economic & business glossary

8/13/2019 Economic & Business Glossary

1/15

1

Absolute MonopolyAbsolute MonopolyAbsolute MonopolyAbsolute MonopolyAbsolute Monopoly

Means the control of the entire output of a

commodity or service, for which there exists no

substitute, by a single producer or supplier. This

kind of situation rarely arises in real life. It is also

known as pure monopoly or perfect monopoly.

AdministerAdministerAdministerAdministerAdministered Pricesed Pricesed Pricesed Pricesed Prices

A price set not by the force of demand and supply

but by some authority like the government or a

regulatory authority.

Ad VAd VAd VAd VAd Valoraloraloraloralorem Tem Tem Tem Tem Taxaxaxaxax

A duty, which is imposed on commodities in

proportion to their value i.e., a duty, which is

expressed as a percentage and not a flat amount.

ApprApprApprApprAppreciationeciationeciationeciationeciation

An increase in the value:

(1) of stocks and shares when their prices rise

on the stock exchange;

(2) of a currency when its value increases in

terms of other currencies;

(3) of stocks held by manufacturers and

merchants during a period of rising prices.

ArbritragArbritragArbritragArbritragArbritrageeeee

It is a speculative activity. It seeks to make profit

out of differences in prices of a security in two

markets. If the price of a certain share is higher

in one market than in another, the speculator will

purchase them in the cheaper market and sell in

the dearer market.

Economic & Business GlossaryBackwBackwBackwBackwBackward Integard Integard Integard Integard IntegrationrationrationrationrationThe expansion of a business which takes the form

of acquiring control over firms supplying it with

its raw materials.

BackwBackwBackwBackwBackward Linkagard Linkagard Linkagard Linkagard Linkageeeee

Refers to the relationship between an industry or

firm and the suppliers of its inputs. A change in

the output of the industry will get transmitted

backwards to the suppliers of its inputs by

changing the demand for inputs.

Balanced BudgBalanced BudgBalanced BudgBalanced BudgBalanced Budgetetetetet

A budget is said to be a balanced budget when

current income equals to current expenditure.

Balance of PaymentsBalance of PaymentsBalance of PaymentsBalance of PaymentsBalance of Payments

Refers to the relation between the payments of

all kinds made from one country to the rest of the

world and its receipts from all other countries.

Balance of TBalance of TBalance of TBalance of TBalance of Traderaderaderaderade

Refers to the relationship between the values of a

countrys imports and exports, i.e., the visible

balance. These items only form a part of the balance

of payments, which also get influenced by

(1) invisible items and

(2) movement of capital.

BarterBarterBarterBarterBarter

Refers to the method of exchanging goods and

services directly for other goods and services

without employing a separate unit of account or

medium of exchange.


2/15

2

ECONOMIC& BUSINESSGLOSSARY

BearBearBearBearBear

A bear is a speculator who sells securities in

anticipation of a fall in prices of securities.

Black MarketBlack MarketBlack MarketBlack MarketBlack Market

Any illegal market which has been established in

a context where prices have been fixed at

minimum or maximum level, usually by

government. Thus, when maximum prices have

been fixed, trading may occur at prices above the

maximum.

Blue ChipBlue ChipBlue ChipBlue ChipBlue Chip

A consistently growing company both in terms

of profit as well as market share is called a blue-

chip company.

Blue Collar JobsBlue Collar JobsBlue Collar JobsBlue Collar JobsBlue Collar Jobs

Persons who are unskilled and depend upon

manual labour are said to be engaged in blue collar

jobs.

Blue Chip RateBlue Chip RateBlue Chip RateBlue Chip RateBlue Chip Rate

Refers to the lowest interest rate payable by

borrowers having the highest credit rating.

Book VBook VBook VBook VBook Valuealuealuealuealue

In its balance sheet a company may value assets

in the form of asset investments at the prices

shown in its books, namely the prices at which

they were purchased, even though their currentprice on the stock exchange may be higher or

lower.

BoomBoomBoomBoomBoom

Refers to a period of expansion of business

activity. It is opposite of slump or recession. A

boom reaches a peak when the economy has been

working at full capacity.

Brain DrainBrain DrainBrain DrainBrain DrainBrain Drain

Means the migration of educated and skilled

labour from poorer to richer countries.

BrandBrandBrandBrandBrand

A brand is a name, term, sign, symbol, or design,

or a combination of them, intended to identify

the goods or services of one seller or group of

sellers and to differentiate them from those of

competitors.

BrBrBrBrBreak-Eveak-Eveak-Eveak-Eveak-EvenenenenenCarrying on business in which neither profit nor

loss is made.

BrBrBrBrBrokerokerokerokeroker

One who buys and sells bonds and other financial

assets. He is employed by other people on account

of his knowledge of market conditions and

procedures and because of his expert knowledge

of the commodity dealt in. A Broker is usually

paid commission for his services, known as

brokerage.

BrBrBrBrBrokeragokeragokeragokeragokerageeeee

A fixed cost which is charged by the broker for

arranging investments, encashment of bonds and

other financial assets.

BudgBudgBudgBudgBudgetetetetet

A budget is a financial statement showing the

estimates of receipts and expenditure. The budget

is divided into two parts : (a) revenue budget and

(b) capital budget.

