NISM Series XV : Research Analyst Certification Exam Notes
Page 32 Of 62
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Inflation - is measured in two ways - at wholesale level in terms of Wholesale Price Index (WPI) and retail level in terms of Consumer Price Index (CPI).
Foreign Direct Investment (FDI) and Foreign Portfolio Investments (FPI) Foreign capital flows to a country can be either in active form known as Foreign Direct Investment (FDI) or passive form known as Foreign Portfolio Investment (FPI). In case of FDIs, investing entities participate in decision making and drive the businesses. However, Portfolio Investment, as name indicates is investment in markets - equity or bonds by the Foreign Portfolio Investors (FPIs) without any management participation. There are upper limits on the individual and combined holding by FPIs in the paid up capital of the Indian companies. While FDI is long term in nature and stable money, FPIs money is considered as hot money as they can pull out the money at any time which could create systemic risk for the economy
Neutral fiscal policy - When governments' income and expenditure are in equilibrium. No major changes required in the Fiscal policies.
Expansionary fiscal policy - Fiscal measures when government's spending exceeds its income. This policy stance is usually undertaken during recessions/slow moving economy.
Contractionary fiscal policy - Fiscal measures when government's spending is lower than its income. Government uses excess income to repay its debts/obligations or acquire assets.
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