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    Economic Terms Made Easy – Part 1

    Transcript

    Nov 07, 2023
    5 Mins Read

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    1. Supply and Demand:


    A fundamental concept in economics that explains the relationship between what people want (demand) and how much is available to meet that demand(supply).

    Example: When there's a high demand for a limited-edition gadget, its price is likely to go up.


    2. Gross Domestic Product (GDP):


    GDP refers to the measure of monetary value of all the final goods and services produced by a country in a specific period. GDP helps to measure the economic health of the nation; it is like a financial report card of the nation.

    Example: If India’s GDP is $3.75 trillion, it means all its businesses and activities together in the country earned that much.


    3. Deficit:


    A situation where the spending is more than the earnings.

    Example: If the country’s overall expenditure is Rs.100 million but only makes Rs. 70 million, it has a deficit of Rs. 30 million.


    4. Trade Surplus:


    If a country's earnings out of selling its local products and services to other countries is more than its import costs, it earns a surplus.

    Example: If Country A exports Rs. 100 million worth of goods and imports Rs. 80 million, it has a trade surplus of Rs. 20 million.


    5. Tariff:


    Colloquially tariff is often used for the rate at which we are charged for public services such as electricity, or for accommodation in a hotel. But it actually refers to a tax or duty imposed by a government on imported goods from other countries. It makes foreign goods more difficult to afford; the objective behind levying tariffs is to encourage the purchase of local products.

    Example: If a country puts a 10% tariff on foreign cars, a Rs. 20,00,000 car would cost Rs. Rs. 22,00,000.


    6. Fiscal Policy:


    Fiscal policy refers to the policy with which a government uses instruments of taxation, public spending and borrowing to achieve its various economic goals and influence targeted outcomes in the economy and sustainable growth.

    Example: During a recession, the government might increase public spending as a fiscal policy measure to boost the economy.


    The views expressed in this article are for knowledge/information purpose only and is not a recommendation, offer or solicitation of business or to buy or sell any securities or to adopt any investment strategy. Aditya Birla Sun Life AMC Limited (“ABSLAMC”) /Aditya Birla Sun Life Mutual Fund (“the Fund”) is not guaranteeing/offering/communicating any indicative yield/returns on investments.


    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.



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