BudgBudgBudgBudgBudget Deficitet Deficitet Deficitet Deficitet Deficit

Budget deficit is the difference between total

revenues and total expenditure.


3/15

3

BullBullBullBullBull

A bull is a speculator who purchases securities in

anticipation of a rise in prices of securities.

BullionBullionBullionBullionBullion

Precious metals like gold or silver which have

been held in bulk in the form of ingots or bars.

Business cycleBusiness cycleBusiness cycleBusiness cycleBusiness cycle

Fluctuations in business conditions/economy like

prosperity recession depression and recovery.

Buyers marketBuyers marketBuyers marketBuyers marketBuyers marketA situation favouring buyers where supply

exceeds demand and there is an abundance of

goods and services.

Call OptionCall OptionCall OptionCall OptionCall Option

Refers to a contract giving the option for buying

shares at a future date within a prearranged time

limit.

CapitalCapitalCapitalCapitalCapital

Capital is one of the factors of production and

has been defined as wealth used in the production

of further wealth. For business purposes, capital

generally has to be considered in terms of money.

Capital Employed, Return OnCapital Employed, Return OnCapital Employed, Return OnCapital Employed, Return OnCapital Employed, Return On

The relation of profit to the estimate of average

capital employed to yield a ratio, commonly called

the primary ratio, as follows:

CapitalPrimary ratio =

Profit

Capital GainCapital GainCapital GainCapital GainCapital Gain

Refers to the difference between the purchase

price of an asset and its resale price at some later

date, where that difference has been positive.

Capital GoodsCapital GoodsCapital GoodsCapital GoodsCapital Goods

Goods which are made for the purpose of

producing consumer goods and other capital

goods, e.g. machinery of all kinds. This term is

synonymous with producers goods.

Capital MarketCapital MarketCapital MarketCapital MarketCapital Market

A market comprising institutions which are

involved in the purchase and sale of securities,

e.g., the new issue market and the stock exchange.

Cash MarketCash MarketCash MarketCash MarketCash MarketThe term used for a market for the immediate

delivery of, and payment for, commodity.

Central Excise DutiesCentral Excise DutiesCentral Excise DutiesCentral Excise DutiesCentral Excise Duties

These duties are levied by the Central

Government on commodities, which are produced

within the country. But commodities on which

State Governments impose excise duties (as for

instance, on liquor and drugs) are exempted from

Central Excise Duties.

C.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and Frrrrreight)eight)eight)eight)eight)

Term used of goods shipped where the price

includes shipping and insurance charges. A C.I.F.

quotation implies that the seller must ship the

goods, meeting all charges upto on board and

paying insurance and freight.

Closed EconomyClosed EconomyClosed EconomyClosed EconomyClosed EconomyA concept which is used mainly in theoretical

models to describe an economy having no external

trade, which is completely self-sufficient and

insulated from external processes.

CompanyCompanyCompanyCompanyCompany

A joint stock company is a legal entity set up for

the purpose of conducting commercial or



4/15

4

industrial operations, and with a capital divided

into shares, held by members.

ConglomerateConglomerateConglomerateConglomerateConglomerate

A group of companies making different types of

products. Ex: Tata Group

Consumer DurableConsumer DurableConsumer DurableConsumer DurableConsumer Durable

A commodity of relatively long life, like a

refrigerator or a washing machine, as distinct

from, say foodstuffs.

Consumer GoodsConsumer GoodsConsumer GoodsConsumer GoodsConsumer GoodsProducts in the actual form in which they reach

domestic consumers.

ConsumerConsumerConsumerConsumerConsumers Surpluss Surpluss Surpluss Surpluss SurplusMeans the excess of the price which a person

would be willing to pay rather than go without an

article over that which he/one actually pays; it

may be termed as consumers rent.

ConsumptionConsumptionConsumptionConsumptionConsumptionMeans the act of using goods and services to

satisfy current wants.

ContangContangContangContangContangoooooA stock exchange term meaning carry-over. A broker

who wishes to postpone settlement of a transaction

to the following account may do so on payment of

interest on the sum due. The term Contango is

also used to mean the extra payment itself.

ContrabandContrabandContrabandContrabandContrabandGoods brought into a country illegally without

paying customs duty.

ContractContractContractContractContractAn agreement, oral or written whereby one party

undertakes to do or not to do something for the

other party to the contract.

ConvConvConvConvConvertibilityertibilityertibilityertibilityertibility

Refers to the freedom to exchange any currency

for another currency at the current exchange rate.

Corporation TCorporation TCorporation TCorporation TCorporation Taxaxaxaxax

It is a tax on the companys profit. It is a direct

tax which is calculated on profits after interest

payments and allowance (i.e., capital allowance)

have been deducted but before dividends are

allowed for.

Corporate PaperCorporate PaperCorporate PaperCorporate PaperCorporate PaperNotes which are sold by large corporations in the

money market as a means of getting funds.

CorporationCorporationCorporationCorporationCorporation

The term used for a contemporary form of business

having two distinct characteristics: it is a legal entity

separated from its owners, the stockholders; and it

is usually on a scale much larger for the sole

proprietor or partnership to manage or fund.

