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IMPORT SUBSTITUTION: A strategy for economic development for a country based on replacing imported goods with domestic production. This is often directed toward imported inputs used for domestic production. The goal of this policy is to encourage domestic production, which subsequently increases domestic income and consumption. A contrasting economic development is export promotion.

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Lesson 12: Business Cycles | Unit 5: Policies Page: 23 of 26

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Stabilization policies try to avoid or correct the problems caused by business cycle instability.
  • The two most popular are fiscal policy and monetary policy.
  • Do nothing 'nonpolicies' might be best in some cases, but are seldom used because people often demand immediate solutions to problems.
  • Business cycle instability is indicated by the red line rising above and falling below the long-run trend line.
  • The flatter, smoother line is the goal of stabilization policy, to limit business cycle instability.
  • Stabilization policies can be either expansionary or contractionary.

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TAX EFFECTS

The primary reason that governments collect taxes from members of society is to finance government operations and provide public goods. However, taxes also create disincentives to engage in the taxed activity, which causes a change in the allocation of resources. This two consequences of taxes are summarized in two essential tax effects -- the revenue effect and the allocation effect. While all taxes have both, the key to effective government is minimize the allocation effect if the goal is to generate revenue and to minimize the revenue effect if the goal is to change the allocation of resources.

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APLS

BEIGE MUNDORTLE
[What's This?]

Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either a square lamp shade with frills along the bottom or an electric coffee pot with automatic shutoff. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?

The average length of a "business lunch" is about 36 minutes.
"Most of the things worth doing in the world had been declared impossible before they were done."

-- Louis D. Brandeis, Supreme Court Justice

BOJ
Bank of Japan
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