Category: Economics
State features of an economy which has attained the drive to maturity stage of economic growth
Long sustainable growth Very high degree of industrialization Very low rate of population growth New production techniques High and well developed infrastructure High rate of ... Read More
Define the term “marginal propensity to save.”
Marginal propensity to same is the proportional of consumer’s additional income that is saved Or Marginal propensity to save (MPS) is an economic measure of how ... Read More
What is the importance of price elasticity of demand to the producer?
It helps a producer in determining prices for his commodities. If a commodity has elastic demand, the producer will reduce the price and charge high ... Read More
Types of factor prices in an economy
Rent for land Wages or salaries for labour Interest for capital Profit for entrepreneurship Read More
What is factor prices?
Factor prices are the rewards offered to factors of production for the service rendered. Or A factor price is the unit cost of using a factor ... Read More
How does inflation cause unemployment?
High inflations lowers purchasing power leading to reduction in aggregate demand and leads to low productivity in an economy It reduces the level of saving ... Read More
What are the major obstacles to technology transfer from developed to developing countries?
Inadequate capital to purchase and use the technology Insufficient technical and scientific skills to adapt technology Limited market High level of protectionism making technology inaccessible ... Read More
Meaning of Technological transfer
Technological transfer is the movement of new technology from the inventor to a secondary user, usually from developed to developing countries in an attempt to ... Read More
What is technological development
Technology development means the overall process of invention and innovation of new modern techniques of production of new high quality goods and services, e.g. the invention ... Read More
Relate small scale industry with “informal” sector
Both are small sized with low output level They both require little capital for establishment and maintenance Both use local inputs They are all scattered ... Read More
With reasons, suggest the Rostov’s stage at which Uganda current level of development is.
Uganda is pre-condition for take-off stage because There is increased rate of saving and investment needed for development The illiteracy rate of the population is ... Read More
Describe Rostov’s stages of economic growth?
Rostov divided economic growth process into five stages The traditional stage Dominated by the subsistence sector with limited levels of exchange. Primitive technology, Agricultural sector ... Read More
Why is devaluation failing to solve the problem of persistence of balance of payments problems in Uganda?
Price inelasticity of demand for imports making devaluation to lead to more capital outflow. Price inelasticity of demand for exports, i.e. devaluation has little benefits ... Read More
What is the cause of persistence of balance of payments problems in Uganda (LDCs)
Exportation of low cost primary products leading to low foreign exchange incomes. Importation of expensive manufactured products leading to high foreign exchange expenditure. Limited variety ... Read More
What is pump printing?
Pump priming refers to the collective stimulatory measures taken by the government by undertaking higher expenditure and tax cuts. In most occasions pump priming is ... Read More
How would a monetary policy solve the problem of balance of payment deficit and economic stagnation
Use of open market operations. It involves the purchase of securities from the public in order to increase money supply. By reducing bank rates to ... Read More
Balance of payment deficit
Balance of payment deficit is a situation which occurs when the country’s total foreign expenditure is greater than its total foreign exchange earnings. It can ... Read More
stagnation
Stagnation is undesirable economic period with no signs of economic progress. It is characterized by static savings, investment, employment, production and GDP growth rate. Read More
14 Causes of structural unemployment
Changes in fashions , tastes or reduction in demand for example when tiled houses replace iron roofed houses, the makers of iron sheets become unemployed. ... Read More
What is structural unemployment
Structural unemployment is a category of unemployment caused by mismatch between the skills possessed by the unemployed population and the jobs available in the market. ... Read More
Causes of frictional unemployment
Ignorance of the existing job opportunities due to failure to get in touch with the media or when the jobs are unadvertised. Poor infrastructure which ... Read More
What is frictional unemployment
Frictional unemployment is a voluntary employment that occurs when workers are moving from job to job or when new workers entering the workforce . Cause of ... Read More
Disguised unemployment
Disguised unemployed refers to workers who are left without work, are working in a redundant manner, or are not being utilized to their full potential. Read More
The common forms of disguised employment are:
Engaged full time but doing unproductive activities due to inactive co-operant factors e.g. a serious man using blunt hoes for digging. Where the marginal productivity ... Read More
The features of disguised unemployment
Too many worker filling to fee jobs Very low marginal productivity. Read More
Causes of disguised unemployment
heavy pressure of population along with halfhearted implementation of agricultural reforms. an increase in technology, a mismatch in demand for certain types of workers, imperfect ... Read More
What is under employment?
