Economics jargons
Ad Valorem It means ‘According to
value’.
Ad Valorem Tax It is a duty imposed
on commodities in proportion to their
value, i.e. a duty expressed as a
percentage and not a flat amount. It is
commonly used in respect of import
tariffs.
Anti-inflation Description of a policy
adopted by the government with the
intention of preventing or reducing
inflation
Appropriation-in-Aid It means an
item in the estimates of a Government
Department which records any
revenue received from the sale of
goods and services to the public; the
effect of such an item is to reduce the
amount of money required from the
Exchequer during the coming
financial year.
Bank Rate It is the interest rate that is
charged by a country’s Central Bank
on loans and advances to control
money supply in the economy and
Banking sector. This is typically done
on a quarterly basis to control
inflation and stabilize the country’s
exchange rates.A fluctuation in bank
rates triggers a ripple-effect as it
impacts every sphere of a country’s
economy.
Bills of Exchange It is a non-interestbearing
written order used primarily
in international trade that binds one
party to pay a fixed sum of money to
another party at a predetermined
future date. Bills of exchange are
similar to checks and promissory
notes. They can be drawn by
individuals or banks and are generally
transferable by endorsements. The
difference between a promissory note
and a bill of exchange is that it is
transferable and can bind one party to
pay a third party that was not involved
in its creation.
Backwardation A downward sloping
forward curve (as in an inverted yield
curve). A backwardation starts when
the difference between the forward
price and the spot price is less than the
cost of carry, or when there can be no delivery arbitrage because the asset is
not currently available for purchase.
Balance of Indebtedness It is a
balance sheet that shows, as of a
particular date, all the claims for
payment held by the residents of one
country against foreigners, and all
claims held by foreigners against
residents.
Balance Of Payments An accounting
record of all monetary transactions
between a country and the rest of the
world.These transactions include
payments for the country's exports
and imports of goods, services, and
financial capital, as well as financial
transfers.
Balance of Trade It means the
relationship between the values of a
country’s imports and its exports, i.e.
the ‘visible’ balance. These items
form only part of the balance
payments which is also influenced by
(a) ‘invisible’ items and (b)
movements of capital.
Balance Ticket It is a deposit receipt
given to the transferor for the number
of shares not transferred and to be
exchanged for new certificate in due
course.
Barriers to Entry (or Exit)
Obstacles in the path of a firm that
make it difficult to enter a given
market.Barriers to entry protect
incumbent firms from competition
from newcomers.
Balanced Budget A balanced budget
is when there is neither a budget
deficit or a budget surplus – when revenues equal expenditure ("the
accounts balance") – particularly by a
government. More generally, it refers
to when there is no deficit, but
possibly a surplus.
Barter Barter is a method of
exchange by which goods or services
are directly exchanged for other
goods or services without using a
medium of exchange, such as money.
CRR It is a Central Bank regulation
that sets the minimum reserves each
bank must hold to customer deposits
and notes. It would normally be in the
form of currency stored in a bank
vault or with the Central Bank.CRR is
used as a tool in the monetary policy,
influencing the country's economy,
borrowing, and interest rates.
Certificate of Deposit (CD) A
certificate of deposit is a promissory
note issued by a bank. It is a time
deposit that restricts holders from
withdrawing funds on demand.
Although it is still possible to
withdraw the money, this action will
often incur a penalty. It is a savings
certificate entitling the bearer to
receive interest. It bears a maturity
date, a specified fixed interest rate and
can be issued in any denomination.
CDs are generally issued by
commercial banks. The term of a CD
generally ranges from one month to
five years.
Commercial Papers In the global
money market, commercial paper is a
unsecured promissory note with a
fixed maturity of 1 to 270 days.
Commercial Paper is a money-market
security issued by large banks and
corporations to meet short term debt
obligations and is only backed by an
issuing bank or corporation's promise
to pay the face amount on the maturity
date specified on the note. Only firms
with excellent credit ratings from a
recognized rating agency will be able
to sell their commercial paper at a
reasonable price. Commercial paper is
usually sold at a discount from face
value, and carries higher interest
repayment dates than bonds.