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What is meant by quantity theory of money?

QUANTITY THEORY OF MONEY Quantity theory of money explains that the value of money depends largely on the quantity of money. If the quantity of money is increased, without corresponding increase in volume of production, the value of money will decrease and vice-versa. According to Irwing Fisher, “Other things remaining the same, value of money fall in proportion to increase in quantity of money in circulation”. It means it the quantity of money is increased by 25% whereas other things remain unchanged, the value of money will fall by 25%, and vice versa. Thus, the quantity of money and its value are inversely related. Fisher explained the relationship between the quantity of money and its value in the form of equation of exchange. P = MV + M’V’ ____________ T Where P stands for the general price level, T stands for total transactions (total amount of goods and services) exchanged, M stands for actual money, M’ stands for credit money, V stands for velocity (rate

Money, Function, Significance & Characteristics Of Good Money

definition of money According to Professor Crowther “Money is anything that is generally acceptable as a means of exchange and at the same time acts as a measure and store of value.” According to A. Walker, “Money is what money does.” According D. H Robertson “Money is everything which is widely accepted in payment for goods or in discharge of other king of business obligations.” SIGNIFICANCE AND IMPORTANCE OF MONEY It helps produces in production It is the money, which has made possible to produce goods in bulk with varieties. It helps the producers to purchase different kinds of raw material from different places. It also helps them to hire the required services of different types of labor. It guides them to combine different factors of production. It helps consumers in consumption Money helps the consumer in getting maximum satisfaction from their available resources. It gives them the power to make purchase of different kinds of goods according to their own choice. It helps in

Sources of Public Revenue

SOURCES OF PUBLIC REVENUE TAX Tax is a compulsory payment by a taxpayer to the government without expectation of any direct return or benefit. FEES Government provides certain special services to the people and in return of these services charges fees. In fact, fee is that revenues, which is paid to the government for the special services rendered by it. Court fee, license fee and passport fee etc. fall under this category. FINES AND PENALTIES Fines and penalties are imposed and collected from the offenders of law as punishment. They are not imposed for the purpose of obtaining revenue but to prevent crime SPECIAL ASSESSMENT When the government undertakes certain public improvement programmers like construction of roads, provision of drainage, street lighting etc. in order to meet the expenses incurred the government may impose a special levy, which is called special assessment. ++++++++++++++++++++++++++++++++++++++ Top Trending In Economics Public Finance & Element

Difference Between Direct and Indirect Tax With Merits and Demerits

DIRECT AND INDIRECT TAXES A direct tax is one whose impact and incidence are on the same person. It cannot be shifted to someone else. Income tax is a good example of a direct tax because the person from whom it is collected has to bear its burden. One the other hand, indirect tax is one hose impact is one person but the incidence on the other. Sales tax is a good example of an indirect tax because it is collected initially form sellers of goods but they do not pay it from their own pockets. They add the tax to the selling price of their goods and recover from the buyers of the goods. The distinction between direct and indirect taxes is based on that burden of a direct tax can be cannot be shifted wholly or partly from the who pays it to other while burden of a direct tax can be cannot be shifted wholly or partly from the who pays it to other. IMPACT OF TAX The impact of tax is borne by a person on whom a tax is imposed. For instance, the impact of an excise duty is on t

Canons of Taxation or Principles of a good taxation System

CANONS OR PRINCIPLES OF A GOOD TAXATION SYSTEM According to ADAM SMITH, a good taxation system is that one which contains the four following canons or principles. did you check these  Explain Robbin's definition of economics is the science of scarcity and choice. Public Finance & Elements Of Public Finance Difference Between Public Finance and Private Finance CANON OF EQUALITY OR EQUITY The canon of Equity equality or equally suggests that the burden of taxes must be distributed equally or equitably regarding to the ability of the taxpayers. Adam smith suggests that taxes should be paid according to the ability to pay. In other worlds, rich people should paid taxes with higher rate and the poor should paid taxes with lower rate. The canon of equality or equity implies that a tax system should contain “progressive tax rate.” CANON OF CERTAINTY The canon of certainty implies that the tax system must have an element of certainty. The taxpayers should be well informan

Difference Between Public Finance and Private Finance

DIFFERENCE BETWEEN PUBLIC & PRIVATE FINANCE DIFFERENT APPROACH OF ADJUSTMENT OF INCOME TO EXPENDITURE An individual tries to adjust his expenditure according to his income. But, a government first fixed the size of its expenditure and then manages to raise the required revenues. trading question with answer in economics Income Elasticity Of Demand  Cross Elasticity Of Demand Define Supply And Difference Between Supply And Stock Define law of supply? Define Utility. Briefly Discuss Various Concepts Of Utility DIFFERENT PERIOD OF TIME In the case of an individual, there is no particular period of time over which the income expenditure must be balanced. But at other hand, the government has to prepare annual budget to balance its accounts. DIFFERENT OF NATURE OF RESOURCES The resources of an individual are relatively limited while those of the government are wider. The government has power to impose taxes or even print currency notes to raise its financial resources. It

