which is hyper sensitive and fluctuates

frequently. Such currencies react very sharply to the political or the economic
situation of a country.
Definition of 'Shareholder Value'

Definition: Shareholder value is the value enjoyed by a shareholder by possessing

shares of a company. It is the value delivered by the company to the shareholder.
Definition of 'Seigniorage'

Definition: Seigniorage is the difference between the value of currency/money and

the cost of producing it. It is essentially the profit earned by the government by
printing currency.
Definition of 'Seasonal Adjustment'

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: This can be referred to as a phenomenon/strategy that strives for

satisfactory decision making. It is aimed at taking decisions that are okay enough
to tackle a situation, but not the best possible decisions.
Definition of 'Risk Averse'

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 of 'Revealed Preferences'

Definition: This is a theory of economics laid down by Paul Samuelson which

aims at revealing the preference of consumers by monitoring their purchasing
habits.

Definition of 'Regressive Tax'

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 'Real Gdp At Factor Cost'

Definition: Real GDP is the nominal GDP after adjusting for any price changes
attributable to either inflation or deflation.
Definition of 'Rationing'

Definition: Rationing refers to an artificial control on the distribution of scarce

resources, food items, industrial production, etc. In banking, credit rationing is a
situation when banks limit the supply of loans to consumers. In economics,
rationing refers to an artificial control of the supply and demand of commodities.

Definition of 'Quantity Supplied'

Definition: Quantity supplied is the quantity of a commodity that producers are

willing to sell at a particular price at a particular point of time.

Definition of 'Production Gap'

Definition: The difference between actual production and estimated production in

industry is known as production gap. It is generally calculated as the percentage
deviation from estimated production. The production gap is a major economic
indicator in GDP analysis.

Definition of 'Principle Agent Problem'

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 of 'Phillips Curve'

Definition: The inverse relationship between unemployment rate and inflation
when graphically charted is called the Phillips curve. William Phillips pioneered
the concept first in his paper "The Relation between Unemployment and the Rate
of Change of Money Wage Rates in the United Kingdom, 1861-1957,' in 1958.
This theory is now proven for all major economies of the world.

Definition of 'Payments Banks'

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 of 'Net National Income'

Definition: Net National Income is Gross National Income or Gross National

Product less depreciation.
Definition of 'Moral Hazard'

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 of 'Mark To Market'

Definition: Mark-to-market refers to the reasonable value of an account that can

vary over a period depending on assets and liabilities. Mark-to-market provides a
realistic estimate of a financial situation. It has been a part of the generally
accepted accounting principles in the United States since 1990 and it is regarded as
gold standards in some areas.
Definition of 'Liquid Asset'
Definition: An asset is said to be liquid if it is easy to sell or convert into cash
without any loss in its value. By definition, bank notes and checking accounts are
the most liquid assets.

Definition of 'Law Of Demand'

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 'Investment Banking'

Definition: Investment banking is a special segment of banking operation that

helps individuals or organisations raise capital and provide financial consultancy
services to them.

Definition of 'Indifference Curve'

Definition: An indifference curve is a graph showing combination of two goods

that give the consumer equal satisfaction and utility. Each point on an indifference
curve indicates that a consumer is indifferent between the two and all points give
him the same utility.

Definition of 'Gross National Product'

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: Domestic institutional investors are those institutional investors which

undertake investment in securities and other financial assets of the country they are
based in.

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 of 'Deadweight Loss'

Definition: It is the loss of economic efficiency in terms of utility for

consumers/producers such that the optimal or allocative efficiency is not achieved.

Definition of 'Cross Elasticity Of Demand'

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 of 'Cost Push Inflation'

Definition: Cost push inflation is inflation caused by an increase in prices of inputs

like labour, raw material, etc. The increased price of the factors of production leads
to a decreased supply of these goods. While the demand remains constant, the
prices of commodities increase causing a rise in the overall price level. This is in
essence cost push inflation.

Definition of 'Contractionary Policy'

Definition: A contractionary policy is a kind of policy which lays emphasis on

reduction in the level of money supply for a lesser spending and investment
thereafter so as to slow down an economy.

Definition of 'Consumer Price Index'

Definition: A comprehensive measure used for estimation of price changes in a
basket of goods and services representative of consumption expenditure in an
economy is called consumer price index.

Definition of 'Catch Up Effect'

Definition: Catch up effect, alternatively called the theory of convergence, states

that poor or developing economies grow faster compared to economies with a
higher per capita income and gradually reach similar high levels of per capita
income. Thus, all economies, over time, may converge in terms of income per
head.

Definition of 'Capital Adequacy Ratio'

Definition: Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in

relation to its risk weighted assets and current liabilities. It is decided by central
banks and bank regulators to prevent commercial banks from taking excess
leverage and becoming insolvent in the process.

Definition of 'Call Money Rate'

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'

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.