onomi on epts and erminolo ies 22.35
country a special favour such as a lower customs full knowledge of the strategies of all the other
duty rate for one of their products the same would players—once the equilibrium is reached, none
need to be extended to all other WTO members. of the players has any incentive to change their
This principle is known as Most Favoured Nation strategy.
MFN is governs trade in goods. MFN is also neo-clAssicAl economics
a priority in the General Agreement on Trade in
Services (GATS) and the Agreement on Trade- The school of economics based on the writings
Related Aspects of Intellectual Property Rights of Alfred Marshall (1842–1924) which replaced
(TRIPS). However, there are some exceptions the classical economics by the 19th century, also
under WTO regime which allow mwmber known as the ‘marginal revolution’.
(i) Set up a ‘free trade agreemen’t that net income
applies only to goods traded within the This is related to a limited liability firm/company
group (discriminating against goods from (i.e., Ltd.). It is derived by deducting the expenses
outside). of the company from its total revenue in a
(ii) Give developing countries special access particular period (usually one year). If income tax
to their markets. and interest are not deducted, it is called ‘operating
(iii) Raise barriers against products that are profit’ (or ‘loss’, as the case may be). Net income is
considered to be traded unfairly from also called earnings, net earnings or net profit.
(iv) To discriminate, in limited circumstances, net stAble funDing rAtio
Net stable funding ratio (NSFR) is one of
But the agreements only permit these the clauses of the Basel III norms (of the Basel
exceptions under strict conditions. In general,
based Bank for International Settlement) aimed
MFN means that every time a country lowers a
at prudential regulation of the banking sector.
trade barrier or opens up a market, it has to do
Banks are supposed to maintain sufficient long-
so for the same goods or services for all its trading
term (upto one year) liquidity under it so that
partners whether developed or developing.
they could be sure of the stable source of fund in
times of financial stress if such situations arise in
nArrow bAnking the economy.
Short-term lending in risk-free asset is narrow
banking. A suggestion for such banking was given net worth
by the committee on Financial System (CFS) in
Net worth for a company is its total assets minus
1991 for the weak banks of India.
total liabilities. This is an important determinant
of the value of a company, considering it is
composed primarily of all the money that has been
A concept in game theory named after John invested since its inception, as well as the retained
Nash, a mathematician and Nobel prize winning earnings for the duration of its operation. Net
economist, which occurs when each player worth can be used to determine creditworthiness
is pursuing their best possible strategy in the because it gives a snapshot of the company’s