Indian Economy part 4

Indian Economy part 4

1) Legal tender: Money issued by the monetary authority or the government which can not refused by anyone.

2) Lender of the last resort: The function of a monetary authority of a country in which it provides guarantee of solvency to commercial banks in a situation of liquidity crisis or bank runs.

3) Narrow money: Currency notes,coins and demand deposits held by the public in commercial banks.

4)National disposable income: Net national product at market prices + other current transfers from the rest of the world.

5) Net Domestic Product: Aggregate value of goods and services produced within the domestic territory of a country which does not include the depreciation of capital stock.

6) Open market operation: Purchases or sales of government securities by the central bank from the general public i the bond market i a bid to increase or decrease the money supply in the economy.

7) Paradox of thrift: As people become more thrifty they end up saving less or same as before in aggregate.

8) Purchasing power parity: A theory of international exchange which holds that the price of similar goods in different countries is the same.

9) Real GDP: GDP evaluated at a set of constant prices.

10) Revaluation: A decrease i the exchange rate in a pegged exchange rate system which makes the foreign currency cheaper in terms of the domestic currency.