Macroeconomics and Policy

As overcapitalsiation arises when actual profits are not sufficient to provide a fair return on share capital over a period fo time. So when profits are low in comparison to capital invested by investors, the company pays lower dividends on shares than previous years to its investors due to less profits.

The 2008 global financial crisis was largely triggered by the sub-prime mortgage crisis in the United States, which severely impacted financial institutions worldwide.

Dear money refers to a situation where the cost of borrowing money is high due to high interest rates, often implemented by central banks to curb inflation.

Inflation is generally caused by an increase in the money supply (too much money chasing too few goods) or a decrease in the supply of goods (fall in production), leading to higher prices.

The sentence mentions about the uncertainity of monsoon. 'Vagaries' is the best option to imply the same as it means odd, whimsical, or freakish.

Chiefly means mainly or primarily, which fits the context of the government's primary focus.

General decline in national income (GDP). Which includes wages, salaries, profits, interest and rental income.

This is the amount charged, expressed as a percentage of principal by a lender to a borrower for the use of assets.

It is an entity (person or institution) that extends credit by giving another entity permission to borrow money if it is paid back at a later date.

In India, monetary policy of the Reserve Bank of India is aimed at managing the quantity of money in order to meet the requirements of different sectors of the economy and to increase the pace of economic growth.

The base effect pertains to low inflation numbers a year ago, which makes even a small increase in the price index now appear much larger. The index is higher this year then the next year inflation figures may be lesser (as base is higher).

An economy that does not interact with the economy of any other country. A closed economy prohibits imports and exports, and prohibits any other country from participating in their stock market.

Current account deficit can be reduced by devaluating the domestic currency (boosting export), increase in the export subsidy (boosting export) and adopting suitable policies which attract greater FDI and more funds from FIIs.

Economic growth is usually coupled with inflation. There has been considerable debate on the existence and nature of the inflation and growth relationship. Some consensus exists suggesting that macroeconomic stability, specifically defined as low inflation, is positively related to economic growth.

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