Economic stimulus: is action by the government to encourage private sector economic

activity by engaging in targeted, expansionary monetary or fiscal policy based on the ideas

of Keynesian economics.

Poverty trap is a spiraling mechanism which forces people to remain poor. It is so binding
in itself that it doesn't allow the poor people to escape it. Poverty trap generally happens in
developing and under-developing countries, and is caused by a lack of capital and credit to
people

Fiscal austerity is a policy approach that involves reducing government spending and/or
increasing taxes in order to reduce budget deficits and debt.

Synergy: is the interaction or cooperation of two or more organizations, substances, or other

agents to produce a combined effect greater than the sum of their separate effects.

Banking or Financial Crisis can happen if banks [(A solvency problem is when a
bank's debt is larger than their equity.” 5. “A bank has a solvency problem when its liabilities
and equity are greater than its assets.”

Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or
meet contractual obligations. Traditionally, it refers to the risk that a lender may not receive the
owed principal and interest, which results in an interruption of cash flows

Liquidity risk (withdrawals exceed the available funds),

Interest rate risk (rising interest rates reduce the value of bonds held by the bank, and
force the bank to pay relatively more on its deposits than it receives on its loans). }]

Withholding tax, or a retention tax, is an income tax to be paid to the government by the

payer of the income rather than by the recipient of the income. The tax is thus withheld or
deducted from the income due to the recipient. In most jurisdictions, withholding tax applies to
employment income.

Real estate is the land along with any permanent improvements attached to the land,
whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and
bridges. Real estate is a form of real property.
Fiscal impulse is measured as the change in the government budget balance resulting from
changes in government expenditure and tax policies. It ignores changes in the fiscal balance that
are attributed to other, no fiscal, origins. Fiscal impulses have often been confused with fiscal
policy multipliers, which attempt to measure the effects of changes in fiscal policy on economic
activity.

Fiscal space is commonly defined as the budgetary room that allows a government to
provide resources for public purposes without undermining fiscal sustainability. According to the
International Monetary Fund, fiscal space exists if a government can raise spending or lower
taxes without endangering market access and putting debt sustainability at risk.

Debt Sustainability A country's public debt is considered sustainable if the government is

able to meet all its current and future payment obligations without exceptional financial
assistance or going into default.

The Debt Sustainability Framework (DSF) is designed to guide the borrowing

decisions of low-income countries in a way that matches their financing needs with their ability
to repay now and in the future.

Fiscal sustainability, or public finance sustainability, is the ability of a

government to sustain its current spending, tax and other policies in the long run without
threatening government solvency or defaulting on some of its liabilities or promised expenditures

Fiscal consolidation is defined as concrete policies aimed at reducing government

deficits and debt accumulation, e.g. active policies to improve
the fiscal position. ... Consolidation plans and detailed measures are given as a per cent of
nominal GDP. The measures are quantified to the extent possible.

Fiscal Stance: The fiscal stance of a government refers to how its level of spending and
taxation impact on aggregate demand and economic growth. Higher taxes and a budget surplus is
seen as fiscal consolidation or deflationary stance. A budget deficit has an expansionary impact.

A fiscal stance can be expansionary, neutral or deflationary.

 Expansionary stance: If the government has higher government spending than tax
revenues, we say the fiscal stance is ‘expansionary’ as this tends to increase aggregate
 demand. For example, if the government cut income tax, households will increase
spending.
 Deflationary stance or ‘Fiscal consolidation’. If government spending is less than
taxation revenue, then the fiscal stance is deflationary. The government is reducing
domestic demand by increasing tax (reducing consumer spending) and/or cutting
government spending.

Sovereign debt is also known as government debt, public debt, and

national debt. Governments borrow for a variety of reasons, from financing public
investments to boosting employment.

A sovereign default happens when a country's government fails to pay its debt

obligations. A sovereign default can have serious economic consequences for the borrowing
nation, making it harder and more expensive to borrow money in the future and pay its ongoing
obligations.

Tax thresholds the level of income or money earned above which people or companies
must pay tax, or must pay a higher rate of tax: The government has announced a rise in the tax
threshold for lower-paid workers.