CooperationCooperationCooperationCooperationCooperation

Cooperation refers to the collective efforts of

people who associate voluntarily to achieve

specified objective.

CountervCountervCountervCountervCountervailing Dutyailing Dutyailing Dutyailing Dutyailing Duty

A duty imposed on imported goods where there

is evidence of an export subsidy in the country of

origin which may adversely affect the domestic

producers in the importing country.

CumCumCumCumCumulativulativulativulativulative Pre Pre Pre Pre Preferefereferefereference Sharence Sharence Sharence Sharence Shareeeee

A preference share which entitles the holder to

receive not only the current dividend but also any

unpaid arrears, before any dividend has been paid

to ordinary shareholders.



5/15

5

CurrCurrCurrCurrCurrent Assetsent Assetsent Assetsent Assetsent Assets

Items such as cash, accounts receivable,

marketable securities, and inventories assets that

could be turned into cash at a reasonable

predictable value within a relatively short time

period (typically, one year).

CurrCurrCurrCurrCurrent Liabilitiesent Liabilitiesent Liabilitiesent Liabilitiesent Liabilities

Debts, such as accounts payable, short-term loans,

and unpaid taxes, that will have to be paid off

during the current fiscal period.

Customs DutiesCustoms DutiesCustoms DutiesCustoms DutiesCustoms Duties

These are taxes on imports.

DebenturDebenturDebenturDebenturDebentureeeee

It is a long term loan taken by a company

DeficitDeficitDeficitDeficitDeficit

Refers to a situation where outgoings exceed

income on an ongoing basis, or where liabilities

exceed assets at a specific point in time.

DeflationDeflationDeflationDeflationDeflation

Deflation is the reverse case of inflation. Deflation

is that state of falling prices which occurs at that

time when the output of goods and services

increases more rapidly than the volume of money

in the economy. In the deflation the general price

level falls and the value of money rises.

DemandDemandDemandDemandDemandBy demand is meant the quantity of a commodity

that will be bought at a particular price and not

merely the desire for a thing. Generally at a high

price, less will be bought than at a low price.

DemDemDemDemDemurragurragurragurragurrageeeee

A penalty imposed for delay in taking delivery of

goods.

DepositoryDepositoryDepositoryDepositoryDepository

An organization which holds securities and settles

trade by recording change of ownership.

DeprDeprDeprDeprDepressionessionessionessionession

A severe and prolonged recession leads to a

depression. Ex: The 1929 Great Depression in

the USA.

DeprDeprDeprDeprDepreciationeciationeciationeciationeciation

Reduction in the value of good by wear and tear.

DerivDerivDerivDerivDerivativativativativativesesesesesAny form of security such as option contracts

which are derived from ordinary bonds and shares.

Derivative instruments can be bought or sold on

stock exchanges or future exchanges.

It is a generic term for options, futures and swaps.

Most of the business is over the counter and

involving a lot of risk.

DirDirDirDirDirect sellingect sellingect sellingect sellingect sellingSelling directly from the producer/manufacturer

to the end user eliminating middlemen.

DisinflationDisinflationDisinflationDisinflationDisinflation

A mild form of deflation. A policy adopted to

check inflation by restricting demand.

Disposable IncomeDisposable IncomeDisposable IncomeDisposable IncomeDisposable Income

Earnings which remain after paying income and

other taxes and other mandatory payments. It can

be regarded as similar to Take home pay.

DividendDividendDividendDividendDividend

In the case of limited companies, the rate of

dividend is the amount of distributed profit as a

percentage of the nominal value of the share

capital to which it relates. Dividends are usually



6/15

6

declared annually but many companies pay

something on account as an interim dividend.

Dividend WDividend WDividend WDividend WDividend Warrantarrantarrantarrantarrant

A draft issued by a limited company and made

payable to a shareholder for the amount of

dividend due to him for a stated period.

Dock WDock WDock WDock WDock Warrantarrantarrantarrantarrant

A receipt for goods stored in a warehouse; it

entitles the holder to take possession of the goods.

DownsizingDownsizingDownsizingDownsizingDownsizingReducing the number of employees to increase

profits or for survival.

DumpingDumpingDumpingDumpingDumping

Means the sale of a good in a foreign market at a

price below its marginal cost. Selling below cost

price to capture a market.

DuopolyDuopolyDuopolyDuopolyDuopoly

A form of imperfect competition where there are

only two producers of a commodity. Such a

situation can be given to cut-throat competition

of a particularly irrelevant type, and to prevent

both parties being ruined by it, they may agree to

share the market, perhaps on a territorial basis,

each agreeing not to compete against the other in

its share of the market.

DuopsonyDuopsonyDuopsonyDuopsonyDuopsony

Refers to a market situation in which there are

only two buyers of a particular goods/service.

Economic GrEconomic GrEconomic GrEconomic GrEconomic Growthowthowthowthowth

The rate of expansion of the national income or

total value of production of goods and services

of a country.

Economies of ScaleEconomies of ScaleEconomies of ScaleEconomies of ScaleEconomies of Scale

Refers to the reduction in the average cost of a

product in the long run, resulting from an

expanded level of output. They are also known

as long run increasing returns.

