onomi    on epts and erminolo ies          22.51
          Proposed by the Nobel prize-winning             earning above the transfer earnings is known as its
     economist James Tobin (1918–2002), the tax has       ‘economic rent’.
     never been implemented anywhere in the world
     so far.                                                 trAnsfer price
                                                          A term of international economics via which an
        totAl proDuct                                     MNC charges lesser prices for its exportables to its
     The main/core product supported by many              arm in another economy where tax rates are high,
     peripheral products/services, as for example a car,  for increasing income. The East India Company
     coming with loan facility, warranties, insurance,    did it heavily in pre-independent India.
     and after sale service, etc.
                                                             ulips & mfs
        trADe creAtion                                    Unit Linked Insurance Policies (ULIPs) offer
     The increase in international trade that results     insurance plus investment objectives to those
     from the elimination or reduction of trade barriers  who want a higher amount of insurance cover at
                                                          a marginally higher cost. However, unlike mutual
     (such as quota, customs, etc.).
                                                          funds, which may be a short-term investment play,
                                                          ULIPs meet long-term investment objectives.
        trAgeDy of the commons                            Essentially, ULIPs must be treated as long-term
     Refers to the dangers of over-exploitation of        (15-plus years) investment vehicles.
     resources due to lack of property rights over them        Returns are varied across the risk class. One
     (‘commons’ are the resources neither owned           can categorise risks into three classes for both
     privately nor by the state but are open for free use MF and ULIP schemes—high, medium, and low
     by all). A rationing or imposing of levy on such     risks. High-risk policies have a higher exposure
     resources as a check.                                to equities and low-risk policies might have low
          The concept was proposed by a 19th century      or no exposure to equities. For MFs, high-risk
                                                          comparable products are diversified equity funds,
     amateur mathematician william Forster Lloyd.
                                                          medium-risks are balanced funds, and low risks
                                                          are debt instruments.
        trAnsfer pAyments
     The expenditure by the government for which             unDerwriting
     it receives no goods or services. For example,
                                                          The process of acceptance by a financial institution
     the expenditures on tax collection, social sector,
                                                          of the financial risks of a transaction for a fee. For
     unemployment allowance, etc.                         example, merchant banks underwrite new share
          As such expenditures are not done against       issues, guaranteeing to buy up the shares not sold
     any products they are not counted in the national    in a public offer (i.e., in the situations of under-
     income of the economy.                               subscription).
        trAnsfer eArnings                                    unsecureD loAn
     The return that an asset must earn to prevent        The loan which is forwarded by bank only against
     its transfer to the next best alternative use. Any   the creditworthiness of borrower is known as