Government Fiscal Policy and Deficit Analysis
Fiscal Policy Fundamentals
Definition of Fiscal Policy
Fiscal policy refers to the government’s policy of managing its income (revenue) and spending (expenditure) to influence the country’s economy. It is mainly concerned with taxation, public spending, and borrowing.
Objectives of Fiscal Policy
- Economic Stability: To control inflation or deflation by adjusting government spending and taxes.
- Full Employment: To create job opportunities by investing in public works and development projects.
- Economic
Understanding Company Costs and Production
What Are the Costs?
Total Revenue, Total Cost, and Profit
Start with the goal of the company: understand their decisions, knowing what they are trying to do.
A key question is: What is the benefit of a company?
Profit = Total Revenue (TR) – Total Cost (TC)
Key Definitions:
- Total Revenue: The amount received from the sale of production.
- Total Cost: The market value of the factors used in production.
Accounting and Economic Costs
- An economist refers to the cost of production of a company, which includes all
Accounting for Loans to Other Entities: Valuation & Recording
The information presented pertains to accounting purposes and will be reflected in the accounts designated for subgroups 53 and 54. When a company receives a loan and pays interest, it is required to withhold taxes from the lending company, which are then payable by the latter.
Investments in Financial Assets
Loans to Other Companies
When a company has excess liquidity, it can, as discussed previously, acquire shares in other companies as an investment, or it may choose to purchase debt securities
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International Monetary Systems and Institutions
The Keynes Plan: Proposal for an International Currency Union
The Keynes Plan proposed a new international monetary system with the following key measures:
- A non-metallic international currency: the “bancor”.
- A pre-established method for determining exchange rates between national currencies.
- An International Clearing Union for international payments compensation.
- An internal mechanism (1% tax) to stabilize the system by applying pressure on both surplus
Core Concepts of Business and Enterprise Management
Elements of a Company
An Organization is a collective unit (e.g., corporation, institution) or a single entity formed by one person (usually the owner).
Human Elements refer to the individuals who work for and/or invest in the company’s development.
Material Goods are all tangible assets owned by the company, such as facilities, offices, and furniture.
The Land, composed of natural assets, refers to the natural resources utilized in the production of goods or services by a specific company.
Work consists
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Operating Cycle
The operating cycle is the average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods. This is useful for estimating the amount of working capital that a company will need in order to maintain or grow its business.
A company with an extremely short operating cycle requires less cash to maintain its operations, and so can still grow while selling at relatively small margins.
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