ElasticityElasticityElasticityElasticityElasticity

The degree of responsiveness of demand or supply

to a change of price. Elasticity may be defined as a

measure of the percentage change in one variable in

respect of a percentage change in another variable.

Elasticity of DemandElasticity of DemandElasticity of DemandElasticity of DemandElasticity of Demand

Means the response of demand to a change in the

price of commodity. If the price rises, the amount

demanded normally decreases.

Elasticity of SupplyElasticity of SupplyElasticity of SupplyElasticity of SupplyElasticity of Supply

Means the response of supply to a change in the

price of commodity. If the price rises, the quantity

demanded normally increases.

EntrEntrEntrEntrEntrepreprepreprepreneureneureneureneureneur

The term used for the organizing factor in

production. Entrepreneurs are responsible for such

economic decisions as what to produce, how much

to produce and what method of production to adopt.

EntrEntrEntrEntrEntrepotepotepotepotepot

Importing goods for the purpose of exporting. Ex:

Singapore

EquityEquityEquityEquityEquity

Another name for ownership; often used to

describe a share in a company.

ExchangExchangExchangExchangExchangeeeee

Exchange is the act of obtaining a desired product

from someone by offering something in return.



7/15

7

Excise DutiesExcise DutiesExcise DutiesExcise DutiesExcise Duties

Taxes on home produced goods to raise revenue,

as distinct from customs duties which are taxes

on imports not primarily imposed to raise revenue.

Excise duties may be imposed either to raise

revenue or to check the consumption of the

commodities on which they are imposed.

ExportExportExportExportExport

The term used for a goods/service which is

produced in one country and sold to a consumer

in another.

FFFFFace Vace Vace Vace Vace Valuealuealuealuealue

Means the nominal value, as distinct from the

market value, of a security (bond/share). The

value written on a coin or a bank note is also

termed as face value.

FFFFFactors of Practors of Practors of Practors of Practors of Productionoductionoductionoductionoduction

The resources required for production. The four

factors of production are Land, Labour, Capital

and Entrepreneur (Organization). Factors of

production are resources required for production.

FFFFFiduciaryiduciaryiduciaryiduciaryiduciary

A person or a legal body acting on behalf of others

who have a beneficial interest in investment or

other property Ex: the executor of a will.

FFFFFinished Goodsinished Goodsinished Goodsinished Goodsinished Goods

Refers to the goods, which are used for the

purpose of consumption and not utilized as inputs

by the firms in the process of production.

FFFFFiscal Deficitiscal Deficitiscal Deficitiscal Deficitiscal Deficit

This is the gap between the Governments total

spending and the sum of its revenue receipts and

non-debt capital receipts. It represents the total

amount of borrowed funds required by the

Government to completely meet its expenditure.

FFFFFiscal Piscal Piscal Piscal Piscal Policyolicyolicyolicyolicy

Generally refers to the use of taxation and

government expenditure for regulating the

aggregate level of economic activity.

FFFFFixixixixixed Assetsed Assetsed Assetsed Assetsed Assets

Includes the monetary value of the companys

plant, equipment, property, patents, and other

items used on a continuing basis to produce its

goods and services.

FFFFFixixixixixed Costed Costed Costed Costed Cost

Refers to the production costs which tend to be

unaffected by variations in the volume of output.

Floor PriceFloor PriceFloor PriceFloor PriceFloor Price

The minimum price level below which a firm can

no longer realise a profit.

FFFFF.O.B. (F.O.B. (F.O.B. (F.O.B. (F.O.B. (Frrrrree on Board)ee on Board)ee on Board)ee on Board)ee on Board)

Term used of goods shipped where the price does

not include shipping and insurance charges;

opposite to C.I.F. An F.O.B. quotation implies that

the exporter will deliver the goods free on board

a ship in accordance with the contract at the port

named; he pays all expenses up to that point. From

there on, the buyer must take responsibility,

paying for freight, insurance, and all subsequent

expenses

FFFFForworworworworward Marketard Marketard Marketard Marketard Market

A Forward market transaction involves a contract

to buy or sell commodities, or securities at a fixed

future date at a price agreed in a contract.



8/15

8

FFFFForororororeign direign direign direign direign direct invect invect invect invect investment (FDI)estment (FDI)estment (FDI)estment (FDI)estment (FDI)

The investment made to acquire lasting interest

in enterprises operating outside of the economy

of the investor. The FDI relationship consists of

a parent enterprise and a foreign affiliate which

together form a transnational corporation.

FFFFForororororeign Institutional Inveign Institutional Inveign Institutional Inveign Institutional Inveign Institutional Investor (FII)estor (FII)estor (FII)estor (FII)estor (FII)

FII means an entity established or incorporated

outside India which proposes to make investment

in the financial markets in India.

FFFFFranchiseranchiseranchiseranchiseranchise

A type of licensing arrangement in which an

organization sells a package containing a

trademark, equipment, materials, services owned

by another organization.

FFFFFranchisingranchisingranchisingranchisingranchising

In general, franchising may be regarded as a

vertical marketing system in which a manufactureror service organization confers upon an individual

or firm the privilege of a marketing a product or

service.

