Glossary
Economics Glossary for Class 11 and 12
Quick answerThis glossary gives short, exam-ready definitions of the key terms in the four NCERT Economics books. Each term has its own page with a definition in original words, a simple example, related terms, and a link back to the chapter that explains it in full. New terms are added as chapters are published.
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
Terms A to Z
A
- ARead
Absolute poverty
Absolute poverty is living below a fixed minimum needed for basic needs.
- ARead
Absorptive capacity
Absorptive capacity is the environment's ability to absorb waste and degradation.
- ARead
Aggregate demand
Aggregate demand is the total planned spending on final goods and services in an economy.
- ARead
Arithmetic mean
The sum of observations divided by their number.
- ARead
AYUSH
AYUSH stands for Ayurveda, Yoga, Unani, Siddha and Homeopathy, India's traditional systems of medicine.
B
- BRead
Balance of payments (BoP)
A record of a country's transactions with the rest of the world.
- BRead
Budget line
All bundles of two goods that cost a consumer exactly her income.
C
- CRead
Capital goods industry
The capital goods industry makes machines and tools used to produce other goods.
- CRead
Carrying capacity
The limit of resource use and waste the environment can sustain.
- CRead
Cash reserve ratio (CRR)
The share of deposits banks must keep as cash with the RBI.
- CRead
Casualisation
Casualisation is the shift of workers from regular and self-employment to casual wage work.
- CRead
Census
A study that covers every unit of the population.
- CRead
Class interval
The width of a class: upper limit minus lower limit.
- CRead
Class mark
The class mark is the mid-value of a class in a frequency distribution.
- CRead
Commercial energy
Commercial energy refers to energy sources that are bought and sold, such as coal, oil and electricity.
- CRead
Consumer Price Index (CPI)
A weighted index of retail prices paid by households.
- CRead
Correlation
The direction and strength of a linear relationship between two variables.
D
- DRead
Deindustrialisation
Decline of traditional industry without a modern base to replace it.
- DRead
Disguised unemployment
More workers employed than the work needs.
- DRead
Disinvestment
Sale of part of the government's shares in public enterprises.
- DRead
Diversification
Diversification means spreading farm effort across crops and moving workers into allied and non-farm activities.
- DRead
Double counting
Double counting means counting the same output more than once in national income.
- DRead
Drain of wealth
Outflow of India's export surplus to Britain under colonial rule.
E
- ERead
Education cess
The education cess is an extra tax levied to fund education.
- ERead
Equilibrium price
The price at which quantity demanded equals quantity supplied.
- ERead
Excess demand
Excess demand arises when the quantity demanded exceeds the quantity supplied at a price.
- ERead
Exchange rate
The price of one currency in terms of another.
F
- FRead
Fiscal deficit
Total government expenditure minus receipts other than borrowing.
- FRead
Five year plan
A plan of goals and targets for using resources over five years.
- FRead
Frequency distribution
A table showing how many observations fall in each class.
G
- GRead
GDP deflator
The GDP deflator is the ratio of nominal to real GDP, times 100.
- GRead
Globalisation
Integration of economies through trade, investment and technology.
- GRead
Global warming
Global warming is the gradual rise in the earth's average temperature due to greenhouse gases.
- GRead
Great Leap Forward
The Great Leap Forward was China's 1958 campaign for rapid industrialisation through communes.
- GRead
Green revolution
The rise in foodgrain output from high yielding seeds.
- GRead
Gross domestic product (GDP)
The market value of all final goods and services produced within a country in a year.
- GRead
Gross national product (GNP)
GDP plus net factor income from abroad.
H
- HRead
Head count ratio
The share of a population below the poverty line.
- HRead
High powered money
High powered money is the monetary base issued by the RBI.
- HRead
Histogram
A graph of a continuous frequency distribution drawn as touching bars.
- HRead
Human capital
Skill, knowledge and health that raise productivity.
- HRead
Human Development Index (HDI)
A UNDP score combining health, education and income.
I
- IRead
Import substitution
Replacing imports with domestic production behind tariffs and quotas.
- IRead
Index number
A measure of average change against a base period set at 100.
- IRead
Index of Industrial Production (IIP)
A quantity index of mining, manufacturing and electricity output.
- IRead
Indifference curve
All bundles of two goods that give a consumer equal satisfaction.
- IRead
Informal sector
Enterprises and workers without formal protection or benefits.
- IRead
Infrastructure
Supporting services such as power, transport, schools and hospitals.
- IRead
Intermediate goods
Intermediate goods are used up in producing other goods and are not counted in GDP.
J
K
L
- LRead
Land reforms
Changes in ownership and tenure of agricultural land.
- LRead
Liberalisation
Removing government controls on business and trade.
