Page 110 - VIRANSH COACHING CLASSES

• Margin Requirements : It is used by RBI to or sell an invention for a particular number of
determine the loan value of a collateral security years.
offered by a borrower. It is used to control • Perishable goods : They are a type of good
speculative activities. especially food products with limited shelf life.

• Merchant Banks : Merchant banks in India • Point of satiety : Point of satiety is defined
manage and underwrite new issues, advise as “the point where marginal utility of any
corporate clients on fund raising and other commodity is zero.”
financial aspects.
• Potential supply : Stock is the basis of supply.
• Mixed income : Remuneration of a self It constitutes the potential or total supply of
employed person is treated as mixed income. a commodity that can be offered for sale at a
It is defined as the income that is received, favourable time.
over a given reference period, by individuals, • Prestige goods : They are high end or luxury
for themselves or in respect of their family goods that increases the status of the consumers
members, as a result of their current or former who own or use them e.g. jewellery, luxury cars
involvement in self employment jobs.
etc.
• Moral Suasion : It is a psychological instrument • Price discrimination : It is the act of of selling
of credit control which is used by RBI to the same product at different prices to different
persuade commercial banks to co-operate with buyers, in order to maximize sales and profits.
it in following a proper credit policy more
rigorously. • Price illusion : It is also called money illusion.
It refers to the tendency of consumers to think
• Mutual Funds : Mutual funds mobilize the in terms of nominal rather than real monetary
savings of the general public and invest them in values when making economic decisions. It is
stock market securities.
likely to occur when inflation is unanticipated.
• National Electronic Fund Transfer (NEFT) : • Price quotations : Price quotation is a document
It is an electronic fund transfer process, through (generally written) which a seller provides to
which money can be sent from one bank the buyer for offering goods and services at a
account to another within the country in a safe stated price, subject to terms and conditions
and hassle free manner.
specified therein.
• Oceanic trade : It refers to expansion of trade • Principle of rationality : It is an economic
network of coastal countries beyond their land principle that assumes that individuals always
territories.
make prudent and logical decisions that provide
• Open market operations : Open market them with the highest amount of personal
operations is the sale and purchase of utility. These decisions provide people with
government securities and treasury bills by the greatest benefit or satisfaction, given the
RBI or the central bank of the country. It is choices available.
undertaken to regulate the money supply in the • Public utilities : Public utilities are services
economy. provided by the government or state, such as
• Optimum allocation : It refers to the allocation the supply of electricity and gas, or the train
of resources in the best possible manner to network.
achieve economic efficiency. It prevents misuse • Quid pro quo : Quid pro quo is a Latin phrase
and avoids wastage of resources. which means a gift or a advantage that is given

• Paradox of values : It is an observation that to someone in return for something that they
articles or goods critical to life (such as water) have done.
are very cheap, whereas others which have no • Rational consumer : A consumer who makes
bearing on human existence (such as diamonds) his choices after considering all the other
are very expensive. alternative goods and services available in the
• Patents : It is an official legal right to make market is called a rational consumer.
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