Everytbing Lol Flashcards
Law of comparative average
States that a country should specialise in trade in the production of those goods and services in which it is rrelatively more efficient
What is national debt
This is the total amount of government borrowing which is outstanding
Principals of tax
Equity: pay upon ability to pay Certainly: when, how much, how Convenience: method encourages Economy: cost < collected Not disincentive to work/invest
International Monetary Fund
Ensures exchange rates stability
Corrects balance of payments problems
Reduce economic and financial crisis
Finance
Functions and characteristic of money
Medium of exchange, measure of value, store of wealth, standard of deferred payments
Confidence, portable, divisible (denominations),
Durable
Role of CB and monetary policy
Controlling the money supply by controlling the amount of credit the banks are allowed to lend out
Eg. Open market operations-sells bonds to HSB
Print and distribute money, gov through CB, maintains price stability lc, stable financial system
Economic development
Economic growth
National income
An increase in the GNP per person accompanied by a change in the structure of society.
The percentage change in national income from one year to the next
Income earned by the permanent residence of a country from current economic activity in one year
Output: g&s produced (double counting-value added)| Input: incomes earned (BiK, transfer payments)
Balance of trade / payments
Visible exports - imports
Exports - imports
Onceoff flows: government borrowing, direct investments, banking transactions
Law of demand
As price rises, demand for g&s fall, and as prices falls, demand will rise
Merit wants
G&s gov feels obliged to provide rather than leave to free play of market forces
Fiscal policy
Gov. Uses alterations in level of expertise future or revenue to achieve its economic objectives
The multiplier
Consumption: Marg. propensity to consume: fracture of each extra unit of income consumed/spent
Investment: interest, gov. Policy, expectations
Gov. Soending: annual political decision in current/capital budget
Exports: incomes abroad
Imports: incomes
Protectionism
Barriers to make it difficult for another country to sell goods Tariffs: import tax Quota: limit Embargo: ban Subsidy: gov. pays production
Demand supply curve
Q = X
P = Y
S = line from corner
D: X
Surge in demand shifts demand curve Right
Equilibrium A-B
Price up P1-P2
Quantity up Q1-Q2
