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REVENUE EFFECT: The goal of imposing taxes to generate revenue used to finance the operation of government, most notably to finance the provision of public goods. This is one of two reasons, and the primary reason, that governments impose taxes. The other reason is the allocation effect. Governments work the revenue effect because they need access to income and resources to build highways, defend the nation, educate the population, and maintain the legal system. They purchase these resources with tax revenue generated through the revenue effect.
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Lesson 18: Banking | Unit 3: Reserve Banking
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Page: 11 of 24
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Banks divide assets between loan and reserves using fractional-reserve banking:- The profit-pursuing, financial intermediary function of banks dictates that deposits be used for loans.
- The safekeeping, money supply security function dictates that banks keep reserves.
A) 100% reserve banking would imply that: - They could not be financial intermediaries, but only storage buildings. The financial intermediary function performed by banks would have to be performed by something else.
B) 0% reserve banking would imply: - Problems with customers who want their wealth, but can't get it because the bank loaned it out.
- The bank can easily be put out of business when customers spread the word that the bank is out of funds.
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LONG-RUN PRODUCTION ANALYSIS An analysis of the production decision made by a firm in the long run. The central characteristic of long-run production analysis is that all inputs under the control of the firm are variable. The central principle guiding production in the long run is returns to scale, which indicates how production responds to proportional changes in all inputs. A contrasting analysis is short-run production analysis.
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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"Advice is like snow ‚ the softer it falls, the longer it dwells upon and the deeper it sinks into the mind. " -- Samuel Taylor Coleridge, poet
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ATS
Automatic Transfer Service
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