Public Finance & Elements Of Public Finance

DEFINITION Public finance can be defined as under. “Public finance refers to the methods and principles which are concerned with the public revenue, expenditure and borrowing”. Professor Herald Groves: an authority on public finance, defines it as. “A field of inquiry that treats of the income and outgo (expenditure) of governments (federal provincial and local). In modern times, this includes four major divisions: public revenue, public expenditure, public debt and certain problems of fiscal System”. Did you Check These Topics Define Demand Define a term law of Demand? Define Price Elasticity of Demand . Change In Demand And Change In Quantity Demand   ELEMENTS OF PUBLIC FINANCE PUBLIC REVENUE This part includes the study of the methods of raising public revenues and the principles of taxation. PUBLIC EXPENDITURE This part consists of the study of the principles and the effects of public expenditure. PUBLIC DEBT This part includes the study of th

2nd Year Urdu Guess paper 2020 For Commerce Group

XII Urdu Guess paper For Commerce Group Only اردو 1۔اشعار کی تشریح 1۔ تیرا ہی حسن جگ میں ہر چند موج زن ہے     تش پر بھی تشنہ کام دیدار ہیں تو ہم ہیں ۔ 2۔ پکڑے جاتے ہیں فرشتوں کے لکھے پر ناحق     آدمی کوئی ہمارا دمِ تحریر بھی تھا ۔   3۔ ہوئی تاخیر تو کچھ  باعث تاخیر بھی تھا     آپ آتے تھے مگر کوئی عناں گیر بھی تھا 4۔ افلاک سے آتا ہے نالوں کا جواب آخر     کرتے ہیں خطاب آخر اٹھتے ہیں حجاب آخر 5۔ آفاق کی منزل سے گیا کون سلامت  2nd Year Mutalia Pakistan guess paper 2019 to 2020   2nd year Banking Guess Paper & Important Short Questions 2020  تشریح کے لئے اہم غزلیات  1۔ میر تقی میر 2۔ خواجہ میر درد 3۔ مرزا اسداللّٰلہ خان غالب 4۔ علامہ محمد اقبال اقتباس کی تشریح ملک و قوم کے حق میں کوئی احسان۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔۔رفتی اسکی بیخ کنی کی جائے۔ نظم کا مرکزی خیال اسرارِقدرت،  حضرت فاطمۃالزارہ کی رخصتی، شکستِ زنداں کاخواب، جشنِ بے چارگی  سبق کا خلاصہ چور ، مجسّمہ ، آرام و سکون ، نیا قانون  مضامین قومی زبان ،

Difficulties in measurement of the national income

DIFFICULTIES IN MEASURING NATIONAL INCOME 1. LACK OF STATISTICAL DATA In developing countries, the accurate figures about the various sectors of economy are not available; due to this we are unable to estimate the real national income of the country. 2. PROBLEM OF DOUBLE COUNTING While computing the national income there is always a danger of double counting. If the care is not taken, the national income is over estimated. 3. LACK OF PUBLIC CO – OPERATION Public is also not ready to provide the correct figures about the income due to the fear of income tax. 4. NO ACCOUNT Some people do not keep any proper account about their business income, so this income is not including in the national income. 5. DIFFICULTY IN ASSESSMENT Some goods and services value cannot be assessed easily. For example the value of different Cows and Sheep’s is very difficult. 6. UNPAID SERVICES In national income only those services are included for which the payment is made. The unpaid ser

2nd year Banking Guess Paper & Important Short Questions 2020

2020 Banking Guess paper & Important Short Questions 1. Define endorsement. describe any two types. 2. When a bank dishonor a cheque? Describe any five conditions. 3. Describe foriegn exchange and rate of exchange. 4. Define letter of credit. Enlist its various kinds. 5. Define central bank. Describe the central banks functions. 6. Enlist the kinds of bank on the basis of functions. 7. Define secured and unsecured loans. 8. Write about E-banking / online banking and any three of its advantages. 9. Difference b/w bill of exchange and promissory note. 10. Define cheque? Write the essential of cheque. check this out Past Papers 2019 Karachi Board 12th Class English 1st Year & 2nd Year Guess Papers 2020 XI English Guess Paper  2020 XI Principle of commerce Guess Paper 2019 To 2020 2nd Year Mutalia Pakistan guess paper 2019 to 2020   11. Describe special and general crossing. 12. List the various kinds of bank account. Describe fixed depo

Explain Robbin's definition of economics is the science of scarcity and choice.

Q economics is the science of scarcity and choice. Elucidate. Robbins definition of economics:                     ‘’Economics is the science that studies human behaviour as a relationship between ends and scarce means which have alternative uses’’ Robbins definition is based on: Multiplicity of wants Scarcity of means In other words, robbins definition says that: The ends are unlimited The means to achieve those ends are unlimited The means are capable for alternative uses. Multiplicity of wants   As a matter of fact, never comes to an end . they are always unlimited. As soon as one wants is satisfied another comes forward. Scarcity of means :                                It refers to the limited resources due to which economics problems arise but if the resources were unlimited, then consequently there would have no economics problems. Selection urgency of wants: It is obvious that some of the wants are more urgent for u