Skip to main content

Translate Your Page

banking terms

By Victor S. Fischer
  ✍️ CRR Cash Reserve Ratio is the minimum fraction of total deposits of a bank’s customers that banks have to hold as reserves with the central bank. ✍️ SLR Statutory Liquidity Ratio is the ratio of liquid assets to the net demand and time liabilities. ✍️ LAF Liquid Adjustment Facility is a tool to allow banks to borrow money through repurchase agreements. It consists of repo and reverse repo operations. ✍️ MSF Marginal Standing Facility allows scheduled banks to borrow funds overnight from RBI against approved government securities. ✍️ MSS Market Stabilization Scheme is a monetary policy intervention by RBI to withdraw excess liquidity by selling government securities in the economy. ✍️ OMO Open Market Operations refers to the buying and selling of government securities in the open market so as to expand or contract the amount of money in the banking system. ✍️ REPO Repo...
Post a Comment

Inflation and its types

Image



Inflation


The general rise in the price level of goods and services.


It is estimated as the percentage rate of change in price index over the reference time-period.


Currently in India inflation rate is measured with the help of Consumer Price Index- combined (Base year- 2012).


Till April 2014, Inflation rate was measured with the help of WPI (Wholesale Price Index).


Rate of Inflation= (Current period price index-Reference period price index)/(Reference Period Price Index)×100


Type of Inflation


Based on rate of rising in Inflation


1. Creeping Inflation


Price rise at very small rate (< 3 %)


It is considered safe and essential for the economy.


2. Walking or Trotting Inflation


Price rise at moderate rate (3 % < Inflation < 10 %)


Inflation at this rate is a warning signal for the Economy.


3. Running Inflation


Price rise at high rate (10 % < Inflation < 20 %)


It affects economy adversely.


4. Hyperinflation or Galloping Inflation or Runway Inflation


Price rise at very high rate (20 % < Inflation < 100 %)


This situation brings total collapse of Economy.


Based on causes


Demand Pull Inflation: When Inflation arises due to higher demand for goods and services over the limited supply.


Cost Push Inflation:  When Inflation arises due to higher input cost (Example- raw material, wages etc.) for goods and services over the limited supply.


Other definitions-


1. Deflation


It is opposite to Inflation.


Reduction of general level of price in an economy.


In this price index measured is negative.


2. Stagflation: When stagnation and inflation coexist in the economy.
3. Stagnation: low national income growth and high unemployment.


4. Disinflation


When the rate of Inflation is at a slower rate.


Example:
If the Inflation of last month was 4 % and rate of inflation in the current month is 3 %.


5. Reflation: 


Deliberate action of government to increase the rate of inflation to redeem economy from a deflationary situation.


6. Core Inflation: 


It is a measure of price rise in the economy excluding the price rise of some products (whose price is volatile and temporary in nature.


Effects of Inflation


1. Redistribution of income and wealth


Due to the effect of inflation, some group of people loses and another group of people gains.


Example-
In case of debtors and creditors
Debtor- gainer
Creditor- loser
In case of Producers and Consumers
Producer- gainer
Consumer- loser


2. Effects on Production and Consumption


Due to inflation, the demand decreases which curtails the production.


People try to use fewer services which lead to decrease in consumption.


3. Unfavorable Balance of Payments


Export decreases and import increases from other countries which lead to decrease in forex reserve.


Measures to control Inflation


1. Credit control-


It is used by RBI.


2. Increase in Direct Taxes


Due to increase in direct taxes, people have less money available to them and low demand from them leads to a lower price.


3. Price Control


By fixing maximum price limit by authorities.


4. Trade measures


Maintain proper supply in the economy by export and import of goods and services.


Labels:
By Victor S. Fischer

Comments

Post a Comment

Popular Posts

Blood safety and availability

By Victor S. Fischer
Blood is needed every two seconds. Hospitals need blood for people who are injured, who undergo surgical procedures, organ transplants, cancer treatments, and treatment for other diseases that affect blood like sickle cell anemia and thalami. Blood can save life.    But the baddest side  is that  ability of blood is more less than in worldwide and if there where is blood that is quietly not safe due to improperly store and more reason.so I am presenting you the report of  WHO report of Blood safety and  availability .. Key Fact Of the 112.5 million blood donations collected globally, approximately half of these are collected in the high-income countries, home to 19% of the world’s population. In low-income countries, up to 65% of blood transfusions are given to children under 5 years of age; whereas in high-income countries, the most frequently transfused patient group is over 65 years of age, accounting for up to 76% of all transfusions. The blood donation rate in high-income countrie...
2 comments
Show Full Post»

Idioms and phrases...

By Victor S. Fischer
1. Acid Test: Meaning -  Acid test proves the effectiveness of something. Example -  I practiced hard at the dance sessions but the acid test will come when the master will assess our solo performances. 2. Cut the ground from under feet : Meaning -  When you cut the ground from under someone's feet, you do something which weakens their position. Example -  When team India hit more than 350 runs in the ODI, they cut the ground from under the opponent's feet. 3. Chase your tail: Meaning -  Spending a lot of time and energy doing a lot of things but actually achieving too little. Example -  He's been chasing his tail all week collecting data but the report is still not ready 4. Whole bag of tricks - Meaning -  Means trying all the clever means to achieve something. Example -  It was really difficult to find the information even after applying the whole bag of tricks. 5. Deliver the goods - Meaning -  Do what is expected or promised. Example -  I have given my car to a new mech...
Post a Comment
Show Full Post»

Question and Answers on GST

By Victor S. Fischer
Question No.1: What kind of Taxes will GST replace? Central Excise Tax Service Tax Entertainment Tax All the types of taxes Answer:  GST will remove or replace all the types of taxes that will include Entry Tax, Luxury Tax, Purchase Tax, Octrol, Service Tax, Central Excise Tax etc on goods and services. Question No: 2 What does G stands for in GST? General Global Goods Great Answer:   G in GST stands for Goods and Service Tax Bill Question No: 3 What is GST officially called? GST is also known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 Question No: 4 To what percent there will be economic growth in the country with the help of GST? The economic growth will be 1- 1.5% per year Question No: 5   What industries will GST benefit? GST will benefit Trade and agriculture industry the most Question No: 6 Will GST benefit Importers OR Exporters? GST will benefit exporters more than importers. Question No: 7 Which areas will be benefitted more by GST? GST will be mo...
Post a Comment
Show Full Post»