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) treatment.
           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’.
     countries to—
           (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.
               specific countries.
         (iv) To discriminate, in limited circumstances,      net stAble funDing rAtio
               in services.
                                                           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
        nAsh equilibrium
                                                           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