Economic Analysis For Business Decisions

The word "economics" is derived from Greek words. The term comes from the Greek words "oikos," meaning "household," and "nomos," meaning "management" or "law." Therefore, economics can be understood as the study of how households and societies manage their resources and make decisions regarding production, distribution, and consumption.

Human wants are unlimited because they are constantly evolving and expanding. As individuals fulfill their basic needs, new desires and aspirations arise. This insatiable nature of human wants leads to an unlimited demand for goods and services. No matter how much one has, there is always a desire for more or something different. This infinite nature of human wants is a driving force behind economic activities and the need for production and consumption.

Economics is considered both an art and a science because it combines elements of both disciplines. It is an art because it involves subjective decision-making and requires creativity in analyzing and solving economic problems. On the other hand, it is a science because it follows a systematic approach, uses empirical data, and applies theories and models to understand and predict economic phenomena. Economics combines the qualitative aspects of art with the quantitative aspects of science to provide a comprehensive understanding of the production, distribution, and consumption of goods and services in society.

RBI stands for "Reserve Bank of India". The Reserve Bank of India is the central banking institution of India, responsible for regulating the country's monetary policy and issuing currency. It acts as the banker to the government and the custodian of the country's foreign exchange reserves. The correct answer is Reserve Bank of India.

SEBI stands for Securities and Exchange Board of India. It is the regulatory body in India that oversees the securities market and ensures the protection of investors' interests. SEBI's main functions include regulating stock exchanges, registering and regulating intermediaries such as brokers and mutual funds, and promoting fair practices in the securities market. It plays a crucial role in maintaining the integrity and transparency of the Indian capital market.

Macro economics deals with aggregate economics, meaning it focuses on the overall behavior and performance of the entire economy. It examines factors such as national income, employment, inflation, and economic growth. Macro economics looks at the economy as a whole and analyzes how different sectors interact and influence each other. In contrast, micro economics focuses on individual economic agents, such as households and firms, and their decision-making processes. Therefore, the correct answer is Macro economics.

The question asks for a factor that does not determine the demand. Supply is not a determinant of demand, but rather a determinant of the quantity supplied. Demand is determined by factors such as price, level of income, and fashion. Therefore, supply is the correct answer as it does not directly determine the demand.

Risk is the probable measurement of uncertainty because it refers to the possibility of an event or outcome that cannot be predicted with complete certainty. It involves the potential for both positive and negative consequences, and is typically associated with situations where the outcome is uncertain or there is a chance of loss or harm. Therefore, risk is a measurement that quantifies the level of uncertainty and helps individuals or organizations assess and manage potential hazards or opportunities.

Tea and sugar are considered complementary goods because they are often consumed together. When people buy tea, they are likely to also purchase sugar to sweeten it. These two goods are typically used together and their demand is interrelated. If the price of tea decreases, for example, the demand for sugar may also increase as more people buy tea and need sugar to go with it. Similarly, if the price of sugar increases, the demand for tea may decrease as people may be less inclined to buy it without the accompanying sugar.

The correct answer is the quantity of the commodity demanded at a certain price during any particular period of time. This refers to the amount of the commodity that consumers are willing and able to purchase at a given price and within a specific timeframe. It takes into account the relationship between price and demand, indicating that as price increases, the quantity demanded typically decreases, and vice versa. This concept is essential in understanding consumer behavior and market dynamics.

Opportunity cost refers to the value of the next best alternative that is forgone when making a decision. It represents the potential benefits or profits that could have been gained from choosing a different option. In other words, it is the cost of choosing one option over another. Economic cost, on the other hand, includes both explicit costs (such as monetary expenses) and implicit costs (such as the value of foregone opportunities). Therefore, the correct answer is opportunity cost as it specifically relates to the sacrifice made when making a decision.

The correct answer is money market. The money market is a type of market where short-term securities with maturities of less than one year are traded. It is a place where borrowers and lenders can engage in short-term borrowing and lending of funds. The money market includes instruments such as Treasury bills, commercial paper, certificates of deposit, and repurchase agreements. These instruments are considered to be low-risk and highly liquid, making them suitable for investors looking for short-term investments or for institutions looking to manage their short-term cash needs.

Revenue deficit is the difference between the government's total revenue expenditure and its total revenue receipts. It indicates that the government is spending more than it is earning from regular sources. This deficit is usually financed through borrowing, leading to an increase in the government's debt. Revenue deficit is an important indicator of a government's financial health and its ability to manage its expenses within its income.

The correct combination is IMF- International monetary fund. The International Monetary Fund (IMF) is an international organization that aims to promote global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It provides financial assistance to member countries facing balance of payments problems and also offers policy advice and technical assistance to help countries improve their economic policies and institutions.

Cost is also known as explicit cost because accounting costs refer to the actual monetary expenses incurred by a business in its operations. These costs are easily quantifiable and can be directly traced to specific activities or resources used. Accounting costs are recorded in financial statements and are used for budgeting, decision-making, and evaluating the financial performance of a business.

Sales tax is the most important source of revenue for the states because it is a tax imposed on the sale or purchase of goods and services within the state. It is levied by the state government and the revenue generated from sales tax is used to fund various state expenditures such as infrastructure development, education, healthcare, and public services. Sales tax is a significant source of revenue as it is collected on a wide range of goods and services, making it a reliable and consistent source of income for the states.

If the price of coffee falls, it is likely that people will switch from drinking tea to drinking coffee as it becomes a more affordable option. This shift in preference will result in a decrease in the demand for tea. Therefore, the correct answer is decrease.

The given statement suggests that cost is also referred to as imputed cost. This means that cost can be associated with the concept of opportunity cost, which refers to the value of the next best alternative that is forgone when making a decision. Imputed cost is a term used to describe the cost that is not physically incurred but is assigned to a particular activity or resource. Therefore, the correct answer is "Opportunity."

NITI Ayog is a national institution for transforming India. It is a government of India policy think-tank and also serves as a replacement for the erstwhile Planning Commission.

In capital markets, the major suppliers of trading instruments are government and corporations. This is because governments issue bonds and other securities that can be traded in the market. These government securities are considered safe investments and are often used as a benchmark for other financial instruments. On the other hand, corporations issue stocks and bonds to raise capital for their operations. These securities represent ownership or debt in the company and can also be traded in the market. Therefore, government and corporations are the primary entities that provide trading instruments in capital markets.