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Economic Function
Providing legal and social FRAMEWORK
Sets legal status of business enterprise, ensure
rights to private ownership and allows the making
and enforcement on contracts.
Economic Function
Redistribute & Reallocate INCOME & WEALTH
Government to reallocate the income and wealth in
a fair way trough a variety of policies and
programmes.
Economic Function
Creating a stable ECONOMIC INVIRONTMENT
Stable economic environment is important to
encourage investment. Peaceful environment and
political stability are important to the
livelihood of the citizen.
Economic Function
Increasing Government WELFARE ACTIVITIES
Responsible of providing public facilities for the
low income consumers. Government to subsidise the
medical costs so the publics has to pay only low
charges.
Surplus Budget
Which estimated
revenue of
government during
the year is
greater than
anticipated
expenditure
Government
expenditures
exceed government
tax revenue in a
given year.
(running a budget
deficit)
Deficit Budget
Surplus
Budget
Balanced
Budget
Government Expenditure
Deficit
Budget
National Income
Tax
R
NonR Tax
evenue
evenue
Direct Taxes
Tax
R
evenue
Indirect Taxes
Direct Taxes
Indirect Taxes
NonR Tax
evenue
Internal Sources
1. Borrowing from citizen through the sale of
securities, bond and saving certificates to citizens.
2. Borrowing from financial institution such as
insurance companies by investing their resources
in the purchase of government securities
3. Loans from the central bank, where he central
bank purchase government securities, bond and
debentures from the government.
4. Loan from commercial banks, where the
commercial banks invest a part of their deposits in
government bond and securities to fulfil the
liquidity requirement.
External Sources
1. International money markets, such as some
foreign exchange banks in Paris, London and New
York, which have big deposits to lend any
government requesting loans.
2. Currency loans from foreign governments, such as
the USA, UK, Germany and Japan, for the supply
of needed goods. The loan are documented in
contracts.
3. Loan from international monetary financial
institutions, such as the International Monetary
Fund (IMF).
Break
Quiz
Domestic Loan
Foreign Loan
Disadvantages
Fiscal Policy
Objectives
Types
Monetary Policy
Objesctive
Types
instrument
Funding
Min.
Liquidity
Req.
OMO
Discount
Operation
Interest
Rate
Moral
Persuasion
Instruments
The
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