Question

Which among the following term describes that "An Institution which organises the free interaction of individuals pursuing their economic activities"?
1. Company
2. Budget
3. Factory
4. Market

Answer 1

Correct Answer - Option 4 : Market

The correct answer is market.

• Market is an Institution that organizes the free interaction of individuals pursuing their economic activities.

Market

• A setup where two or more parties engage in an exchange of goods, services, and information is called a market.
  • ​Physical Markets - Physical market is a setup where buyers can physically meet the sellers and purchase the desired merchandise from them in exchange for money. Shopping malls, department stores, retail stores are examples of physical markets.
  • Non Physical Markets/Virtual markets - In such markets, buyers purchase goods and services through the internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is done through the internet. Examples - Rediff shopping, eBay, etc.
  • Auction Market - In an auction market the seller sells his goods to one who is the highest bidder.
  • The market for Intermediate Goods - Such markets sell raw materials (goods) required for the final production of other goods.
  • Black Market - A black market is a setup where illegal goods like drugs and weapons are sold.
  • Knowledge Market - A knowledge market is a setup that deals in the exchange of information and knowledge-based products.
  • Financial Market - Market dealing with the exchange of liquid assets (money) is called a financial market. Financial markets are of the following types.
    • Stock Market - A form of market where sellers and buyers exchange shares is called a stock market.
    • Bond Market - A marketplace where buyers and sellers are engaged in the exchange of debt securities, usually in the form of bonds is called a bond market. A bond is a contract signed by both parties where one party promises to return the money with interest at fixed intervals.
    • Foreign Exchange Market - In such type of market, parties are involved in the trading of currency. In a foreign exchange market (also called a currency market), one party exchanges one country’s currency with an equivalent quantity of another currency.
    • Predictive Markets - Predictive market is a setup where the exchange of goods or services takes place for the future. The buyer benefits when the market goes up and is at a loss when the market crashes.

Company

• A company is a legal entity formed by a group of individuals to engage in and operate a business, commercial or industrial enterprise.
• Company members share a common purpose and unite to achieve specific, declared goals.
• A company is a body corporate or an incorporated business organization registered under the companies act. 
• Companies are to be classified on the basis of liabilities, members, and the basis of control.
  • The companies on the basis of liabilities are:
    • Companies Limited by Shares.
    • Companies Limited by Guarantee.
    • Unlimited Companies.
  • The companies on the basis of members are:
    • One Person Companies.
    • Private Companies.
    • Public Companies.
  • The companies on the basis of control are:
    • Holding and Subsidiary Companies.
    • Associate Companies.

Budget

• The Constitution refers to the Budget as the 'Annual Financial Statement'.
• The budget is laid before Parliament in the name of the President.
• The central ministry decided to merge the General Budget and the Railway Budget on 21st September 2016.
• The General Budget has a total of 109 demands (103 for civil expenditure and 6 for defense expenditure).
• The Railway Budget has 32 demands.
• The Union Finance Minister presents the Union Budget every year in the Parliament that contains the Government of India revenue and expenditure for one fiscal year which begins on 1^st April and ends on 31^st March of the following year.
• India's first Union Budget was presented by the first Finance minister, RK Shanmukham Chetty on November 26, 1947.
• Former Prime Minister Indira Gandhi was the first Indian woman Finance minister and to have presented the budget in her capacity as the Prime Minister of India in 1978.
• C. D. Deshmukh was India's first Governor of RBI to have presented the interim Budget for the year  (1951-1952).
• The budget of 1973-1974 is known as the 'Black Budget' due to the budget deficit.

Factory

• A factory is an industrial site or set of buildings where large amounts of goods are made using machines.
• A factory is defined as something that can be made or assembled things quickly and in great quantities.

• They are a critical part of modern economic production, with the majority of the world's goods being created or processed within factories.