onomi     on epts and erminolo ies        22.31
        l-m scheDule                                            lou
     Here ‘L-M’ stands for ‘liquidity-money’. This is        Letter of Undertaking (LoU) is basically, a kind of
     a schedule showing the combinations of levels           guarantee/promise given by the LoU-issuing bank/
     of national income and interest rates where the         financial institution about the creditworthiness of
     equilibrium condition for the monetary economy,         a firm (corporate body). By showing the LoU the
     L = M, holds.                                           drawee of the LoU can borrow from the eligible
                                                             banks/financial institution inside India or abroad.
        locAl AreA bAnk                                      In case of a default in repaying the loan by the
                                                             drawee (of the LoU) the bank/financial institution
     Announced in the Union Budget 1996–97 to                compensates the lending body. This term came in
     ensure a focussed savings and credit mobilisation       news by February, 2018 in a financial fraud with a
     by defining the clear boundary of operation,            public sector bank (Punjab National Bank).
     the local Area Bank (LAB) operates to a narrow
     geographical area of three contiguous districts. The       lump of lAbour fAllAcy
     private sector is also allowed entry in the segment.
                                                             The fallacy in economics that there is a ‘fixed
        locomotive priniciple                                amount of work’ to be done i.e. a lump of labour—
                                                             this may be shared in different ways to create fewer
     The idea that in a situation of worldwide recession     or more jobs in an economy. An economist, D.F.
     (see the chapter Business Cycle), increase in the total Schloss in 1891 called it the lump of labour fallacy
     demand in one economy stimulates economic               because in reality, the amount of work to be done
     activities in the other economies via foreign trade.    is not fixed.
        lorenz curve                                            mAcro AnD micro economics
     A graph showing the degree of inequality in income      In economics, two different ways of looking at the
     and wealth in a given population or an economy.         economy have been developed by economists i.e.,
     It is a rigorous way to measure income inequality.      macroeconomics and microeconomics.
     In this method (for example), personal incomes in            Macroeconomics (‘macro’ in Greek language
     an economy are arranged in increasing order; the        means ‘large’) looks at the behaviour of the
     cumulative share of total income is then plotted        economy as a whole such as the issues like inflation,
     against the cumulative share of the population.         rate of unemployment, economic growth, balance
     The curve’s slope is thus proportional to per           of trade, etc. It is the branch of economics which
     capita income at each point of the population           studies the economy in its total or average term.
     distribution. In the case of complete equality of            Microeconomics (in Greek language ‘micro’
     income, the lorenz curve will be a straight line        means ‘small’) looks on the behaviour of the units
     and with greater curvature the inequality rises         i.e. the individual, the households, the firms, a
     proportionally–the Gini Coefficient measures this       specific industry, which together make up the
     inequality.                                             economy.