FFFFFrrrrree Marketee Marketee Marketee Marketee Market

Refers to a market in which there is an absence

of intervention by government and where the

process of demand and supply are permitted to

operate freely.

FuturFuturFuturFuturFutureseseseses

Trading in shares or commodity for delivery at a

later date. A futures contract is for a purchase of

commodities for delivery at a date in the future.

A fixed and binding contract for a standard

amount to be bought at a fixed price at a fixed

future date.

GDPGDPGDPGDPGDP

(Gross Domestic Product) measures the total final

outputs of goods and services produced by the

countrys economy, i.e., within the countrys

territory by residents and non residents.

GoodGoodGoodGoodGood

This term is used of any commodity or service

for which there is a demand, irrespective of

whether it is in any sense good or bad.

GrGrGrGrGrey marketey marketey marketey marketey marketA market in shares which are yet to be issued.

HDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEX

Was developed by UNDP in 1996 and

measures physical quality of life in a country

along 3 key parameters

Life expectancy at birth

No. of years in school

Per capita income

India ranks 134 out of 182 countries in 2009.

HierarHierarHierarHierarHierarchychychychychy

The line of authority in an organization that runs

in order of rank from top management to the

lowest level of the enterprise.

Horizontal IntegHorizontal IntegHorizontal IntegHorizontal IntegHorizontal Integrationrationrationrationration

With reference to the structure of an industry it is

the tendency to specialize in single processes

instead of undertaking the entire production of

the commodity from start to finish.

HypermarketHypermarketHypermarketHypermarketHypermarket

A hypermarket is a multi-brand, multi-department

store under one roof meant to offer cost-effective

shopping for household requirements.



9/15

9

Income TIncome TIncome TIncome TIncome Taxaxaxaxax

Personal income tax is levied on individuals by

the Central Government and the proceeds are

shared between the Centre and the States. The

income tax is progressive; that is, the tax rate is

not uniform but rises progressively with the rise

in money income.

InflationInflationInflationInflationInflation

A situation of a steady and sustained rise in general

prices is usually known as inflation. Inflation is a

state in which the value of money is falling i.e.,

prices are rising.

InfrastructurInfrastructurInfrastructurInfrastructurInfrastructureeeee

Services which are regarded as essential for the

creation of a modern economy; e.g.; power,

transport, housing, education, health services.

Intermediate GoodsIntermediate GoodsIntermediate GoodsIntermediate GoodsIntermediate Goods

The goods which find use at some point in the

production process of other goods, rather than

final consumption.

InvInvInvInvInventoryentoryentoryentoryentory

The raw materials, work in progress and finished

goods in organization maintained to meet its

operational needs. A term used for the quantity

of stock held by a business.

InvInvInvInvInvoiceoiceoiceoiceoiceA document used in business giving a complete

summary of a transaction involving the sale of

goods.

Issued CapitalIssued CapitalIssued CapitalIssued CapitalIssued Capital

The actual amount of capital issued by a company

and allotted in shares to investors. It may be the

same or less than the authorised capital.

JobberJobberJobberJobberJobber

A jobber is an independent dealer in securities. He

purchases and sells securities in his own name. He

is not allowed to deal with non-members directly.

LabourLabourLabourLabourLabour

All human resources which are available to

society for use in the process of production.

Laissez FLaissez FLaissez FLaissez FLaissez Fairairairairaireeeee

Refers to a policy of non-interference by the State

in economic affairs.

Lateral IntegLateral IntegLateral IntegLateral IntegLateral Integrationrationrationrationration

This occurs when a firm branches or absorbs other

businesses engaged in producing commodities

related in same way to its own main products.

LIFO (Last In, FLIFO (Last In, FLIFO (Last In, FLIFO (Last In, FLIFO (Last In, First Out)irst Out)irst Out)irst Out)irst Out)

This is a method of costing adopted by firms which

carry many items of stock of the same kind bought

at different times and at different prices as shown inthe books. Under the more common FIFO system,

it is assumed that whenever an item is sold it was

the first to be purchased, whereas under the LIFO

system it is assumed to have been purchased last.

Limited LiabilityLimited LiabilityLimited LiabilityLimited LiabilityLimited Liability

Means the restriction of an owners loss in a

business to the extent of the capital that he has

invested in it.

Line OrLine OrLine OrLine OrLine Orggggganisationanisationanisationanisationanisation

Line organisation refers to a direct chain of

command from top to bottom. Here, the lines of

direction are straight and vertical. Every superior

has complete command over his subordinates and

every subordinate is directly accountable to only

one superior immediately above him.



10/15

10

Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)

Refers to the process where-by the existence of a

company gets terminated, its property having been

realized and distributed among its creditors and

in the event of a surplus, among its members.

LiquidationLiquidationLiquidationLiquidationLiquidation

It refers to the termination (or winding up) of a

registered company. Liquidation takes place

because of companys insolvency. In liquidation,

assets are turned into cash for settling outstanding

debts and for apportioning the balance, if any,

amongst the owners.

ManagManagManagManagManagementementementementement

The process of planning, organizing, leading, and

controlling the work of members of an

organization and of using all available

organizational resources to reach stated

organizational goals.

