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Economic Terms

Ad Valorem Tax: (in Latin: to the value added) – a tax based on the value (or assessed value) of property.
Aggregate supply is the total value of the goods and services produced in a country, plus the value of imported goods less the value of exports.
Asset: Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

Balance of trade: The difference in value over a period of time between a country’s imports and exports.
Barter System: It is a system where there is exchange of goods without involving money.
Base year: In the construction of an index, the year from which the weights assigned to the different components of the index is drawn. It is conventional to set the value of an index in its base year equal to 100.
Bear: An investor with a pessimistic market outlook; an investor who expects prices to fall and sells it in order to buy later at a lower price
Bid price: The highest price an investor is willing to pay for a stock.
Bill of exchange: A written, dated, and signed three-party instrument containing an unconditional order by a drawer that directs a drawee to pay a definite sum of money to a payee on demand or at a specified future date. Also known as a draft it is the most commonly used financial instrument in international trade.
Bond: A certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal.
Boom: It is a state of economic prosperity.
Budget: It is a summary of intended expenditures along with proposals for how to meet them. A budget can provide guidelines for managing future investments and expenses.
Budget Deficit is the amount by which government spending exceeds government revenues during a specified period of time usually a year.
Bull: An investor with an optimistic market outlook; an investor who expects prices to rise and so buys now for resale later

Capital account: It is the part of a nation’s balance of payments that includes purchases and sales of assets, such as stocks, bonds, and land. A nation has a capital account surplus when receipts from asset sales exceed payments for the country’s purchases of foreign assets. The sum of the capital and current accounts is the overall balance of payments.
Cartel: An organization of producers seeking to limit or eliminate competition among its members, most often by agreeing to restrict output to keep prices higher than would occur under competitive conditions. Cartels are inherently unstable because of the potential for producers to defect from the agreement and capture larger markets by selling at lower prices.
Census: It is the official gathering of information about the population in a particular area. Government departments use the data collected in planning in such areas as health, education, transport, and housing.
Closed economy: It is an economy in which there are no foreign trade transactions or any other form of economic contacts with the rest of the world.
Customs duty: Duty levied on the imports of certain goods. Includes excise equivalents unlike tariffs customs duties are used mainly as a means to raise revenue for the government rather than protecting domestic producers from foreign competition.

Deflation: a reduction in the level of national income and output, usually accompanied by a fall in the general price level.
Developed country is an economically advanced country whose economy is characterized by a large industrial and service sector and high levels of income per head.
Developing country, less developed country, underdeveloped country or third world country: A country characterized by low levels of GDP and per capita income; typically dominated by agriculture and mineral products and majority of the population lives near subsistence levels.
Depository: The organization responsible to maintain investor’s securities in the electronic form is called the depository. In other words, a depository can therefore be conceived of as a “bank” for securities. In India there are two such organizations viz. NSDL and CDSL.
Dumping occurs when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third country markets, or at less than production cost.
Direct investment: It is foreign capital inflow in the form of investment by foreign-based companies into domestic based companies. Portfolio investment is foreign capital inflow by foreign investors into shares and financial securities. It is the ownership and management of production and/or marketing facilities in a foreign country.

Econometrics: It is the application of statistical and mathematical methods in the field of economics to test and quantify economic theories and the solutions to economic problems.
Economic development: It is the process of improving the quality of human life through increasing per capita income, reducing poverty, and enhancing individual economic opportunities. It is also sometimes defined to include better education, improved health and nutrition, conservation of natural resources, a cleaner environment, and a richer cultural life.
Economic growth: It is an increase in the nation’s capacity to produce goods and services.
Exchange rate: The price of one currency stated in terms of another currency.
Exchange control – A governmental policy designed to restrict the outflow of domestic currency and prevent a worsened balance of payments position by controlling the amount of foreign exchange that can be obtained or held by domestic citizens. Often results from overvalued exchange rates.