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Functions of the Budget
The budget fulfils three main functions:
The government of a country provides certain services such as administration, defence, law and order, environmental services and economic services. Also it must meet the public debt. Sufficient revenue must be raised to pay for this.
In many countries, a situation has arisen where a small proportion of the population own a more than proportionate share of the nations wealth, while the majority of the population own only a small proportion of it. One method of redressing such inequalities of wealth is through a progressive system of taxation on income and capital. A progressive system is one whereby the wealthy people do not only pay more tax than the poor, but also pay a greater proportion of their income or wealth.
The government uses the budget to implement fiscal policy, i.e. the regulation of the economy through governments expenditure and taxes.
Disadvantages of product differentiation a) Product differentiation generally reduces the degree of competition in the market. It does this in two ways: i.
When is production profitable according to price-taking firm at profit, break-even or loss? Production profitable at profit, break-even or loss: a. When TR > TC, in that cas
Equilibrium National Income in a Frugal Economy Saving and investment are examples of two categories of expenditure called withdrawals and injections. A WITHDRAWAL is any inc
gap between economic theory and business practice
Using the discounting principle calculate the present value of an annuity of five years at Rs. 500 payments made at the end of each of the next five years at 10% interest. stion..
Barriers to entry in pure oligopoly The barriers to entry can be artificial or natural. Artificial Barriers This can be acquired through: State protection throu
What are the limitations of managerial ecomimics
Disadvantages of the Planned System The centrally planned economies suffer from the following limitations: Lack of choice: Consumers have little influence over what is p
a) What do you understand by equilibrium National Income and to what extent is economic growth beneficial to an economy? b) Explain using both diagrams and mathematical tools,
A chemical producer dumps toxic waste into a river. The waste decreases the population of fish, decreasing profits for the local fishing industry by $100,000 per year. The firm cou
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