Key Terms And Their Meanings Part III
- Eurodollars: US dollars, or rights to US dollars, held by people or institutions outside the USA. European Economic Community Popularly known as the European Common Market. It is a free trade organisation, which was created by the Treaty of Romne, 1957. Its members comprised France. West Germany, Italy, Belgium, the Netherlands and Luxembourg, although the Treaty allows for the admission of other countries at a later date. With the signing of the Treaty, the ‘Six’ became combined in three distinct but interlocked functional communities; the European Coalana Steel Community formed in 1952, the European Atomic Energy Community (‘Euroatom’) and the European Economic Community. The total population of the Community, about 186 million ‘whis only slightly less than that of the United States. Later, England and other countries also joined
- Exchange Rate: The rate at which one currency can be exe longed for another the price of one currency in terms of another Several exchange-rate systems are available to determine how one currency should be related to all others, ranging from fixed exchange rates through various compromises to completely flexible exchange rates determined by the market forces.
- Fiscal Policy : (budgetary policy) Deliberate manipulation by the government of the level of its own expenditure and the amount of taxes levied. Announcements of major fiscal changes are made in the annual budget (usually presented to parliament in March or April), although some governments have used additional ‘mini budgets and discretionary powers to make changes more frequently.15101
- The distribution of income: Changes indirect taxes affect disposable incomes, as do changes in items of public expenditure termed transfer payments, e.g., state pensions, unemployment benefit, and student grants.
- The distribution of expenditure: Changes in the distribution of disposable income will affect the demand for different goods and services, and this can be reinforced by varying the rates of being indirect taxes on particular goods and services. For instance, increased duty on tobacco may ti be used to reduce the demand for cigarettes. In this way, fiscal policy can be seen as an 11t instrument of resource re-allocation. In recent years, monetarists have objected to the use of fiscal policy to attempt to control the level of aggregate demand. They argue that the borrowing required to meet persistent budget deficits has tended to raise interest rates, crowd out private investment, and take control of the money supply more difficult.
- Gazumping: The practice of raising the price after accepting an offer, but before contracts have been exchanged. The term is nowadays used almost exclusively in the context of house purchase.
- General agreement on tariffs and Trade (GATT): A multilateral trade treaty was signed in 1947 to reverse the interwar trend of increasing trade restrictions. At present, there are 85 full contracting parties and these include the main industrial Western countries and most of the developing countries. About 30 additional” countries are interested in joining. GATT aims to promote: international trade by reducing tariffs in stages and eliminating as unacceptable all other forms of protection. It provides a forum for multilateral trade negotiations to this end, and the most-favoured-nation clause ensures nondiscrimination.
- Giffen Good: A good with a positive relationship between price and quantity demanded: more is bought when price rises, and less when the price falls.
- Gift Tax: A levy on the value of the property given away to others. Gifts taxes are levied on the amount over and above a certain total and are paid by the donor.
- Gilt-edged security: A security carrying little or no investment risk traded on the stock exchange.
- Golden Handshake: A lump-sum payment made by a company to an employee as an inducement to leave.
- Government Bonds: Securities issued by the government as a means of borrowing money from the public and investing institutions, including consols, war loans, Treasury bonds, etc. They usually carry a fixed rate of interest, but their prices vary according to the conditions of the stock market.
- Grants-in-AID: Central government grants are given to the local authorities to help them cover the cost of certain services.
- Gresham’s Law: The generalization that if two coins of the same face value, but differing metallic value, are in circulation then ‘good money drives out bad money; people will tend to hoard the coin which has a higher metallic value so that eventually, only that of the lower metallic value will remain in circulation. For instance, they will tend to hoard gold coins rather than silver. The law is named after Sir Thomas Gresham (1519-1579) who advised Queen Elizabeth I about this phenomenon. The principle itself was first formulated by the Polish astronomer Nicolaus Copernicus (1473-1543).
Here are the notes for Key Terms And Their Meanings Part IV.