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Description
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Term
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That type of policy the government must balance with allowing automatic stabilisers to work as if it is used too much it could result in recession or overheating
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Discretionary Fiscal Policy
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The reduction or forgiving of less developed countries' debts to developed countries to ease the large repayments burden they face, criticised for encouraging unsustainable borrowing, and helping finance corruption and military expenditure
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Debt Relief
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Where economic growth is achieved through exploitation of economies of scale, made possible by focusing on exports and so reaching a wider market that would be available, as practiced by the Asian Tigers
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Export-led Growth
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That which less developed countries go about correcting by developing or establishing those markets which are lacking, particularly financial markets, and improving the terms and efficiency of overseas assistance, international borrowing, or foreign direct investment (FDI)
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Market Failure
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Those which when low in less developed countries sometimes prevent borrowing for investment because people don't deposit savings from which borrowed money is sources due to the low returns available
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Interest Rates
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The ratio showing the amount of capital required to produce a unit of output, the lower the ratio the higher the capital productivity
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Capital-Output Ratio
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A market oriented strategy for development in which a country tries to make domestic producers more competitive on the world market, and thus earn more foreign exchange, such as Cote d'Ivoire moving from producing unprocessed cashew nuts to processed cashew nuts (2020)
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Export Promotion
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An organisation formed in the wake of the financial crisis wholly owned by the Bank of England, responsible for the supervision of banks, building societies, credit unions, insurers, and investment firms, in the form of ensuring they control risk and hold adequate capital and liquidity
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Prudential Regulation Authority
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Where low employment opportunities result in low incomes for most, preventing saving due to earners having no surplus, resulting in a lack of funds for borrowing, and therefore a lack of capital investment leading to low employment opportunities
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Poverty Cycle
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Those countries which try to develop their primary industries by exploiting their factor endowments and absolute of comparative advantage, diversifying, processing more products, and raising productivity to release labour for the secondary and tertiary sectors, increasing price competitiveness and thus export revenue
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Less Developed Countries
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Description
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Term
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Aid given while stipulating where it is spent or from which country (usually the donor if bilateral aid) products must be purchased
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Tied Aid
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One of the two traditional banking sectors, providing high-street services to depositors (households, small firms, etc.) mainly on a relatively small scale, and providing a distributed branch banking service
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Retail Banks
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That which largely determines the size of the multiplier effect
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Marginal Propensity to Withdraw
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That type of policy the prime goal of which since the financial crisis has been to reduce the net debt accumulated during the crisis, mostly in the form of austerity
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Fiscal Policy
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The rate at which money changes hands calculated as the volume of transactions (real income (Y) × average price level (P)) ÷ the money stock
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Velocity of Circulation (V)
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A system where all incomes are taxed at the same rate, making payment and collection easier and encouraging more labour input, working hours, and foreign direct investment, though also being regressive where a sufficiently high payment threshold is not set
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Flat Tax System
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That which can lead to development by increasing the output of goods and services, usually increasing people's standard of living and potential investment in healthcare, education, and infrastructure
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Economic Growth
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That type of tax the disadvantages of which are that they may disincentivise consumption and thus reduce output, are regressive, the level at which they are set is prone to information failure, and they can cause inflation via a general increase in the price level
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Indirect Taxes
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A rapid flow of assets/money out of a country such as profits in firms in less developed countries being invested abroad where returns are higher
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Capital Flight
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A model of economic growth that sets out five stages developing countries pass through, from an agrarian society to increased productivity to rising investment to balanced growth to consumerism
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Rostow's Stages of Economic Growth Model
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