Learn CBSE Economics Index Terms for Class 12, Part 2, Chapter 1 Introduction
1. Rate of Interest – The term rate of interest is a technical term referring to the amount of money charged for lending or borrowing. In the business world, it often refers to the interest rate charged by a bank or private lender on a loan.
The rate of interest is an economic term that describes the amount of money that needs to be paid to borrow something from a lender, such as a bank or credit union. The rate of interest is usually expressed as an annual percentage. For example, if one were to borrow Rupees 10,000 for three years, and it required an annual interest rate of 2%, one’s total costs would be Rupees 2,000 per year.
The rate of interest is the amount that a creditor charges a debtor to borrow money. In economics, the interest rate is the rate of return earned on a security or other investment.
2. Wage Rate – A wage rate is the rate of payment for an individual employee. It is the amount of money earned by a worker, per hour, per unit of time worked. The wage rate is the mean rate at which workers are paid.
The wage rate is the amount of money paid to employees for their labour and is expressed in terms of either an hourly, daily, or yearly rate. Wages are also called “labour income” or “employment income”. A wage is a payment made by the employer to the employee, who gets work, and then gives it to someone who is hired. This is called labour. We can say wages are an exchange between two parties; they give their own product or labour, and they receive some other product or commodity (that is, money or a service) in return.
3. Great Depression – Great depression is a landmark economic period that lasted from the time of its beginning in 1929 until 1939. This time includes the years of widespread unemployment, severe banking panics, stock market crashes, lost investments, high levels of bank failures, dramatic reductions in income and standards of living, and a decline in organised church membership and urbanisation, as well as poverty.
The great depression is a state of the economy in which prices fall, leading to a sharp decrease in production and widespread unemployment. By the late 1920s and early 1930s, other nations had started seeing the consequences of these policies, as expressed by a massive debt crisis that dwarfed that of the 1920s.
The great depression was a devastating 10-year period of economic decline and unemployment in the 1930s that began in the United States and quickly spread to much of the world. Economists and historians point to several causes, including the stock market crash of 1929, plummeting agricultural prices, jarring shifts in consumer spending, a sudden drop in international trade, and several large-scale bank failures that brought millions out on the street.
The great depression was a severe worldwide economic depression in the 1930s that came about from the complete collapse of economic activity in large portions of the industrialised world. During this time, many families were unable to afford basic needs for food and shelter, and went hungry. The United States alone lost almost 10% of its GDP.
In the United States and Canada, women made up 50% of unemployed workers during this period. Unemployment was based not only on closed factories and farms but also on migration to cities in search of work.
4. Unemployment Rate – In economics, the unemployment rate is defined as the percentage of the labour force that is without a job and actively looking for one. The unemployment rate is a statistic that provides an estimate of the proportion of the labour force that was without a job, looking for work, or is employed but involuntarily downsized in a given time period.
The unemployment rate is the number of unemployed people in a selected population based on specific criteria. The unemployment rate is an indicator of the degree of unemployment in a nation. It shows approximately how many people are without jobs in that country. This figure shows statistics about who is looking for a job, and how many are actually employed.
The unemployment rate is a statistic that describes the proportion of people in the general population who are unemployed and actively looking for work. As an example, if 10% of the total workforce was unemployed, but only 1 out of 5 employed people were actively looking for jobs, then the unemployment rate would be 10%.
5. Four Factors of Production – The term “four factors of production” refers to factors that contribute to economic output, such as land and labour. The land is usually considered a fixed factor in that it is not readily available for use; however, it can be negatively affected by diminishing natural resources and the increased use of technology for converting raw materials into finished products. Labour can be cyclical; unemployment rates and inflation rates often influence wages and job availability. Capital, or tools and machines, are used to make goods such as cars, computers, and iPods. In addition to these four main industries that make up the four factors of production, there are other industries, including agriculture and tourism, where one also has certain types of workers who generate value using their expertise.
The four factors of production in economics are land, labour, capital, and entrepreneurship. The factors of production include nature, technology, and human decision-making skill. The four factors of production are used as inputs into the production process, and more importantly, they make up the output from the production process.
