onomi     on epts and erminolo ies        22.3
                                                            agricultural labourer. He or she has no risk in the
        ADverse selection
                                                            cultivation, but merely works on another person’s
     One among the two kinds of the market failure          land for wages. An agricultural labourer has no
     often associated with insurance business which         right of lease or contract on land on which he/
     means doing business with the people one would         she works.
     have better avoided.
          Adverse selection can be a problem when there        Alpine convertible bonD
     is an asymmetry in information between the seller
     and the buyer of an insurance policy—as insurance      An ACB (Alpine Convertible Bond) is a Foreign
     will not be profitable when buyers have better         Currency Convertible Bond (FCCB) issued by an
     information about their risk of claiming than does     Indian company exclusively to the Swiss investors.
     the seller of the insurance policy. In the ideal case,
     insurance premiums are set in accordance to the           AmmortisAtion
     risk of a randomly selected person in the insured
     bracket (such as 40-year-old male smokers) of the      Payment of a loan in installments by the borrower.
     population.                                            It is usually done in an agreed period and every
          The other kind of market failure is moral         installment includes a part of the total loan plus
     hazards associated with the insurance sector.          the interest.
        AgriculturAl extension                                 AnDeAn pAct
     Agricultural extension is a proper approach            A regional pact to establish a common market link,
     to motivate people to help themselves by               started originally in 1969. At present it has peru,
     applying agricultural research and development
                                                            Equador, Columbia, Bolivia, and Venezuela. The
     in their daily lives in farming, home making,
     and community living. It plays a vital role in         pact had almost collapsed by the mid-1980s due
     community development. It is a two-way channel         to regional, economic, and political instabilities
     that brings scientific information to rural people     and was re-launched in 1990 (the original member
     and takes their problems to scientific institutes      Chile was dropped and the new member venezuela
     (for further research and development) for their       was added to it).
          In India, like many other developing countries,      AnimAl spirit
     the role of agricultural extension is more than
     educational and it needs to deal with the human        ‘Confidence’, considered as one of the essential
     resource development of the agrarian population        ingredients of economic prosperity was called by
     too, making it a comparatively tougher task            J. M. Keynes as animal spirit. For Keynes, this is
     than in the developed countries. The spread of         a ‘naive optimism’ by which an entrepreneur puts
     information technology will serve a great purpose      aside the fact of loss as a healthy man puts aside
     in this area.                                          the expectation of death.
                                                                 But from where does this animal spirit come
        AgriculturAl lAbourer                               has been a mystery—can it be created artificially
     A person who works on another person’s land for        from outside or whether it is an innate thing some
     wages in money or kind or share is regarded as an      are born with, etc.