ManpowManpowManpowManpowManpowererererer

In ordinary language, manpower means the

working population of a country. In economics,

manpower means the organisation of work force

for its utilization in different sectors of the

economy.

MarketMarketMarketMarketMarket

A market consists of all the potential customerssharing a particular need or want who might be

willing and able to engage in exchange to satisfy

that need or want. In non-marketing terms the

function of a market is to enable an exchange of

goods or services to take place, a means by which

buyers and sellers are brought into contact with

one another.

Market LeaderMarket LeaderMarket LeaderMarket LeaderMarket Leader

A company which has a major market share of a

product/service. Ex: LIC is the market leader in

life insurance.

MarketingMarketingMarketingMarketingMarketing

Marketing is a social and managerial process by

which individuals and groups obtain what they

need and want through creating, offering and

exchanging products of value with others.

Market EconomyMarket EconomyMarket EconomyMarket EconomyMarket EconomyMeans an economy in which crucial economic

decisions and choices are made in a decentralized

manner by private individuals and firms operating

through a free price-and-market mechanism.

Equilibrium of prices and quantities are

determined in a market economy through the laws

of supply and demand. An economy based on free

enterprise in which forces of demand and supplyare allowed to operate freely, without any

restriction.

Market FMarket FMarket FMarket FMarket Forororororcescescescesces

Refers to pressures by the free play of market

supply and demand, which induce adjustment in

prices and / or quantities traded.

Market PriceMarket PriceMarket PriceMarket PriceMarket Price

Means the price determined by the equilibrium

between demand and supply in a market period

(or very short period).

Marketing MixMarketing MixMarketing MixMarketing MixMarketing Mix

The blending of variables like product pricing

promotion and distribution to form a marketing

strategy.



11/15

11

Matrix StructurMatrix StructurMatrix StructurMatrix StructurMatrix Structureeeee

An organizational structure in which each

employee reports to both a functional or division

manager and to a project group manager.

MaturityMaturityMaturityMaturityMaturity

Means the date on which a loan or bond or

debenture becomes due and is to be paid off i.e.,

the capital refunded.

MerMerMerMerMergggggererererer

Means a union of two or more firms in a

transaction by which one absorbs the other(s), or

a new firm gets created utilising the assets of the

absorbed firms.

MixMixMixMixMixed Economyed Economyed Economyed Economyed Economy

It refers to that economic system in which both

private and public sector co-exist. Indian economy

is an example of a mixed economy.

Most FMost FMost FMost FMost Favavavavavourourourouroured Nationed Nationed Nationed Nationed Nation

An agreement between two countries that each

will offer the best possible trade terms in

commercial contracts.

MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)

A large corporation with operations and decisions

spread over several countries but controlled by a

central headquarters.

National IncomeNational IncomeNational IncomeNational IncomeNational Income

In the simplest way it can be defined as factor

income accruing to the national residents of a

country. It is the sum of domestic factor income

and net factor income earned from abroad. Net

national product at factor cost is called National

Income.

NANANANANAV (Net Asset VV (Net Asset VV (Net Asset VV (Net Asset VV (Net Asset Value)alue)alue)alue)alue)

The value of a funds investment. For a mutual

fund, the net asset value per share usually

represents the funds market price.

Net Book VNet Book VNet Book VNet Book VNet Book Valuealuealuealuealue

A statement of the value of fixed assets which is

used in accounting. The appropriate amount of

depreciation is deducted from the original cost

of purchase of the asset to give its net book value.

Net PrNet PrNet PrNet PrNet ProfitofitofitofitofitMeans gross profit minus deduction of tax

payments and depreciation provisions.

Net National PrNet National PrNet National PrNet National PrNet National Product (NNP)oduct (NNP)oduct (NNP)oduct (NNP)oduct (NNP)

When depreciation is deducted from GNP i.e.,

Gross National Product, we get Net National

Product (NNP).

NicheNicheNicheNicheNiche

A narrow specialized market.

OptionOptionOptionOptionOption

An option to sell or purchase within a period.

Open EconomyOpen EconomyOpen EconomyOpen EconomyOpen Economy

An economy, which is engaged in international

trade. The degree of openness of an economy is

appreciated by the rise of its foreign trade sector

relative to its gross domestic product.

OvOvOvOvOver Drafter Drafter Drafter Drafter Draft

A loan limit in a current account.

OvOvOvOvOverheadserheadserheadserheadserheads

Costs which are not directly chargeable to any

unit produced. They include rent of premises,

salaries of salesmen, research, etc.,



12/15

12

Paid Up CapitalPaid Up CapitalPaid Up CapitalPaid Up CapitalPaid Up Capital

That part of the issued capital, which is paid upby the shareholders. The actual amount of capital

that shareholders have subscribed. It may be less

than the authorised capital.

Paid Up SharPaid Up SharPaid Up SharPaid Up SharPaid Up Shareseseseses

Shares are fully paid up when the full amount

has been paid. Sometimes shares are only partly

paid up, the company being able to call for the

balance to be paid whenever it requires this

additional capital.

Paradox of VParadox of VParadox of VParadox of VParadox of Valuealuealuealuealue

Means paradox on which an essential to life item,

such as water is normally valued little, but a luxury

item, such as diamonds, carry a high price.

