Today in this article we are telling you about Economics Terms & Definitions which you can ask in Exam. We will also tell you the meaning of every word here.

Economics Terms & Definitions

Economics Terms & Definitions


Property of Any Kind.

Balance Of Trade(BoT)

The difference between the exports and imports of two counties in the trade with each other is called Balance of Trade.

Balance Sheet

It is a statement of accounts, generally of business concerns, prepared at the end of a year.

Banker’s Cheque

A cheque from one bank to another.

Bank Rate

It is the rate of interest charged by the Reserve Bank of India for lending money to commercial banks.


To trade by exchanging one commodity for another.


This term on cheques and bills denotes that any person holding the same has the same right in respect of it, as the person who issued it.

Black Money

It means unaccounted money, concealed income and undisclosed wealth. The money which thus remains unaccounted for, it called the black money.


A legal agreement to pay a certain sum of money at some future date and carrying a fixed rate of interest.


An estimate of expected revenues and expenditure for a given period usually a year, item by item.

Budget Deficit

When the expenditure of the government exceeds the revenue the balance between the two is the budget deficit.


Speculators in the stock markets who buy goods, in some cases without money to pay with, anticipating that prices will go up.

Buyer’s Market

An area in which the supply of certain goods exceeds the demands so that purchasers can drive hard bargains.

Commercial Banks

Finacial in situations that create credit accepts deposits, give loans and performs other financial functions.

Call Money

Loan Made for a very short period. It carries a low rate of interest.


It is a state in a monetary market when money in circulation has decreased.


Reduction in the value of fixed assets due to wear and tear.


Offical reduction in the foreign value of domestic currency. It is done to encourage the country’s exports and discourage imports.


Earning of stock paid to shareholders.


Sale of the commodity at different prices in different markets, the lower price being charged in a market where demand is relatively elastic.

Exchange Rate

The rate at which Central Banks will exchange one country’s currency for another.

Excise Duty Tax

Imposed on the manufacture, sale, and consumption of the various commodities such as taxes on textiles, clothes, Liquor, etc.

Fiscal Policy

Government’s expenditure, tax policy, and borrowing.

Gross Domestic Product (GDP)

A measure of the total flow of goods and services produced by the economy over a specific time period, normally a year.

Repo Rate

The rate at which banks borrow from RBI. It injects liquidity into the market.


A sustained and appreciable increase in the price level over a considerable period of time.


Single seller selling a single product.

Monopolistic Competition

The existence of single too many sellers selling differentiated products.

Bilateral Monopoly

Exitance of the single buyer and single seller.


Single buyer buying product is unique.


The existence of few sellers and few products, a price war is a common feature.

Reverse Repo Rate

The rate at which RBI borrows from banks for a short-term. It withdraws liquidity into the market.

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