Key Terms And Their Meanings Part V
- International Monetary Fund (IMF): An international financial institution conceived at the Bretton Woods Conference and established in 1945. It is designed to take care of short-term international liquidity problems and to assist countries with temporary balance of payments difficulties. It does this by letting countries withdrawing rights borrow from the gold and domestic currencies deposited with it according to quotas allocated to each member. At first, it attempted to impose a system of fixed exchange rates but when this failed it turned in 1971) to managing a quasi-flexible system. 141 countries are currently members of the IMF.
- Joint-Stock Company: Joint-stock companies developed in the 17th century; the earliest were trading concerns (e.g. the East India Company) in which several traders jointly supplied a stock of merchandise. Keynes, John Maynard, Lord (1883-1946): English economist and financier. The most influential economist of our century, Keynes revolutionized government policy throughout the Western world by teaching that heavy public spending can cure depressions, increase employment and demand, and produce growth and prosperity.
- The theory he developed in detail in The General Theory of Employment, Interest and Money (1936) – the most influential economic work since Adam Smith’s Wealth of Nations. Traditional economists argued that depression and unemployment would reduce wages, which would reduce costs and prices. This would stimulate the economy, and thus depressions and unemployment would end of their own accord. But after 1921 the UK suffered continuous high unemployment.
- Keynes severely modified traditional theory by concentrating on aggregate demand – the total expenditure on consumption and investment. If this was high, the economy flourished. To increase it during depressions, the government should increase investment by spending heavily, on public works. These theories led to the development of modern macroeconomics, but are strongly challenged by the monetarist school.
- Laissez-Faire: The doctrine that the government should interfere as little as possible with the =}economic activity of its citizens. The basis of this view is the assumption that all private economic activity is beneficial and government economic intervention can only be harmful. Laissez-fair was popularized by Adam Smith and is now chiefly found among conservative business economists. However, even its advocates accept that the government must protect its citizens from the abuses of private monopolists, and most economists believe that consumer protection, some social welfare provision, and the support of necessary but unprofitable enterprises (such as drainage and defence) are worthwhile government activities.
- Legal Tender: Current notes and coins in circulation, which must be accepted in legal settlement of a money debt. Legal tender is also referred to as the current medium of exchange:
- Lender Of Last Resort: A central bank or institution that lends to the banking system in times of difficulty. In the UK, the Bank of England is the lender of last resort to the discount houses. Malthus, Rey, Thomas Robert: (1766 – 1834) English economist. His Essay on the Principle of Population. (1798) revolutionized attitudes to the effects of population growth and determined public policy for several generations. Whereas earlier economists believed that a growing labour force was a source of wealth, Malthus argued that the population grows far faster than food supplies. Accordingly, most people will always live at a bare subsistence level. His work, however, overlooked the impact of technological advances.
- Marx, Karl : (1818-83) German revolutionary, political philosopher, and economist. The father of modern socialism, he developed an all-embracing social and political theory that attempted to show how all societies inevitably evolve from primitive communism through slavery, feudalism, and capitalism to socialism. In Das Kapital (1867) he described 19th-century capitalism and developed his view that the value of any product is determined by the amount of labour going into its production. But the worker is only paid part of this sum, the rest becoming profit. Because the capitalist wishes to expand his business, he invests profits in more machinery that needs fewer. workers. Businesses grow bigger but fewer in number; the number of jobs decreases; wages fall; eventually, the workers’ revolt, destroy capitalism, and establish socialism.
- Memorandum Of Association: A document that has to be submitted to the Registrar of Companies when a company is being registered. It contains details of the company’s name, address, objectives, value and types of shares, and a statement that it has limited liability.
Here are the notes for Key Terms And Their Meanings Part VI.