Quench Your 'Economics' Query!

Reserve Bank of India Establishment: The Reserve Bank of India was established in  1935   under the provisions of the  Reserve Bank of India Act, 1934  in Calcutta, eventually moved permanently to  Mumbai . Though originally privately owned, was nationalized  in 1949. Organisation and Management: The Reserve Bank”s affairs are governed by a  central board of directors . The board is appointed by the Government of India for a period of  four years. Full-time officials :  Governor  and  not more than four Deputy Governors.  The current Governor of RBI is  Mr. Urjit Pattel . There are 4  Deputy Governors ,  BP Kanungo, S S Mundra, N S Vishwanathan and Viral Acharya . Nominated by Government:  ten Directors from various fields and two government Officials Others: four Directors – one each from four local boards Main Role and Functions of RBI Monetary Authority : Formulates, implements and monitors the monetary policy for A)  maintaining price stability, keeping inflation

SUPPLY CURVE DEFINITION of 'Supply Curve' The supply curve is a graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. In a typical representation, the price will appear on the left vertical axis, the quantity supplied on the horizontal axis.  BREAKING DOWN 'Supply Curve' The supply curve will move upward from the left to the right, which expresses the  law of supply : as the price of a given commodity increases, the quantity supplied increases, all else being equal. Note that this formulation implies that price is the independent variable, and quantity the dependent variable. In most disciplines, the independent variable appears on the horizontal or  x -axis, but economics is an exception to this rule. For example, if the price of soybeans rises, farmers will have an incentive to plant less corn and more soybeans, and the total quantity of soybeans on the market will in

Budget Line Definition:  The  Budget Line , also called as  Budget Constraint  shows all the combinations of two commodities that a consumer can afford at given market prices and within the particular income level. We know that the higher the indifference curve, the higher is the utility, and thus, utility maximizing consumer will strive to reach the highest possible Indifference curve. But, he has two strong constraints:  limited income and given the market price of goods and services . The income in hand is the main constraint (budgetary) that decides how high a consumer can go on the indifference map. In a two commodity model, the budgetary constraint can be expressed in the form of the budget equation: P x  . Q x  + P y  . Q y  =M Where, P x  and P y  are the prices of commodity X and Y and Q x , and Q y  is their respective quantities. M= consumer’s money income The Budget equation states that the consumer’s expenditure on commodity X and Y cannot exceed his m

Indifference curve An indifference curve is a locus of all combinations of two goods which yield the same level of satisfaction (utility) to the consumers. Since any combination of the two goods on an indifference curve gives equal level of satisfaction, the consumer is indifferent to any combination he consumes. Thus, an indifference curve is also known as ‘equal satisfaction curve’ or ‘iso-utility curve’. On a graph, an indifference curve is a link between the combinations of quantities which the consumer regards to yield equal utility. Simply, an indifference curve is a graphical representation of indifference schedule. The table given below is an example of indifference schedule and the graph that follows is the illustration of that schedule. Table: Indifference schedule Combination Mangoes Oranges A 1 14 B 2 9 C 3 6 D 4 4 E 5 2.5 Figure: Graphical representation of indifference curve Assumptions of indifferenc

Types of Inflation: As the nature of inflation is not uniform in an economy for all the time, it is wise to distin­guish between different types of inflation. Such analysis is useful to study the distribu­tional and other effects of inflation as well as to recommend anti-inflationary policies. Infla­tion may be caused by a variety of factors. Its intensity or pace may be different at different times. It may also be classified in accordance with the reactions of the government toward inflation. A. On the Basis of Causes: (i) Currency inflation: This type of infla­tion is caused by the printing of cur­rency notes. (ii) Credit inflation: Being profit-making institutions, commercial banks sanction more loans and advances to the public than what the economy needs. Such credit expansion leads to a rise in price level. (iii) Deficit-induced inflation: The budget of the government reflects a deficit when expenditure exceeds revenue. To meet this gap, the government may ask