Quasi-fiscal activities are any activities undertaken by state-owned banks and

enterprises, and some- times by private sector companies at the direction of the government,
where the prices charged are less than usual or less than the “market rate.” Examples include
subsidized bank loans provided by the central bank

A transfer payment is a payment of money for which there are no goods or services
exchanged. Transfer payments commonly refer to efforts by local, state, and federal
governments to redistribute money to those in need.

Gross domestic product measures the value of goods and services produced within a
country; the measurement includes national output, expenditures, and income.1

GNI equals GDP plus wages, salaries, and property income of the country's residents earned
abroad and at home. It also includes net taxes and subsidies receivable from abroad, according to
the Organization for Economic Cooperation and Development.
 GNI is the total income received by the country from its residents and businesses regardless of
whether they are located in the country or abroad. GNP includes the income of all of a country's
residents and businesses whether it flows back to the country or is spent abroad.

The chart provides a visual of what is and isn't included in GDP, GNI, and GNP.

Income Earned by: GDP GNI GNP

Residents in Country C+I+G+X C+I+G+X C+I+G+X
Foreigners in Country Includes Includes If Spent in Country Excludes All
Residents Out of Country Excludes Includes If Remitted Back Includes All
Foreigners Out of Country Excludes Excludes Excludes

As of 1 July 2019, low-income economies are defined as those with a GNI

per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2018; lower
middle-income economies are those with a GNI per capita between $1,026 and $3,995; upper
middle-income economies are those between $3,996 and $12,375; high-income economies are
those with a GNI per capita of $12,376 or more.

LIDCs are a group of 59 IMF member countries primarily defined by income per
capita level below a certain threshold (set at $2,700 in 2016). This group of countries contain one
fifth of the world’s population—1.5 billion people—but account for only 4 percent of global
output.

Economic scarring is a term widely used in analysis and discussion of the

macroeconomic impact of the pandemic.

Economic scarring refers to the medium-long term damage done to the economies of one or
more countries following a severe economic shock which then leads to a recession.
Scarring can manifest itself in several ways including a slowdown or absolute fall in a country’s
estimated potential GDP and their long-term trend growth rate. Scarring effects might be seen in
the following ways:

1. Fall in business investment leading to an ageing of the existing capital stock

2. Rise in long-term unemployment and economic inactivity in the labour market
3. Increase in business failures including many commercially viable businesses
4. Shrinkage in the capacity of financial system to lend to businesses and households
GNI is the total income received by the country from its residents and businesses regardless of
whether they are located in the country or abroad. GNP includes the income of all of a country's
residents and businesses whether it flows back to the country or is spent abroad.

GDP is the total market value of all finished goods and services produced within a country in a
set time period. GNI is the total income received by the country from its residents and
businesses regardless of whether they are located in the country or abroad.

"Lending into arrears" describes the circumstances in which the IMF will be prepared
to extend finan- cial assistance to a member country that has accumulated overdue amounts to
other creditors.

Sometimes arrear something overdue in payment; a debt that remains unpaid: Those
countries that have paid their arrears may be granted additional loans.

A grace period is a period immediately after the deadline for an obligation during which a
late fee, or other action that would have been taken as a result of failing to meet the deadline, is
waived provided that the obligation is satisfied during the grace period.

What Is Arbitrage? Arbitrage describes the act of buying a security in one market and
simultaneously selling it in another market at a higher price

A cross-functional team is a group of people with different functional expertise working

toward a common goal. It may include people from finance, marketing, operations, and human
resources departments. ... Decision making within a team may depend on consensus, but often is
led by a manager/coach/team leader.

Conceptually, the fiscal impulse is defined as the change in the government budget
balance resulting from changes in government expenditure and tax policies. It differs from
changes in actual measures of the fiscal balance published in government reports by attempting
to remove the effects of other factors on the measured budget balance. These may include the
cyclical position of the economy, the effects of inflation on government interest payments,
changes in unemployment compensation and other influences,

Fiscal impulse measures, if properly constructed, are useful for at least two purposes. First, in so
far as they measure the effects of a government’s fiscal policies on budget outcomes, they are
useful for monitoring the performance of fiscal authorities. Second, fiscal impulse measures are
useful for international comparisons of fiscal policy changes, to judge within a multilateral
surveillance exercise, for example, whether fiscal policy has changed over time. Fiscal impulse
measures have been designed to summarize in a single measure the aggregate effects of fiscal
policy actions on the government’s budget balance and have served as a basis for policy
discussions and international comparisons of fiscal policy actions.

