Indian Economy Quiz 6

Per capita income (PCI) is a measure of the amount of money earned per person in a nation or geographic region. It is calculated by dividing the national income by its total population.

Production function is the maximum set of output(s) that can be produced with a given set of inputs. Use of a production function implies technical efficiency.

Fiscal policy refers to the use of the government budget to affect the economy. This includes government spending and levied taxes. In deficit financing, a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.

National income is the sum total value of all goods and services produced in the country during a period of one year.

Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest, while plan expenditure pertains to the money to be set aside for productive purposes, like various projects of ministries.

In a capitalist society the prices of goods, services and labour are determined by supply and demand. If a lot of people want to buy a certain product its price will go up. Products that are mass produced usually have low prices.

Laissez-faire is an economic philosophy of free-market capitalism that opposes government intervention. The theory of laissez-faire was developed by the French Physiocrats during the 18th century and believes that economic success is more likely the fewer governments are involved in the business.

The current account balance of payments is a record of a country's international transactions with the rest of the world. The nation's current account is its imports, exports, net income, asset income, and direct transfers. Short-term commercial borrowings is not included in the current account of India's Balance of Payments.

Lowering the tariff barriers has facilitated globalisation of international trade the most. In International Business Tariff Barriers are related taxes imposed by Governments to control Import Export of one or more products with a particular country.

In the case of temporary inflation, the central bank (RBI) generally attempts to reduce the money supply in the economy so as to ease the demand pressure. This helps in arresting price rises in the economy.