Par VPar VPar VPar VPar Valuealuealuealuealue

Means the nominal or face value of a share or

security.

Planned EconomyPlanned EconomyPlanned EconomyPlanned EconomyPlanned Economy

An economy where crucial economic processes

are determined to a large extent not by market

prices, but by an economic planning body.

PlanningPlanningPlanningPlanningPlanning

Planning, a primary function of management,

implies looking ahead and deciding in advance

what to do, when to do it, how to do it and who is

to do it.

Planned obsolescencePlanned obsolescencePlanned obsolescencePlanned obsolescencePlanned obsolescence

A marketing strategy to encourage replacement

of old models or styles by introducing new models

or styles.

PPPPPoint of puroint of puroint of puroint of puroint of purchase displaychase displaychase displaychase displaychase display

A display at a place closely associated with

purchase decisions like check out counter. The

display stimulates impulse buying.

PrPrPrPrPredatory Pricingedatory Pricingedatory Pricingedatory Pricingedatory Pricing

Means the practice of diminishing prices down

to unprofitable levels for a period, so as to weaken

or eliminate existing competitors.

PrPrPrPrPremiumemiumemiumemiumemium

Securities are said to be at a premium when theystand above par on the stock exchange.

PricePricePricePricePrice

Refers to the value of a commodity or service in

terms of money. Also it is the amount of money

that has to be paid for a commodity or service.

Price DiscriminationPrice DiscriminationPrice DiscriminationPrice DiscriminationPrice Discrimination

Refers to the charging of different prices to

different groups of individuals for the same goods

or services for reasons not associated with

difference in costs.

Primary DeficitPrimary DeficitPrimary DeficitPrimary DeficitPrimary Deficit

The primary deficit is the fiscal deficit minus

interest payments. It tells how much of the

Governments borrowings are going towards

meeting expenses other than interest payments.

Primary IndustryPrimary IndustryPrimary IndustryPrimary IndustryPrimary Industry

Refers to the production of goods from

agriculture, forestry and fishing, mines that

constitute the natural wealth of a nation.

PrPrPrPrProducers Goodsoducers Goodsoducers Goodsoducers Goodsoducers Goods

Refers to goods made for the purpose of

producing consumer goods and other capital



13/15

13

goods e.g. machinery of all kinds. This is

synonymous with capital goods.

PrPrPrPrProductoductoductoductoduct

A product can be defined as anything that can be

offered to satisfy a need or want. The term

Product can be used to cover both goods and

services.

PrPrPrPrProductivityoductivityoductivityoductivityoductivity

Means output per unit of input employed.

PrPrPrPrProfit Marofit Marofit Marofit Marofit MarginginginginginRefers to profit per unit of output which is

expressed as a percentage of price.

P NotesP NotesP NotesP NotesP Notes

A system by which certain overseas entities can

invest in Indias capital markets. Also termed as

overseas derivative instruments [ODIS].

PrPrPrPrProfitofitofitofitofit

Total Revenue less all costs and expenses.

PrPrPrPrPromotion mixomotion mixomotion mixomotion mixomotion mix

Using advertising, publicity, sales promotion and

personal selling to communicate, inform and sell

goods and services to the consumer.

PurPurPurPurPurchasing Pchasing Pchasing Pchasing Pchasing Powowowowower Parity (PPP)er Parity (PPP)er Parity (PPP)er Parity (PPP)er Parity (PPP)

An exchange rate between two currencies such

that the same basket of goods and services couldbe bought in each country if the cost were

converted at that exchange rate.

It is often used to compare the standards of living

between countries.

Pyramid/PPyramid/PPyramid/PPyramid/PPyramid/Ponzionzionzionzionzi

An illegal system of paying off old investors with

new investments. A constant stream of new

investments is needed for the success of this

model.

Rate of ReturnRate of ReturnRate of ReturnRate of ReturnRate of Return

Refers to the basis of earnings from the investment

of capital, where earnings are expressed as a

proportion of the outlay.

Rate of TRate of TRate of TRate of TRate of Turnovurnovurnovurnovurnovererererer

The number of times the value of the average

stock of a business is sold during a period.

RecessionRecessionRecessionRecessionRecession

Slowing down of the economy over a period of

two to three quarters. [Many countries are

currently in Recession]

ReinsuranceReinsuranceReinsuranceReinsuranceReinsurance

Insurers passing on parts of the risk to other

parties in return for a proportional share of

premium

Sandwich BoardsSandwich BoardsSandwich BoardsSandwich BoardsSandwich Boards

Boards carried in front of and behind a person to

carry advertisements

Sandwich ManSandwich ManSandwich ManSandwich ManSandwich Man

A man who carries sandwich boards to carry

advertisements.

Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)

A scab is a worker who goes on working when

there is a strike.

ScheduleScheduleScheduleScheduleSchedule

A schedule specifies time limits within which

activities are to be completed. It is the process of

establishing a time sequence for the work to be

done.



