Inflation

a general increase in prices and fall in the purchasing value of money. Inflation reduces the real value of
money over time

Deflation

deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the
inflation rate falls below 0% (a negative inflation rate). deflation increases the real value of money.

 Monopolistic competition, is a type of imperfect competition such that many producers

sell products that are differentiated from one another (e.g. by branding or quality) and
hence are not perfect substitutes. In monopolistic competition, a firm takes the prices
charged by its rivals as given and ignores the impact of its own prices on the prices of
other firms
 Oligopoly, in which a market is run by a small number of firms that together control the
majority of the market share.
o Duopoly, a special case of an oligopoly with two firms.
 Monopsony, when there is only one buyer in a market.
 Oligopsony, a market where many sellers can be present but meet only a few buyers.
 Monopoly, where there is only one provider of a product or service.
o Natural monopoly, a monopoly in which economies of scale cause efficiency to
increase continuously with the size of the firm. A firm is a natural monopoly if it
is able to serve the entire market demand at a lower cost than any combination of
two or more smaller, more specialized firms.
 Perfect competition, a theoretical market structure that features no barriers to entry, an
unlimited number of producers and consumers, and a perfectly elastic demand curve.

Capital Market

the part of a financial system concerned with raising capital by dealing in shares, bonds, and other long-
term investments.

Money Market

A segment of the financial market in which financial instruments with high liquidity and very short
maturities are traded. The money market is used by participants as a means for borrowing and lending
in the short term, from several days to just under a year. Money market securities consist of negotiable
certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal
notes, federal funds and repurchase agreements (repos).

Repo rate

The rate at which the RBI lends money to commercial banks is called repo rate.
Reverse Repo Rate

Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. Banks
are always happy to lend money to the RBI since their money are in safe hands with a good
interest.

An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn
higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money
out of the banking system.

CRR

Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If
the central bank decides to increase the CRR, the available amount with the banks comes down.
The RBI uses the CRR to drain out excessive money from the system. -