The four factors of production are the human factor, land factor, capital, and labour. The human factor is referred to as the productive capacity of labour, which can include the ability to work overtime, dynamism and creativity; additionally, this factor may produce some capital or new technologies. Land is a natural resource that provides a place where one can locate it as well as attributes such as soil quality and weather conditions that influence productivity.
6. Inputs – In economics, inputs or factors of production are the resources that are used up in the process of production. These include labour and capital. Inputs are the acts, products, and resources that producers use in producing goods and services.
Inputs are the valuable sources of goods and services used by an organisation to produce its output. Examples include a company’s raw materials and manufacturing equipment, as well as labour and water. Inputs are essential for using resources efficiently.
A variable that one can use in an equation (such as the equation “Price = Labour x Marginal Productivity”) is called an input.
7. Labour – Labour is the amount of work put into a single unit of time by a person or machine. The term labour refers to all economic output and may include compensation paid to employees, but does not include the employer’s payments to capital (depreciation, amortisation and taxes).
Labour is a quantity that describes how much of a good or service an economy produces. Labour is the amount of work a worker can do in a specific period of time. Labour is one of the forms of human labour, a commodity produced by human beings. Labour can also refer to an activity, skill, or type of work.
8. Entrepreneurship – The term entrepreneurship can be described as the process of creating and operating a business, especially a small business. An entrepreneur is a person who organises, plans, manages, and or runs a project or business. Entrepreneurs are the drivers and creators of businesses. A business entrepreneur runs a successful business for their profit. Entrepreneurship is about coping with uncertainty by the creation of new opportunities, and this takes place through innovation.
Entrepreneurs are the driving force behind a company’s success. They take risks, generate new ideas and possibilities, overcome obstacles and create new opportunities for themselves and others. Entrepreneurship describes the attitudes, abilities and actions of individuals who set out to create their own businesses or to generate wealth by starting the development of a business.
Entrepreneurship is the process of starting, operating and managing a business enterprise. The term can refer to the process of finding and creating opportunities in any field, such as developing a business plan, raising start-up capital and hiring employees.
9. Wage Labour – Wage labour is a system in which wages are determined by the market. Wage labour is an economic system in which workers sell their liberty and labour power to a capitalist or landowner, who offers them employment as their own boss and employer.
Wage labour is the relationship between worker and employer in which the worker sells their ability to work. Under wage labour, workers are merely means to accumulate capital and make a profit (theories of value).
Wage labour is a very special type of employment relationship, often a permanent, full-time job which allows an employee to sell their labour to someone else. Wage labour is a system of employment where wages are determined in terms of the amount of work that has been performed, usually measured by time and effort rather than by skill or experience.
10. Economy – The meaning of the word economy in economics is a market in which producers distribute goods and services as well as factors of production, such as capital and labour. This is often coupled with government policies to influence the production of goods and services.
In economics, the economy is a provider of goods and services. The term is also used to describe the application of financial policy to the use of natural resources or to social and environmental issues.
The economy is the sum total of all exchanges, barter and monetary transactions. A nation’s economy can be evaluated by the Gross Domestic Product (GDP), which is measured in terms of both aggregate value and total output, as well as by per capita GDP, which measures each individual efficiently and in proportion to their entire population. Therefore, it can be said that the economy is a measure of the quantity of wealth or demand in that country.
The concept of economic growth through the use of scarce resources and a large number of resources that are in constant demand is referred to as an economy.
11. Firms – The term ‘firm’ is a concept in economics that defines an organisation as a group of people who are cooperating, each with a specific role to play in the organisation’s functioning. Natural monopolies and natural competitive market structures create economies with only one firm per industry.
A firm is an organisation that can control its own resources, has financial strength and uses its capital in the pursuit of profit. A firm is a business organisation that employs specialised workers and tools to produce goods or services. Businesses provide goods and services for the market, including manufacturing products for sale, offering professional services (for example, accounting, engineering, advertising, and marketing) to clients seeking their expertise, or offering financial services (such as banking).
Firms make decisions about their productive activities, seek to maximise profits, allocate resources among different production factors and investment projects, to decide how much to produce and at what prices to offer it for sale.