14/15

14

Scientific ManagScientific ManagScientific ManagScientific ManagScientific Managementementementementement

It is the art of knowing exactly what you want

men to do and then seeing that they do it in the

best and cheapest way. (F.W. Taylor)

Sellers marketSellers marketSellers marketSellers marketSellers market

Demand exceeds supply. The situation favours a

seller.

Shell CompanyShell CompanyShell CompanyShell CompanyShell Company

A company listed in the stock exchange but which

does not trade.

Span of ContrSpan of ContrSpan of ContrSpan of ContrSpan of Contrololololol

The number of subordinates reporting directly to

a given

Spin OffSpin OffSpin OffSpin OffSpin Off

A secondary product developed from the main

product. superior. Also called span of

management control.

SpotSpotSpotSpotSpot

One common meaning is immediate or now.

Buying something for immediate delivery. Ex: a

spot market for oil Other variations of the use of

spot are spot cash, spot price and spot rate.

Spot Price or rateSpot Price or rateSpot Price or rateSpot Price or rateSpot Price or rate

Price or rate for something which is delivered

immediately.

StaffingStaffingStaffingStaffingStaffing

Staffing is the process of filling all positions in

the organisation with adequate and qualified

personnel. It consists of manpower planning,

recruitment, selection, training, compensation,

integration and maintenance of employees.

StagStagStagStagStag

A speculator who buys a large amount of a new

issue of shares or stock if he thinks the price is

likely to rise above the offer price when dealings

in it begin on the stock exchange, so that he hopes

to sell soon at profit.

A person who buys new shares and sells them

immediately to make a profit.

Start-UpStart-UpStart-UpStart-UpStart-Up

Business founded by individuals intending to

change the environment of a given industry by

the introduction of either a new product or a new

production process.

Stock ExchangStock ExchangStock ExchangStock ExchangStock Exchangeeeee

A highly organised market for dealings in stocks

and shares. Only members are admitted and

business is transacted according to a prescribed

set of rules. An investor who wishes to sell or

buy securities must act through a broker.

StrategyStrategyStrategyStrategyStrategy

A strategy may be defined as an administrative

course of action designed to achieve success in

the face of difficulties.

Strategic PlanningStrategic PlanningStrategic PlanningStrategic PlanningStrategic Planning

Strategic planning is long term in nature. Strategic

planning is formulated mainly at the top level of

management. It has mainly an external focus as it

is designed to achieve the organisational

objectives in the face of challenges and

opportunities.

SynerSynerSynerSynerSynergygygygygy

The situation in which the whole is greater than

its units. In organizational terms, synergy means



15/15

15

the departments that interact cooperatively are

more productive than they would be if they

operated in isolation.

TTTTTax havax havax havax havax havensensensensens

A financial off shore centre that offers a more

favourable tax environment to non-residents. One

of the attractive features is the maintenance of

strict secrecy regarding the name of the account

holder.

TTTTTaxaxaxaxaxeseseseses Direct Taxes

Direct incidence of tax on the person who pays

the tax. liability to pay tax is NOT passed on

to someone else. e.g. INCOME TAX,

CORPORATION TAX, WEALTH TAX,

LAND REVENUE, GIFT TAX etc.

Indirect Taxes

Levied on goods and services. traders /

producers pay it. Liability passed on to end

customer. e.g. VAT, EXCISE TAX,

CUSTOMS DUTY, SERVICE TAX

TTTTTraded Optionsraded Optionsraded Optionsraded Optionsraded Options

Options to buy or sell shares at a certain price at

a certain date in the future which themselves can

be bought or sold.

TTTTTurnovurnovurnovurnovurnovererererer

Total sales of a business during a particular period.

UnivUnivUnivUnivUniversal Service Obligersal Service Obligersal Service Obligersal Service Obligersal Service Obligationationationationation

A fund created by imposing a cess on telecom

companies to recover part of the costs incurred

by the Government for extending telecom network

in rural areas.

VVVVV.A.T (V.A.T (V.A.T (V.A.T (V.A.T (Value Added Talue Added Talue Added Talue Added Talue Added Tax)ax)ax)ax)ax)

A tax levied on the value of each of the processes

carried out by a business.

VVVVVariable Costsariable Costsariable Costsariable Costsariable Costs

Expenses that vary directly with the amount of

work being performed.

VVVVVendorendorendorendorendor

Commonly known as supplier. An individual or

business who sells goods to other business.

WWWWWash Salesash Salesash Salesash Salesash SalesIt is a transaction in which a speculator sells a

security and then buys it at a higher price through

another broker. This will create an impression that

there is great demand for that security. As a result,

people may be induced to purchase them at a very

high price.

WWWWWear and Tear and Tear and Tear and Tear and Tearearearearear

The depreciation of the value of a thing as a result

of ordinary usage as distinct from damage

resulting from negligence or accidental causes.

Wind UpWind UpWind UpWind UpWind Up

To bring a limited company to an end either

voluntarily or by order of the court.

YYYYYieldieldieldieldield

The return on a security, based on its currentearnings in relation to its current price on the stock

exchange. Money produced as a return on an

investment.

80-20 Principle80-20 Principle80-20 Principle80-20 Principle80-20 Principle

A rule of thumb stating that 80% of a firms

business is generated by approximately 20% of

its customers.


economic & business glossary

Documents