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Layman's economics

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Understanding frequently used terms in in very simple ye conceptual way :-

INFLATION  AND DEFLATION:-
Inflation-"It is the sustained increase in the general price level" of basket of commodities and service. Remember a saying Commodities and services are real and not the money, eg Let two years back cost of one marker was Rs 10 and now it has increased to Rs 20.So it simply means that now yer Rs 10 can buy only half of that commodity, this means that value of money w.r.t has decreased ( this is w.r.t within a country nothing to do with foreign ). Similarly Deflation means "value of money has increased".
For example let a creditor gives a loan of 10,000 to a debtor and then next yr inflation occurs then if the debtor returns 10000 to creditor, it means creditor loses and debtor gains.So to tackle this the creditor increases the interest rates.

Now what's a Inflation cycle ?

Ans:- Price increase result in-
 profit- increase result in-                ( read it l…

Epic Fb of World war

Bali Package and Indian Subsidy

Bali Ministerial conference has witnessed  the 1st ever agreement signed under WTO because it needs a unanimous consensus  of all the 168 members.This agreement is basically based on trade facilitation and regulation of custom rules  for the mutual  growth of its members.
So what's the Indian Issue there ?

The matter revolves around the food security policy of India under which it has started providing food grains to around 2/3 of population ( 75 % rural and 50% urban ) at a highly subsidized rate .For example rice for Rs 3 per kg, wheat for Rs 2 per kg and coarse grains like millet,bajra etc for Rs 1 per kg. Because for this India will incur a subsidy of around 125 lakh crore in mere 1 year and which is going to increase exponentially in coming years.Now India is on the verge of breaching the 10% limit ( for Developed countries this is around 5 %) with respect to subsidies on agricultural production as specified after Uruguay round of WTO conference.(It is to be kept in mind tha…