12. Output – Output is the total quantity of a good or service produced, regardless of its market price. In economics, the output can be measured in terms of dollars, pounds, euros and other currencies. Output in economics is usually measured as Gross Domestic Product (GDP) by economists.
The economic concept of output is the total quantity of goods or services produced in a given time period. It may be expressed as quantity supplied, the amount produced or the amount consumed.
Output is the total value of all goods and services that a particular economic sector produces and that can be sold. In other words, the output is the value added or subtracted from all inputs used in the process of production. Output is the total output of a country. Output increases when production increases and decreases when production decreases.
13. Government – The term “government” is used in many fields of economics; this includes analysing the political and economic features of a state or society. Government is an organisation that assumes the function of securing social order and distributing resources.
Government is a set of institutions, actions and processes vested with the primary responsibility for accommodating the common good. It is not synonymous with the state, and it may refer to the supremacy of civic justice above private justice or to government based on reasoned deliberation.
Government is a body of people, the majority of whom have an official position, who enforce and administer the law at a national or local level. To live in a society with laws and governmental institutions is sometimes called living under the government or being subject to a government.
14. Exports – The meaning of exports in economics is that a country’s exports are foreign-made goods and services that are traded for or convertible into foreign currencies. The purpose of exports is to make money for the country.
Exports are goods and services produced in a country and sold to other countries. Exports produce jobs and income, but they decrease the purchasing power of domestic currency due to the exchange rate between the local currency and foreign currency. One must be able to find alternative means of producing goods, such as growth, education, and innovation, for one’s economy to continue growing.
Exports are goods that are produced by a country or activities related to production located in a country. Exports cover both tangible and intangible products, including non-factor services produced by companies or non-profit organisations, remanufactured and used goods, government services and capital flows.
Exports are goods produced using a country’s resources. Exporting countries take the goods they produce, and sell them at a high price in another country. In contrast, imports are goods produced using other nations’ resources that are received by residents of the importing country. Importing countries buy cheap goods produced in other countries.
15. Means of Production – The means of production is an economic term that refers to the tools, machines and supplies that businesses, factories and households use to produce goods or services. The means of production are a company’s investment in its physical assets or infrastructure – its buildings, raw materials, and machinery.
In economics, the means of production is everything that contributes to the generation of goods and services used in the production of goods and services. This includes land, machinery, tools and equipment, and other resources such as raw materials, fuel, and labour. The goods produced also include products that have been transformed into a finished good (that is, food for sale) or turned into intermediate goods before being transformed into finished goods. The main factors altering the product value are supply and demand conditions, prices, other market conditions, including taxes, and additional costs incurred by firms that may arise from the process of transforming inputs into outputs.
Means of production are the raw materials and tools used in the production process. A farmer who grows and harvests their own wheat and their family’s dogs, pigs, and chickens are using their own labour and the products of their own labour to produce bread, meat, and poultry.
The means of production are the total productive forces that people need in order to be able to produce. It includes things like land, labour, and capital.
16. Land – The meaning of land in economics is an investment, where a person intends to gain future benefits from owning the property. The land will be used as a store or investment when the owner gives the right or charge over it to another person.
Land is the natural and economic base of human activities. It includes land, open spaces, and water. The land is the basic resource for agriculture and represents a large percentage of economic activity. Land use also impacts gas and oil exploration, mining, and energy production.
The land is the geographical area of a country that is suitable for agriculture. It includes all-natural features, such as land bodies and soil, but does not include man-made features like beaches and glaciers.
17. Capital – Capital is the wealth used to finance economic production. Investors use it to buy shares of a company or loans to finance other businesses. The term capital refers to the value of real or personal property, and it is thus synonymous with wealth. In economics, capital refers to “all the means of production, and of distribution employed by any economic unit in order to produce its output”.
The main economic concept is capital. It is the wealth that can produce future income, usually through investment in a good or service (the “capital”). Capital is the total value of all assets – land, buildings, machinery, vehicles, and so on. This is calculated as the cost price plus any remaining costs that are still outstanding at the accounting date.
18. Investment Expenditure – Investment expenditure is a category of expenditure included in national accounts to measure the use of fixed capital and structures. Investment expenditure is paid out of the capital budget. It is used to purchase additional machinery, facilities, or other things that will be used in production.
