Month: October 2020

The concept of elasticity can be applied in economic policy decisions in the light of the following situations: Business pricing decisions: revenue can be increased by increasing prices where demand is inelastic; where demand is elastic, revenue could be increased Read More …

Main problems of National Income Accounting: Incomplete/inadequate information Danger of double counting Changes in prices (price instability) Problem of inclusion, in terms of: Subsistence output/income Intermediate goods Housing i.e. rent on owner-occupiers Public services provided by the government Foreign payments Read More …

Income approach Expenditure approach Output/Value Added approach   The Income Approach: Each time something is produced and sold someone obtains income from those activities/transactions. More precisely, each unit of expenditure will find its way partly into wages/salaries, profits, interest and Read More …

Increased cost of public debt servicing – redemption of treasury bills and bonds by the government involves paying back the principle sum plus interest. Non-performing loans/bad debts arising from existing loan agreements. This tends to cripple the liquidity status of Read More …

Credit Management performance standards – eg by banks and other financial institutions. Credit management efficiency levels determine the size of non-performing loans and bad debts, which tend to force banks and other lending institutions to readjust and try to cushion Read More …

Combination of features from both perfect competition and monopoly; this compromise between monopoly and perfect competition takes the form of many firms producing differentiated and highly substitutable products – product differentiation could be in terms of packaging designs, colour, brand Read More …

Increasing the budget provisions to the security/defence machinery of peace keeping missions; the sale of arms to war torn countries should be brought into focus in International Law in form of crime against humanity. Widening the scope of bilateral and Read More …

Impact of economic integration – Loss of tax revenue to governments initially in form of import duties. The infant industry argument – dumping of foreign goods tends to reduce the industrial development potential in the country of destination. Similarity of Read More …

Factors: Cost of production (factor prices) Government policy (taxation and subsidies) Natural events (e.g weather) Goals of the firm Availability and cost of credit Transport and communication Prices of related products (substitutes and complements) Technology Future expectations Changes in the Read More …

Commercial banks and non- financial institutions may contribute to economic growth and development from the standpoint of their functions which include: Provision of safe deposits for money and other valuables Credit creation based on mobilization of savings Facilitation of the Read More …