Indian Economy Quiz 6

The term 'secular stagnation' refers to a state of little or no economic growth – in other words, an environment where the economy is essentially stagnant.

When marginal cost is less than average cost, average cost falls and when marginal cost is greater than average cost, average cost rises.

Inventory is the accounting of items, component parts and raw materials a company uses in production or sells.

Excess reserves are capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Monopolistic competition characterizes an industry in which many firms offer products or services that are similar substitutes. Excess capacity is more defined under monopolistic competition due to the nature of the market structure.

In economics, equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the values of economic variables will not change. In equilibrium, a perfectly competitive firm will equate marginal revenue with marginal cost.

The term 'Hindu rate of growth' was coined by Professor Rajkrishna, an Indian economist, in 1978 to describe the slow growth and to explain it against the backdrop of socialistic economic policies. Hindu growth rate is related to GDP.

Consumer sovereignty is the situation in an economy where the desires and needs of consumers control the output of producers.

In economics, the demand for inferior goods decreases as income increases or the economy improves. When this happens, consumers will be more willing to spend on more costly substitutes. Some of the reasons behind this shift may include quality or a change to a consumer's socio-economic status.

The term “marginal efficiency of capital” was introduced by J.M. Keynes in his General Theory, and defined as “the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal its supply price”.