Investment expenditure is the total of all expenditures by a government or individuals on new equipment, industrial construction and infrastructure needing to be added to or better utilised in the productive structure. An investment project will also include any capital cost incurred in acquiring necessary land and building structures needed to house either new or existing facilities.
Investiture expenditure means the sum of the following costs: salaries, wages, depreciation and amortisation, rent and interest on the debt.
19. Capitalist – The meaning of the term capitalist in economics is a person or organisation that owns and manages an enterprise, especially one that is productive. In economics, the term capitalist refers to an owner of capital and an entrepreneur who makes a profit on their own capital.
The word capitalist comes from “capital” and “ist”. A capitalist is an individual or group that owns and operates an enterprise for profit. Capitalism is a socioeconomic system based on private capital and market exchange. It is distinguished from traditional full-time production and distribution, in which the goods are centrally planned.
20. Households – Households are the basic social unit in economics, consisting of all people who live together. Household operations like agriculture, industry and trade among households are similar to the concept of individual operations or production. The book Households: How They Work by Gary D. Burt says it this way: “To make sense of the real world and deal with it effectively requires that we begin to think of households as units.”
Households in economics are households that are members of the same monetary unit. Households comprise the basic private economic unit of the economy and are a key starting point for any economic analysis.
Households are the basic economic unit in both of the world’s main economic systems – capitalism and socialism. Households use their own resources to produce goods and services that they exchange with other households in a market economy or with a government in a socialist economy.
Households are the smallest economic unit. It represents the group of individuals living in a single dwelling and having a joint disposable income. Households make up the largest amount of people, with an estimated total of about 4 billion in 2010.
21. External Sector – External sector refers to the entities that create and seize demand, as they establish and destroy markets. The external sector includes corporations, business firms, banks and financial institutions, individuals and households, governments and other public bodies.
The term “External Sector” is used to describe the economic activity of a country with regard to its external environment. The external sector concerns both trade and investment flows, as well as income from foreign securities purchases and payments for imported goods.
The external sector refers to the part of the economy that operates in the market. It is linked to the Indian economy by trading natural resources, exports and imports. The buying and selling of these goods and services occur in several different markets, including international marketplaces such as New York and London, as well as domestic markets like Vancouver and Toronto.
The external sector includes the trade, tourism and employment activities that are related to the manufacturing and services industries. It can also include those businesses that provide goods and services to the industry sector.
22. Imports – The meaning of imports means the goods and services one buys from other countries. They are necessary to run an economy because they provide consumers with things that they need to survive. Economists say that imports strengthen our domestic economy because imports are processed through tax systems and trade agreements.
The term imports mean the movement of goods from one country to another. It can be divided into two categories: originating or importing a product from abroad and ending or exporting a product to another country. The difference between these two terms lies in the place that one economy becomes involved with the other’s economy in buying products.
Imports are the goods and services that a country obtains from other countries. If a country’s exports to another country are equal to their imports from that other country, then there is no net flow of goods.
The term imports refer to the goods that are imported and not produced in a country. On the other hand, exports are the goods that are produced and not imported.
We hope that you found these Economics Index Terms for Class 12 with respect to Part II, Chapter 1: Introduction, useful.
Related Links:
- Class 12 Economics Index Terms Part I Chapter1: Introduction
- Class 12 Economics Index Terms Part I Chapter 2: Theory of Consumer Behaviour
- Class 12 Economics Index Terms Part I Chapter 3: Production and Costs
- Class 12 Economics Index Terms Part I Chapter 4: The Theory of the Firm Under Perfect Competition
- Class 12 Economics Index Terms Part I Chapter 5: Market Equilibrium
- Class 12 Economics Index Terms Part II Chapter 1: Introduction
- Class 12 Economics Index Terms Part II Chapter 2: National Income Accounting
- Class 12 Economics Index Terms Part II Chapter 3: Money and Banking
- Class 12 Economics Index Terms Part II Chapter 4: Determination of Income and Employment
- Class 12 Economics Index Terms Part II Chapter 5: Government Budget and the Economy
- Class 12 Economics Index Terms Part II Chapter 6: Open Economy Macroeconomics
