ECONOMIC TERMS - B


BUSINESS   Any activity or organization that produces or exchanges goods or services for a profit.

BARTER   Trading (buying and selling) a good or service directly for another good or service - without using money or credit.

BALANCE SHEET   An itemized statement listing the total assets and total liabilities of a given business to portray its net worth at a given moment in time.


BORROW To receive and use something belonging to somebody else, with the intention of returning or repaying it --often with interest (for a period of time) for borrowed money.

BORROWER     An individual who has borrowed/ borrowing money.

BRAND   A trade name used to recognize a product produced by a particular firm, distinguishing it from similar products produced by competitors.

BLUE CHIP STOCKS   Shares of large, nationally well-known companies that have been profitable for a long time and are well-known and trusted.

BOND  A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender at a fixed rate of interest and at a specified time.

BANK    A financial institution that provides various products and services to its customers, including savings accounts, loans and currency exchange.
BANKING INDUSTRY      The industry involved with conducting financial transactions. Also, conducting business with a bank, e.g., maintaining a savings account or obtaining a loan, etc.

BANK ACCOUNT   An arrangement by which a bank holds funds on behalf of a depositor.

BANK RESERVES    The percentage of a bank's deposits that it keeps on hand, i.e., does not lend out.

BANK SERVICE CHARGES  Fees paid by bank customers for financial services, for example, fees for using the ATMs of other banks and fees for using bank-issued credit cards, etc.

BANK STATEMENT    A monthly summary providing the status of a depositor's financial accounts (current and/or savings account).

BARRIERS TO ENTRY    Factors that restrict entry into an industry and give cost advantages to existing firms. Examples economies of  large size of existing firms, control over an essential resource or information (exit costs, for example, norm to hire workers on long-term contracts), sunk cost such as advertisements and legal rights such as patents and licenses.

BALANCE OF PAYMENTS    It is a systematic record of all transactions (in goods, services, physical and financial assets) between individuals, firms and governments of one country with those in all other countries in a given year, expressed in monetary terms.

BALANCE OF PAYMENTS DEFICIT    An imbalance in a nation's balance of payments, where more currency is flowing out (for import) of the country than is flowing in (from export).

BALANCE OF PAYMENTS SURPLUS   An imbalance in a nation's balance of payments in which more currency is flowing into (from export) the country than is flowing out (for import).

BALANCE OF TRADE   The part of a nation's balance of payments accounts that deals only with its imports and exports of goods and services.   The balance of trade is divided into the balance on goods (visible) and the balance on services (invisible).

BARRIERS TO TRADE      Restrictions on trade such as tariffs, quotas and regulations so as to reduce the trade.

BUDGET   A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, or a country covering a specific time period.

BALANCED BUDGET      A financial plan in which income is equal to expenses.

BUDGET DEFICIT    It is a situation when budget expenses are greater than income in a given year.

BUDGET SURPLUS    It is a situation when budget income is greater than budget expenses in a given year.

BENEFIT    Monetary or non-monetary gain received because of an action taken or a decision made.

BUSINESS CYCLE   Variations in the overall rate of national economic activity with alternating periods of growth and reduction; these vary in duration and degrees of severity; usually measured by real gross domestic product (GDP).

BASKET OF GOODS   Large number of commonly used goods would be taken for the construction of index number. Basket of goods shows the true representative of household purchases.

BASE YEAR   The year from which the index numbers begins. In the base year the index will always be 100 so that we can compare it with the current year.