M
- MRead
Marginal cost
The addition to total cost from producing one more unit.
- MRead
Marginal propensity to consume
The marginal propensity to consume is the share of an extra rupee of income that is spent.
- MRead
Marginal rate of substitution
The marginal rate of substitution is the rate at which a consumer trades one good for another without losing satisfaction.
- MRead
Marketed surplus
The part of farm output sold in the market.
- MRead
Median
The middle value of ordered data.
- MRead
Micro-credit
Micro-credit means very small loans given to poor borrowers, often through groups.
- MRead
Mixed economy
An economy in which the market and the state decide together.
- MRead
Mode
The most frequently occurring value.
- MRead
Money multiplier
The ratio of money supply to high powered money.
- MRead
Monopoly
A market with a single seller and no close substitute.
- MRead
Multiplier
The ratio of the change in output to the change in autonomous spending.
O
- ORead
Ogive
A graph of cumulative frequency; the two ogives cross at the median.
- ORead
Oligopoly
An oligopoly is a market dominated by a few large firms whose decisions depend on each other.
- ORead
One-child norm
The one-child norm was China's policy of limiting families to one child.
- ORead
Opportunity cost
The value of the most valuable alternative given up when a choice is made.
- ORead
Organic farming
Farming without chemical fertilisers and pesticides.
- ORead
Outsourcing
Hiring services from an outside provider, often abroad.
P
- PRead
Per capita income
National income divided by population; an average that hides inequality.
- PRead
Perfect competition
Many firms, identical products and price-taking buyers and sellers.
- PRead
Physical capital
Physical capital is the stock of man-made goods such as machines and buildings used in production.
- PRead
Pie diagram
A pie diagram shows how a total is divided, with each slice proportional to its share.
- PRead
Poverty line
The consumption expenditure below which a person is counted as poor.
- PRead
Price ceiling
A legal maximum price set below the equilibrium price.
- PRead
Price elasticity of demand
Percentage change in quantity demanded divided by percentage change in price.
- PRead
Price floor
A legal minimum price set above the equilibrium price.
- PRead
Primary data
Information collected first-hand for the purpose at hand.
- PRead
Primary health centre
A primary health centre is the first health facility for a rural population.
- PRead
Privatisation
Moving ownership or management of public enterprises to private hands.
- PRead
Production function
A production function links inputs to the maximum output a firm can produce.
- PRead
Production possibility frontier
The most of two goods an economy can produce with given resources.
- PRead
Public goods
Public goods are goods whose benefits are shared by all and cannot be withheld.
Q
- QRead
Qualitative data
Qualitative data describe qualities or categories rather than numbers.
- QRead
Quantitative data
Quantitative data are measured or counted in numbers.
- QRead
Quartile
Quartiles divide ordered data into four equal parts.
- QRead
Questionnaire
A questionnaire is a set of questions used to collect data from respondents.
R
- RRead
Repo rate
The rate at which the RBI lends short-term to banks.
- RRead
Returns to scale
Returns to scale describe how output changes when all inputs are increased in the same proportion.
- RRead
Revenue deficit
Revenue spending in excess of revenue receipts.
S
- SRead
Sample survey
A study of a selected part of the population to learn about the whole.
- SRead
Sampling error
The gap between a sample estimate and the true population value.
- SRead
Scarcity
Resources are limited compared with wants.
- SRead
Scatter diagram
A graph of paired values that shows the pattern of a relationship.
- SRead
Secondary data
Information collected earlier by others and reused.
- SRead
Self-help group
A small group that saves together and lends to its members.
- SRead
Sensex
The benchmark index of 30 large companies on the Bombay Stock Exchange.
- SRead
Shut-down point
The shut-down point is the price below which a competitive firm stops producing in the short run.
- SRead
Spearman rank correlation
A measure of agreement between two sets of ranks.
- SRead
Special economic zone
A special economic zone is a designated area with relaxed rules and tax benefits to attract investment and exports.
- SRead
Statutory liquidity ratio (SLR)
The share of deposits banks must hold in liquid assets.
- SRead
Sustainable development
Development that meets present needs without harming future generations.
U
V
- VRead
Value added
The value of a firm's output minus the intermediate goods it used.
- VRead
Variable
A variable is a characteristic that can take different values.
W
- WRead
Weighted mean
The weighted mean gives each item an importance weight.
- WRead
Wholesale Price Index (WPI)
An index of wholesale prices of goods, excluding services.
- WRead
Worker-population ratio
The share of the population that is working.
- WRead
World Trade Organisation
The body that sets rules for trade between countries.
Z
Coming with the next chapters: repo rate, revenue deficit, scarcity, utility, returns to scale, oligopoly, poverty line, human capital, median, correlation, index number and about 30 more.