Measures of fiscal impulse have often been confused with fiscal policy multipliers, which
attempt to measure the effects of changes in fiscal policy on economic activity and other
economic variables. For example, economists and policymakers have often stated that fiscal
policy in a particular year was “expansionary” or “contractionary,” implying that it had a
positive or negative effect on economic activity, respectively, when they meant to say that an
estimate of the change in the discretionary component of the budget increased or decreased. Thus
there are at least two questions of interest relating to fiscal policy of a country over time. Fiscal
impulse measures try to answer the question, “has there been a policy-based change in the
government’s budget balance?” Fiscal policy multipliers, on the other hand, try to answer the
question, “what is the impact of changes in fiscal policy on economic activity and other
economic variables?”

The father of modern economics, Adam Smith, stated that connectivity leads to productivity.
That’s an apt summary of the latent potential in Afghanistan’s geostrategic location.

Definition of 'Bailout': Bailout is a general term for extending financial support to a

company or a country facing a potential bankruptcy threat. It can take the form of loans, cash,
bonds, or stock purchases. A bailout may or may not require reimbursement and is often
accompanied by greater government oversee and regulations.

The reason for bailout is to support an industry that may be affecting millions of people
internationally and could be on the verge of bankruptcy due to prolonged financial crises.

But who pays those support? We normal people from our pocket trough out government tax 

Vector auto regression (VAR) is a statistical model used to capture the relationship

between multiple quantities as they change over time. VAR is a type of stochastic process model.
VAR models generalize the single-variable (univariate) autoregressive model by allowing for
multivariate time series.

A stochastic process is defined as a collection of random variables defined on a

common probability space , where is a sample space, is a -algebra, and is a probability measure;
and the random variables, indexed by some set , all take values in the same mathematical space ,
which must be measurable with respect to some ...

Probability Space in probability theory, a probability space or a probability triple. is a

mathematical construct that provides a formal model of a random process or "experiment". For
example, one can define a probability space which models the throwing of a dice.
A monetary policy shock occurs when a central bank changes, without sufficient
advance warning, its pattern of interest rate or money supply control. 

The monetary transmission mechanism is the process by which asset prices and

general economic conditions are affected as a result of monetary policy decisions. Such
decisions are intended to influence the aggregate demand, interest rates, and amounts
of money and credit in order to affect overall economic performance.

Monetary tightening the policy in which a central bank raises interest rates and deposit
ratios to make credit less easily available. This usually happens when the central bank is seeking
to control or is concerned about inflation.

Neutral Monetary Policy Stance

Unbiased, not supporting or helping either side in a conflict/ Equilibrium or Neutral rate.

Meaning in Economic Terms – The policy rates neither stimulates (speed up) nor restrains
(slowdown) the economic growth by taxation and government spending.

That stance can be defined as the contribution made by monetary policy to economic,
financial and monetary developments.

A credit portfolio is an investment portfolio comprised of debts, like home and car loans.

A credit portfolio is an investment portfolio comprised of debts, like home and car loans.
Private investors can build credit portfolios, but more commonly they are held by banks and
other financial institutions.

 An investment portfolio is a basket of assets that can hold stocks, bonds, cash and
more. Investors aim for a return by mixing these securities in a way that reflects their risk
tolerance and financial goals.

In economics, the loanable funds doctrine is a theory of the market interest rate. According

to this approach, the interest rate is determined by the demand for and supply of loanable funds.
The term loanable funds includes all forms of credit, such as loans, bonds, or savings deposits.

Tight monetary policy is an action undertaken by a central bank such as the Federal
Reserve to slow down overheated economic growth. Central banks engage in tight monetary
policy when an economy is accelerating too quickly or inflation—overall prices—is rising too
fast.
A line item budget is a form of budget presentation that clusters proposed expenses by
department or cost center. This method of aggregation more easily shows which departments and
cost centers are absorbing the bulk of the entity's funds.

A baseline in project management is a clearly defined starting point for your project
plan. It is a fixed reference point to measure and compare your project's.

A baseline programme may be prepared by a contractor at the beginning of a project.

This is a detailed view of how they will divide the works into activities, the duration of those
activities, and logic links to preceding and succeeding activities.

Royalties: Income from sale of natural resources by government departments, State-Owned

Enterprises or municipalities.

