Republishing from A First Taste of Law.

This is another high-frequency area for many entrance tests, including all sort of management entrances, government services, PSUs; even interview boards ask questions on this. Questions from Indian economy has turned up in limited number in almost every question paper of various law entrances. That is hardly the only reason you need to read up on these topics. Remember that even recruiters ask these questions to law graduates. Having some idea about the economy is going to be very handy for almost anyone with any professional profile. Even those already in law schools will find this write up useful if they have lost touch with what is happening in the economic world. GK is an important aspect and reading this post will certainly boost yours.

What are the issues at the forefront of discussion these days?

• The fall of the dollar as a global currency: It was the normal practice for countries across the globe to store up dollars to meet their international expenditure. India has a phenomenal stock pile of dollars, so does China. Given that the price of a dollar is nose-diving, the value of these dollar stock piles is reducing.

What will happen now if India or China decides to sell off its dollar reserve (practically, some of it) to stock some other more stable currency like Euro? It already does so to an extent to reduce its exposure to price fluctuation of dollars, by having a basket of different currencies. Still, the mos significant portion is still in dollar, and if India decides to sell even half of these dollars to convert them into another currency, or even worse, china decides to do that, dollar is doomed! The price of the dollar will fall even further, probably causing a panic in the International Currency Markets, triggering a crisis.

These apprehensions and what seems to be the fall of the dollar from grace has brought up some issues, making them important for your preparation. Read about them on the internet and keep an eye out for news about these things:

IMF, clearing houses, gold standard, foreign currency reserve, international debt, pegging of currency, Dubai financial crisis

• BRIC nations emerging as new economic forces: This is supposedly happening for a while now, but the economic downturn and the crisis of the financial giants have highlighted the strong fundamentals and also the potentials of these four countries. (DO you know which are the BRIC countries?

related issues: the share of India in international trade, GDP (the concept and projected figures), recession, economic concepts related to demand and supply, Adam Smith, business cycles, Keynes, energy security

• India has a new minister representing it in the WTO and international trade negotiations. Who is he? The earlier one used to be Kamal Nath, who famously opposed the agenda of the developed countries and gave Indian bargaining some teeth.

Related issues: Uruguay round, WTO, GATS, negotiations at WTO, least developed countries, Doha round, food security, agricultural market access, export subsidy, quantitative restrictions, subsidy in agriculture, most favoured nation, national treatment, regional trade agreements, technical barriers to trade, sanitary and phytosanitary measures, major Indian exports (rice, tea, jute, sugarcane, spices, coffee, cashew – read up the data and figures like Indian share in the international market, biggest exporting country in the world about these products)

•  Stock markets have been in the news a lot. While few will expect you to have comprehensive idea about stock markets, it will be a good idea to know what the following terms mean:
  IPO, QIP, insider trading, liquidity, FII, FDI, mutual funds, bonds, security, stock, share, SEBI, capital market, leveraged transaction, mergers, acquisition

Ok, that’s a lot to do. Good Luck! Please point out in your comments any issue I might have missed, I shall try and include them in the post.