Economy, Macro & Market Cycles — 60 Terms Defined

Balance of Payments Economy, Macro & Market Cycles ₹ crore A record of all economic transactions between a country's residents and the rest of the world in a period. Balance of Payments = Current Account + Capital Account + Financial Account + Errors and Omissions = Change in Reserves

Base Effect Economy, Macro & Market Cycles % The distortion in a growth rate caused by an unusually high or low value in the comparison period. Test: the current growth rate is driven substantially by the level of the year-earlier figure rather than by current activity

Bear Market Economy, Macro & Market Cycles % A sustained period of falling prices, conventionally marked by a decline of 20% or more from a high. Test: the index has fallen 20% or more from its prior peak

Bubble Economy, Macro & Market Cycles qualitative A period in which asset prices rise far above any defensible estimate of value, sustained by expectations of further rises. Test: prices are justified primarily by the expectation of selling higher rather than by the asset's cash flows

Bull Market Economy, Macro & Market Cycles % A sustained period of rising prices, conventionally marked by a rise of 20% or more from a low. Test: the index has risen 20% or more from its prior trough, without an intervening 20% decline

Business Cycle Economy, Macro & Market Cycles qualitative The recurring pattern of expansion and contraction in economic activity around a long-term growth trend. Phases: expansion, peak, contraction, trough, recovery, repeating with irregular length and amplitude

Capacity Utilisation Economy, Macro & Market Cycles % The proportion of installed productive capacity that is actually being used. Capacity Utilisation = Actual Output / Maximum Possible Output x 100

Cash Reserve Ratio Economy, Macro & Market Cycles % The proportion of deposits banks must hold as cash with the Reserve Bank, earning no interest. Required Reserves = Net Demand and Time Liabilities x Cash Reserve Ratio

Commodity Cycle Economy, Macro & Market Cycles qualitative The long swing in commodity prices driven by the lag between demand changes and the supply response. Test: high prices induce investment in new supply, which arrives years later and depresses prices, discouraging investment in turn

Consumer Price Index Economy, Macro & Market Cycles index points An index tracking the price of a fixed basket of goods and services bought by households. CPI = (Cost of the Basket in the Current Period / Cost of the Basket in the Base Period) x 100

Core Inflation Economy, Macro & Market Cycles % Inflation excluding food and fuel, whose prices are volatile and driven largely by supply conditions. Core Inflation = Headline Inflation computed on the basket excluding food and fuel components

Correction Economy, Macro & Market Cycles % A decline of roughly 10% or more from a recent peak, short of the 20% that defines a bear market. Test: the index has fallen between 10% and 20% from its prior high

Credit Growth Economy, Macro & Market Cycles % The rate of increase in bank lending to the economy. Credit Growth = (Current Outstanding Bank Credit - Year-Earlier Credit) / Year-Earlier Credit x 100

Crude Oil Price Economy, Macro & Market Cycles % The price of crude oil, a key macroeconomic variable for India because most of its requirement is imported. Impact on Import Bill = Change in Price per Barrel x Annual Barrels Imported

Current Account Deficit Economy, Macro & Market Cycles % The excess of a country's payments for imports, services and transfers over its receipts from them. Current Account Balance = Trade Balance + Net Services + Net Primary Income + Net Transfers

Deflation Economy, Macro & Market Cycles % A sustained fall in the general price level, the opposite of inflation. Test: the price index declines from one period to the corresponding earlier one, giving a negative inflation rate

Disinflation Economy, Macro & Market Cycles % A slowing in the rate of inflation, while prices continue to rise. Test: the inflation rate falls between periods while remaining above zero

Domestic Institutional Flows Economy, Macro & Market Cycles ₹ crore Net purchases or sales of Indian securities by domestic mutual funds, insurers and pension funds. Net Flow = Value of Purchases - Value of Sales by domestic institutions over the period

Exchange Rate Economy, Macro & Market Cycles ₹ The price of one currency expressed in terms of another. USD/INR = number of rupees required to buy one US dollar

Expansion Economy, Macro & Market Cycles qualitative The phase of the business cycle in which output, employment and incomes are rising. Test: real GDP, employment and industrial production are rising on a sustained basis from a prior trough

Fiscal Deficit Economy, Macro & Market Cycles % The gap between the government's total expenditure and its total revenue excluding borrowings, in a year. Fiscal Deficit = Total Expenditure - (Revenue Receipts + Non-Debt Capital Receipts)

Fiscal Policy Economy, Macro & Market Cycles % The government's use of taxation and spending to influence economic activity. Fiscal Impulse = Change in the Fiscal Deficit as a percentage of GDP, adjusted for the cycle

Foreign Exchange Reserves Economy, Macro & Market Cycles ₹ crore Foreign currency assets, gold and reserve positions held by a central bank to meet external obligations and manage the currency. Import Cover = Foreign Exchange Reserves / Average Monthly Imports, expressed in months

Foreign Institutional Flows Economy, Macro & Market Cycles ₹ crore Net purchases or sales of Indian securities by foreign portfolio investors. Net Flow = Value of Purchases - Value of Sales by foreign portfolio investors over the period