Indian Economic And Social Development – Key Terms And Their Meanings Part VII

Key Terms And Their Meanings Part VII

• Opportunity Cost : The best alternatives that have to be forgone in order to have or to do something.
• Sinking Fund : A fund built up by regular installments for some particular use.
• Slumpflation : A state of the economy in which economic activity contracts while, at the same time, the price level rises. This word is a blend of the words slump and inflation.
• Special Drawing Rights: (SDRs) A reserve asset created within the framework of the International Monetary Fund in an attempt to increase international liquidity, and now forming a part of countries’ official reserves along with gold, reserve positions in the IMF and convertible foreign currencies. SDRs are allocated to member countries according to their pre-assigned quotas within the Fund and they are used only by monetary authorities to settle international debts. Their attractiveness derives from the obligation of all members to accept them in exchange for the freely convertible currency requested. Because of their similarity in use to gold, SDRs are sometimes referred to as paper gold.
• Stagflation: A state of the economy in which economic activity is slowing down, but wages and prices continue to rise. The term is a blend of the words stagnation and inflation. It became common as a description of the state of the British economy since the early 1970s.
• Subsidy : A payment by the state with the aim of encouraging production or reducing prices in some way. For example, exporters may receive payments so that a country may be more competitive in its foreign trade, or food manufacturers may receive subsidies to keep the price of some targeted foods below the market price.
• Tariff : A tax or a duty on imports, which can be levied either on physical units, e.g., per tonne (specific), or on value (ad valorem). Tariffs may be imposed for a variety of reasons including to raise government revenue, to protect domestic industry from subsidized or low-wage imports, lo boost domestic employment, or to ease a deficit on the balance of payments. Apart from the revenue they raise, tariffs achieve little good – they reduce the volume of trade, increase the price of the imported commodity to consumers, and decrease the return to producers of exportables by causing resources to be diverted into producing more of the imported commodity at home.
• Tax Avoidance : The minimizing of tax liability by legal means.
• Tax Base : The object to which a tax rate is to be applied. This may be the price of a good in the case of VAT, one’s income in the case of income tax, etc.
• Tax Burden : The amount of tax liability that falls on an individual or firm.
• Tax Evasion : The illegal avoidance of tax liability. Tax Haven : A country or area that offer lower rates of tax in order to attract funds from either individuals or companies. Places, considered to be tax havens include the Cayman Islands, the Channel Islands, the Isle of Man, Bermuda, Switzerland, and Monaco. PTranche : One of the five parts into which the drawing rights of member countries of the International Monetary Fund are divided. The first is the gold tranche (now called the reserve 3. tranche) and it corresponds to the country’s original subscription in gold. The remaining tranches are the first, second, third, and fourth credit tranches. A country wishing to cover a deficit in its w balance of payments can draw currency from its reserve tranche automatically and from its first tranche without much difficulty. Beyond these, the IMF must approve credit and in so doing it can impose certain conditions; e.g. it can extract policy pledges from the borrower designed to correct the trading imbalance.
• Wealth Tax : A tax on the value of a person’s total assets, most usually with exemption below a certain amount.
• White-Collar Worker : A person engaged in a clerical or administrative job. White-collar workers now make up a larger proportion of the workforce than formerly. Workers’ Participation : Involvement of employees in formulation of company policy.
• Zero Growth: A state of the economy in which there is no overall growth in the level of economic activity.