22.38        ndian   onom
                                                          doctor’s prescription is an over-the-counter deal
        okun’s lAw
                                                          in drugs.
     Based on the empirical research of Arthur Okun
     (1928–80), the law describes the relationship           pArAllel importing
     between unemployment and growth rate in an
                                                          A type of arbitrage where an independent importer
     economy. As per it, if GDP grows at 3 per cent
                                                          buys product of a particular supplier at low price
     p.a., the unemployment rate would not change.
                                                          in one country and resells it in direct competition
     In the case of faster growth rates, every extra
                                                          with the supplier’s distributors in another country
     above the 3 per cent will have a decrease in the
                                                          where prices are higher.
     unemployment rate by its half (i.e., a 4 per cent
     growth rate will decrease unemployment by 0.5             It promotes free trade and competition by
     per cent–half of 1 which is the extra above 3        breaking down barriers to international trade and
     per cent). Similarly, a growth rate below 3 per      undermines price discrimination between markets
     cent will have the same but opposite impact on       covered by the suppliers.
     unemployment (i.e., increases it).
          Though the law was perfectly correct for the       pAreto principle
     period of the US economy Okun studied, it may        The maximisation of the economic welfare of the
     not be valid today in either US or anywhere else.    community. Named after the Italian economist
     But in general, the law is still used by experts and Vilfredo Pareto (1843–1923), this points to a
     policy makers as a rule of thumb to estimate the     situation in which nobody can be made better off
     relationship between growth rate and job creation.   without making somebody else worse off.
                                                               By an efficient use of resources an economy
        open mArket operAtion                             is able to do so i.e., without making somebody
     An instrument/tool of monetary policy under          else worse off, somebody might be made better
     which sale/purchase of government Treasury Bills     off. In reality, change often produces losers as well
     and bonds takes place as a means of controlling      as winners. Pareto optimality does not help judge
     money supply.                                        whether this sort of change is economically good
                                                          or bad.
        opportunity cost
                                                             pArkinson’s lAw
     A measure of the economic cost of using scarce
     resources to produce one particular good or service  A proposition by C. Northcote Parkinson which
     in terms of the alternative thereby foregone, also   suggests that work expands according to the time
     known as the economic cost.                          available in which it is done.
        over the counter                                     penny stocks
     The financial papers/securities which can be         Very low-priced shares of small companies which
     bought or sold through a private dealer or bank      have low market capitalisation. The term made
     rather than on a financial exchange. The term has    news in mid-2006 when some of the ‘penny
     its use in the non-financial world too–purchasing    stocks’ did show a high rise in their trading prices
     medicines from a medical store without the           in India at the BSE as well as the NSE.