Inflation targeting refers to the formal declaration of a specific range of inflation as an official policy, and it is typically executed by the central bank as a component of its monetary policy. The primary aim of this strategy is…
The Capital Adequacy Ratio (CAR) is a vital metric used to gauge banks’ resilience in absorbing losses and their capacity to manage liabilities and address credit and operational risks. Regulators employ it to evaluate a bank’s resilience to losses. A…
Purchasing Power Parity (PPP) serves as a method to gauge the relative purchasing power of various currencies. It involves comparing the prices of a standard basket of goods and services in different countries. PPP finds its utility in assessing and…
Tobin tax is basically a tax that is levied on the short term currency transactions in order to discourage the volatility and speculation. It’s like a small fee proposed for certain financial transactions, especially those involving different currencies. A tool…
The Laffer Curve is a theory to show the relationship between tax rates and the amount of tax revenue collected by governments. A Brief Explanation A curve named after economist Arthur Laffer, which reveals a fascinating principle about taxes. When…
A liquidity trap is when expansionary monetary policy (increase in money supply) does not increase the interest rate or income and hence does not stimulate economic growth. A Simple Explanation with Example. Picture a scenario called a “liquidity trap.” It’s…
Lorenz curve A Lorenz curve is a graphical representation of income inequality or wealth inequality Brief Explanation Imagine the Lorenz curve as a visual snapshot of how money or assets are spread out among the people in a community. Max…
A gig economy is a labour market that heavily relies on temporary and part-time job positions, which are often filled by independent contractors and freelancers rather than traditional full-time permanent employees. In the gig economy, workers do enjoy a certain…
A Certificate of Deposit, often called a CD, is a financial tool issued by banks and financial institutions in India. These certificates are subject to regulation by the Reserve Bank of India (RBI) and serve as time deposits, resembling fixed…