Fiscal Policy: Govt. spending policy that influences macroeconomic conditions.

Two main instruments are income (tax) and expenditure (national defense, highway construction). Affect the following variables: Aggregate demand, resource allocation and distribution of income. Monetary policy: The action of central bank that determine the size and rate of growth of the money supply. Tools: interest rate, bank reserve (CRR). Through monetary policy BB regulates: Supply of money, Interest rate, Exchange rate. Financial market: Money market and Capital market. Capital market: 1. Primary market 2. Secondary market Money market: A segment of financial market in which financial instruments with high liquidity and very short maturities are traded. Such as short term borrowing and lending. Call money: Money loaned by a bank that must be paid on demand. Call money doesnt have to follow fixed payment schedule. Funds can be obtained quickly. Functions of BB: 1.Maintain price stability through economic and monetary policy 2.Managing the foreign exchange and gold reserve 3.Regulating banking sector of the country. 4.Issuing bank notes. Inflation: Rise in prices caused by an increase in the amount of money in circulation or increase in the amount of money in spending. Causes of inflation: 1.Print excess of money 2.Increase in production cost 3.Reduction of supply of goods 4.Govt. spending 5.Development works of govt. Controlling inflation: 1. Monetary measures 2. Fiscal measures Deflation: Fall in the price brought about by a decrease in spending. Monetary measures: 1. Bank rate policy- raise bank rate 2.CRR- raises CRR 3. Open market operation bank sell govt. securities and bonds. Fiscal measures: Govt. can ban export and encourage import by lowering import duties. CRR: Cash reserve ratio. It is a percentage of bank deposit that banks are supposed to maintain with central bank (6%). SLR: Statutory liquidity ratio. It is a percentage of bank deposit that banks are supposed to maintain with themselves in liquid form such as cash, gold, or govt. bonds (19%).

PLR: Prime lending rate. Interest rate that commercial banks charge their most credit-worthy customers on short term loans (Prime rate). REPO rate: Repurchase. The discount rate at which a central bank repurchases govt. securities from the commercial banks depending on the level of money supply it decides to maintain in the countrys monetary system. Currency policy: Total supply of money = Amount of gold reserve in the central bank. Devaluation: Lowering the exchange value of a currency with respect to another. Paid up capital: The amount of a companys capital that has been funded by shareholders is called paid up capital. Paid up capital can be less than a companys total capital. Bond: A long term debt instrument issued by a corporation or govt. Banking: It involves acceptance of deposit repayable in demand and lending money at a interest to customers who are creditworthy. Economic policy: Economic policy refers to the actions that govt. take in the economic field. It covers the systems for setting interest rate and govt. budget as well as the labor market, national ownership and many other areas of govt. intervention into the economy. Business: The exchange of goods, services or money for mutual benefit of profit. It is also an economic activity. Economics: The study of how a society chooses to use scarce resources to produce goods and services and to distribute them for consumption. Four factors: Land, labor, capital and organization. Cartel: Syndicate made by producers (OPEC) Pool: Syndicate made by traders. Ethics: A principles of behavior that distinguish between right and wrong. Management: The application of planning, organizing, leading and controlling functions in a efficient manner to accomplish objectives. Utility: Ability of a product to satisfy customers need. Form, time, place and possession utility. Marketing research: The systematic gathering, recording and analyzing information for taking marketing decisions. Marketing mix: The combination of four elements- product, price, place, promotion- used to satisfy the need of the target market.

Marketing plan: It involves deciding on marketing strategies that will helps the company to attain its overall strategic objectives. Money: Anything commonly accepted as a means of paying for goods or services. Trust: A legal entity set up to hold and manage assets for a designated beneficiary. Finance: Finance is the study of money within the firm with the responsibility of finding funds, managing those funds and determining their best uses. Accounting: The process of identifying, measuring and communicating economic information to permit informed decisions by the users of the information. Financial statement analysis: The art of transforming data from financial statements into information that is useful for informed decision making. SBU: A separately managed division or unit of an enterprise with strategic objectives that is both distinct from the parent unit and integral to the overall performance of the enterprise. It is created to target a specific market. Strategic marketing: Identification of one or more substantial competitive advantages a firm has in the market it serves and allocation of resources to exploit them. Service marketing: It is the form of marketing that focuses on selling services. Business plan: A business plan is a formal or informal document that serves as a road map for a business. It defines business and its goals. Micro economics: It concerns with the behavior of individual entities such as markets, firms etc. Macro economics: It concerns with the overall performance of the economy. GDP: C+I+G+X (consumption, gross investment, govt. purchase of goods and services, net export within a given year). Corporate culture: The beliefs and behavior that determine how a companys employees and management interact and handle outside business transaction. It reflects on dress code, business hour, employee benefit, turnover, client satisfaction etc.

Basis of Difference Meaning

Trade Trade refers to the exchange of goods and services by the intended parties. Trade has a narrow scope of exchange.

Commerce Commerce involves the exchange of goods and services with a motive to earn higher profits on them. Commerce has a wider scope of exchange as it involves transportation and shipment of goods and services.

Scope

Distance

The sale of goods and The sale of goods and services under trade, takes services under commerce place only within shorter covers longer distances. distances.