A royalty is a legally binding payment made to an individual or company for the ongoing use
of their assets, including copyrighted works, franchises, and natural resources.

A line-item budget is one in which the individual financial statement items are grouped

by category. It shows the comparison between the financial data for the past accounting
or budgeting periods and estimated figures for the current or a future period.
Balanced growth refers to a specific type of economic growth that is sustainable in the
long term. It is sustainable in terms of low inflation, the environment and balance between
different sectors of the economy such as exports and retail spending.

Balanced growth' has at least two different meanings in economics. In

macroeconomics, balanced growth occurs when output and the capital stock grow at the same
rate. ... In development economics, balanced growth refers to the simultaneous, coordinated
expansion of several sectors.

A technical feasibility study assesses the details of how you intend to deliver a product
or service to customers. Think materials, labor, transportation, where your business will be
located, and the technology that will be necessary to bring all this together.

Financial viability refers to an organizations ability to generate sufficient income to meet

operating payments, debt commitments and, where applicable, to allow growth while
maintaining service levels.

A budget requisition constitutes a formal request for funding. During the budget

requisition process, an organization or division within an organization requests funding from a
higher authority.

The grace period for principal is the period from the date of signature of the
loan or the issue of the financial instrument to the first repayment of principal. The repayment
period is the period from the first to last repayment of principal. Maturity is the sum of both
periods: grace plus repayment periods.

Revenue Expenditure Those expenditures of the government that do not lead to the
creation of fixed assets are called revenue expenditures. The government spends money under
various accounting heads, such as paying interest on loans, salaries and pensions, subsidies,
spends on different ministries and departments, etc. Grants made to state governments and other
parties are also treated as revenue expenditures, even though these might be used for the creation
of fixed assets.

Capital expenditure is the money spent by the government on the development of

machinery, equipment, building, health facilities, education, etc. It also includes the expenditure
incurred on acquiring fixed assets like land and investment by the government that gives profits
or dividend in future.
Revenue Deficit if a business or government has a revenue deficit that means its income
isn't enough to cover its basic operations. When that happens, it may make up for the revenue it
needs to cover by borrowing money or selling existing assets. To remedy a revenue deficit, a
government can choose to raise taxes or cut expenses.

Revenue deficit = Total Revenue expenditure – (Tax Revenue + Non-Tax Revenue)

1. Revenue Deficit = Revenue expenditure - Revenue receipts

= Rs. 22,250 crore - Rs. 17,750 crore
= Rs. 4,500 crore
2. Fiscal deficit = Revenue expenditure + Capital expenditure - Revenue receipts - Capital
receipts (net of borrowings) = Borrowings = Rs. 12,500 crore
3. Primary Deficit = Fiscal deficit - Interest payments

Capital receipts refer to the funds or resources that a government, organization, or

individual receives from sources representing increased capital or net worth. These receipts are
generally one-time or non-recurring and are not a regular source of income.

What is vertical and horizontal equity?

Horizontal equity is the principle that taxpayers with equal income should pay equal tax. Vertical
equity requires that tax obligations vary in proportion to income such that if A has a greater
income than B, A will owe more income tax than B.

Fiscal stimulus is an important tool that policymakers can use to reduce the severity of
recessions. The federal government provides fiscal stimulus when it increases spending, cuts
taxes, or both, to shore up households' and businesses' demand for goods and services during a
recession.

Austerity measures are strict, frugal economic policies used by governments to manage

public debt. There are three main types: higher taxes (revenue generation) to fund government
spending, revenue generation plus lower government spending, and lower taxes plus lower
government spending.

Rationalization of expenditure Austerity could mean to reduce the overall spending

with a change in its structure or to leave as is; while rationalization could mean a change in the
structure of spending without changing its size or ceiling.

Supply side management relates to the process of procuring, generating, and

distributing energy in the most efficient manner possible.
What is Demand-side Management (DSM)? DSM refers to initiatives and
technologies that encourage consumers to optimise their energy use. The benefits from DSM are
potentially two-fold; first, consumers can reduce their electricity bills by adjusting the timing and
amount of electricity use.

Stagnation is a prolonged period of little or no growth in an economy often highlighted by

periods of high unemployment. A rate of growth of less than 2-3% annually as measured by
gross domestic product (GDP) is considered stagnation.