Terminology : Economic, Commercial and Trade Terms
Ante date—To give a date prior to that on which it is written, to any bill, cheque or any other document.
Appreciation of money—It is a rise in the price of money due to fall in the general price level.
Articles of Association—These are the rules and regulations elaborating the scope and method of conducting the business of a limited company.
Balance of trade—The balance between the imports and exports of a country is called balance of trade. If the imports are greater, the balance of trade is unfavourable; if the exports exceed the imports, the balance of trade is favourable.
Balance Sheet—It is statement of debits and credits maintained under broad heads by businessmen to find out the position of profit and loss at the end of a year.
Bank notes—Bank notes are promissory notes of a bank payable to the bearer on demand.
Bank rate—The rate at which the Central Bank will discount first class bills of exchange.
Bilateralism—It denotes a system of special trade and payments arrangement between two countries.
Bimetalism—A monetary system in which gold and silver are used, and coined at a fixed rate. Bimetalism was prevalent in the western countries until the first quarter of 19th century.
Budget—Is a statement of estimated income and expenditure of a state, company or corporation generally for the ensuing year.
Buyer’s Market—A market in which the supply of goods exceeds the demand, so the buyers play an active role in the determination of price and drive hard bargains.
Complementary Goods—Two goods X and Y are complementary goods if a change in the demand for one following a change in price affects similarly the demand for the other.
Co-operative Farming—A system of farming in which the farmers pool their land together and divide the produce among themselves in proportion to their land in the pool. They do not lose their proprietary rights in the land and they can withdraw their land from the pool whenever they wish after giving due notice.
Collective Farming—Practised mostly in communist countries. It differs from co-operative farming in so far as in it the farmers lose their proprietary rights and the land belongs to the state.
Death Duty—A kind of tax imposed on the property inherited at the death of its previous owner. It is also known as Estate Duty and it has been levied in India since 1953.
Deficit Financing—It is device to cover up the deficit money in budget by printing currency notes. In deficit financing there is a danger of money in circulation going up and leading to price rise. Adequate controls are necessary to be adopted to prevent its harmful effects. It proves useful in order to accelerate economic activity.
Devaluation—It is deliberate reduction in the value of the home currency in terms of foreign currency. It is resorted to in order to increase exports and reduce imports.
Economic Planning—It refers to a system wherein the economic resources of the country are exploited in a systematic and planned way in order to raise the standard of living of the people and reduce disparities.
Fiduciary Issue—Is the putting into circulation of paper money which has not been covered by any reserve of bullion.
Floating Debt—A short term debt by nature is a floating debt. That part of a national debt which is not a long-term debt is called a floating debt. It is the opposite of Funded debt which is for a long term.
Free Trade—A system of international trade wherein there are no restrictions or tariffs on imports and exports among different countries. Imports and exports are allowed duty free.
Gold Standard—It is a system of currency based on the free coinage of gold. It pre-supposes that the state will sell and buy gold at fixed price in terms of the local currency.
Hard Currency—It is the currency of a country in relation to which we have adverse balance of payments.
Hot Money—A new term used to describe money or currency which everybody is anxious to drop for fear of a fall in its exchange rate.
Index Number—A statistical method of indication variations in the price of essential commodites over a definite period of time.
Inflation—It is an increase in the quantity of money in circulation as a result of which the general price level goes up.
Laissez Faire—It is another name for individualistic theory where free initiative is allowed to private business and enterprise without intervention by the state.
Limited Company—It is one in which the responsibility of the shareholders is limited in proportion to the value of their shares in it.
Limited Liability—Liability of the shareholders of a company is limited to the extent of the value of their shares in it.
Mixed Economy—A system of planning wherein both public and private enterprise are afforded adequate opportunities of growth in their respective spheres. India is an example of such type of economy.
Operation Flood—The term refers to several measures taken by the Government to increase the supply of milk.
Preference Shares—Shares entitled to a fixed dividend before any distribution of profits can be made amongst the holders of ordinary shares.
Public Sector—A term generally applied to state enterprises or undertaking.
Recession—A state of affairs characterized by a slump in trade and industry leading to accumulation of unsold stocks owing to a fall in consumer demand is called a recession.
Rolling Plan, The—It is a term coined in the regime of Janata Party economists to introduce new type of planning strategy which will replace the Five Year and Annual Plans so far undertaken in India. Under the Rolling Plan the Planning Commission will revise the outlays and physical targets before a crisis. Under it there would be a full-fledged 5-Year Plan as in the past, but with the condition that every year a projection would be made for one extra year.
The newly constituted Planning Commission, decided to give up the concept of the rolling plan on April 21, 1980.
Sinking Fund—It is fund created by setting apart a portion of the revenues of a government with a view to paying off foreign loans.
State Trading—When the state undertakes the purchase and sale of certain commodities with a view to controlling their market price.
Sterling—It is the paper currency of England i.e., one pound currency note is called sterling.
Sterling Balances—It is a debt which Britain owed to many countries which participated in the World War II on Britain’s side. This debt had accumulated on account of the purchase made by Great Britain.
Turnover Tax—It is a tax levied every time a good finished or unfinished changes hands. It is thus cumulative sales tax.
Venture Capital—Also known as Risk Capital, it is the money supplied by stock holders.
Zero Net Aid—Refers to a stage where a country becomes self reliant so that it does not need any foreign aid.
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