What's it: National debt is money owed by the government to its creditors. The government owes money to cover the budget deficit, where revenues are less than expenditures. And the higher the deficit, the bigger the debt.
Macroeconomics
Discretionary Fiscal Policy: How it Works, Types, Effects
What's it: Discretionary fiscal policy is a deliberate government policy to influence the economy by changing its spending and income. It is deliberate because the government intends to change items in its budget or revenue to direct
Induced Tax: Examples, How they Work, Effects on the Economy
What's it: An induced tax is a tax in which the rate increases and decreases depending on the taxpayer's ability. So, when our income or wealth rises, we have to bear high rates. Conversely, a decrease in income leaves us with a lower
Balanced Budget: Why It Matters, The Multiplier Effect
What's it: A balanced budget is when a government's spending equals its revenue. Therefore, there is no surplus or deficit. So, the government does not need to borrow to cover its expenses. So, there is no government increase. However,
Budget Surplus: Why It Occurs and Its Effects
What's it: A budget surplus is when the government plans to spend less than it earns. In other words, the government's budgeted revenue is greater than the government's spending. Surpluses may be an option when the economy is
Tax: Types and Its Impact on the Economy
What's it: A tax is a mandatory levy by the government on an individual or other entity. There are many variations, including income tax, value added tax, and capital gains tax. It has become the main source to cover government
Government Budget: Components, Types, and Fiscal Policy
What's it: A government budget is a government's planned expenditures and revenues over a specific period, usually one year. Government revenue can come from taxes or other sources such as contributions from government-owned
Inflation Rate: How to Calculate, Types, Effects of Economic Policy
What's it: The inflation rate is the percentage change in the economy's prices of goods and services over a certain period. While inflation tells us about a situation where the prices of goods and services increase or decrease, the
Income Distribution: How to Measure and Overcome Inequality
What's it: Income distribution is about how the income or wealth of the economy is shared among its citizens. It is fair when income is evenly distributed to all people who really need it and are on target. Thus, there is no sharp
Possible Conflicts Between Macroeconomic Objectives
Conflicts between macroeconomic objectives occur because governments cannot pursue all goals at once. There is a trade-off between these objectives. Choosing one objective requires the government to forego or not achieve other objectives.
How Does The Government Play A Role In The Economy?
The government sector is one of four economic sectors in addition to the household sector, the business sector, and the external sector. Unlike business, the government sector is not profit-oriented but rather
External Sector: Its Effect on the Economy
What's it: The external sector refers to economic actors located outside the country. They include foreign households, foreign businesses, and foreign governments. They interact with the domestic economy through international trade.
Household Sector: Definition and Role in the Economy
What's it: The household sector includes individuals or groups of individuals. A household may consist of one or several people who live in the same household and share food. They may include one family or another group of
What are the Factors Causing Deindustrialization
Factors causing deindustrialization occurred due to higher manufacturing productivity, pushing prices and job absorption to continue to fall. The change in the economic structure from a manufacturing-based to a service-based basis has
What Are The Impacts of Deindustrialization?
Deindustrialization brings both positive and negative impacts. First, it could reflect an increase in living standards, so consumers spend more dollars on services. Then, the reduced reduction in environmental degradation is an example of
What is the Difference Between Private Sector and Public Sector
Ownership and motives in providing goods and services are the main differences between the private sectors and public sector. Yet, both play a vital role under mixed economies, the economic systems most countries adopt today. What is a