Under employment is a situation where the person is working, below the full extent of their abilities, skills, or qualifications. The common forms of under ... Read More
Policy measures for reducing income inequality in LDCs
Adoption of progressive taxation. High taxes should be imposed on the rich and the income earned from such taxes should be used to subsidize the ... Read More
How does the law of comparative advantage explain the failure of East African countries to establish serious and long lasting regional cooperation?
Because East African countries produce similar commodities hence have very low opportunity cost in similar commodities. Read More
What is taxable Capacity
Taxable Capacity means the maximum capacity of the people of a country to bear the burden of taxation without much hardship or taxable capacity or taxable ... Read More
What is a tax base?
The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A broad ... Read More
What is meant by tax structure of a country?
Tax structure is the composition or categories a tax(es) according to either the mode of payment which can be direct or indirect or by the ... Read More
Relate interest rate and the demand for money in an economy.
If interest rate offered by the banks is high people will deposit their money in banks and this reduces their demand for money and the ... Read More
Transactions motive for money demand
Transactions motive for money demand is a desire to hold cash in order to conduct cash-based transactions. Read More
Precautionary motive for money demand
Precautionary motive for money demand refers to a desire to hold cash in order to be able to deal effectively with unexpected events that require cash ... Read More
What is international Trade Organization and What is its objectives
International Trade Organization is the main international body, which was established with the aim of reducing tariffs, promoting the production, exchange and consumption of goods ... Read More
Can structural adjustment alone lead to a “Rostov’s take-off” in LDCs?
Structural adjustment alone will not lead to take-off because there is need for Increased exploitation of resources Increased entrepreneurship skills Political stability throughout the country ... Read More
Least developed country versus Underdeveloped countries in reference to a poor country
Least developed country refers to a stagnant country with very low levels of income, persistent unemployment characterized by constant poverty, standards of living below international ... Read More
structural adjustment
A structural adjustment is a set of economic reforms that a country must adhere to in order to secure a loan from the International Monetary Fund ... Read More
Take-off development stage according to Rostov
Take-off: Rostov describes this stage as a short period of intensive growth, in which industrialization begins to occur, and workers and institutions become concentrated around ... Read More
Of income tax and consumption taxes which is ideally better tax?
Consumption tax is better than income tax because It is less felt by the taxpayer. It is cheaper to administer It does not discriminate between ... Read More
What is meant by consumption tax?
Consumption tax is an indirect tax on the purchase of a good or service by the consumer in the form of retail sales taxes, excise taxes, ... Read More
What is income tax?
Income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file ... Read More
Why has balance of trade for developing countries continues to worsen despite the strong and persistent external stabilization efforts?
Increased importation of oil products at very high prices Exportation of low value exports such as raw materials Low export base due to limited external ... Read More
In which way is the price of Saudi Arabia’s crude oil related to the prices of bananas in any Kampala market?
When the price of crude oil in Saudi Arabia increases, the cost of fuel in Uganda increases and hence the costs of transporting bananas to ... Read More
Which reasons classify the market structure of petrol industry in Uganda?
The market structure of Petrol industry in Uganda is oligopoly because There are few unequal competing firms in the market There is high degree of ... Read More
Briefly explain the extent to which consumer sovereignty determines how resources are used in the various sectors of Uganda’s economy.
Consumer sovereignty is playing an increasing role in resource allocation in both private and public sector. The private sector allocates resources according to demand for ... Read More
What is meant by consumer sovereignty?
Consumer sovereignty is an economic situation where the desires and needs of consumers control the output of producers. (A customer’s desires and need control allocation ... Read More
Challenges of fiscal and monetary policies in combating inflation in developing countries.
Challenges for monetary policy in combating inflation in developing countries The financial institutions in Uganda are not well developed and at times because of government ... Read More
Explain the difference between monetary and fiscal policies
Monetary policy is a set of actions/guidelines to control a nation's overall money supply and achieve economic growth. Fiscal policy is the use of government spending ... Read More
What is fiscal policy
Fiscal policy is the use of government spending and taxation to influence the economy. Read More
What is meant by monetary policy
Monetary policy is a set of actions/guidelines/strategies to control a nation's overall money supply and achieve economic growth. Read More
What are costs of stagflation?
Poor standards of living Discourage saving and investment Leads to social distress and misery Leads to income inequality Loss of confidence in the country’s currency Read More
Explain the three theories of inflation
Demand pull inflation: this arises when the demand for goods and services exceeds the supply for commodities available e.g. during Christmas season. Cost push inflation: ... Read More
Reasons/arguments trade unions put forward/advance when demanding for higher wages
Rising cost of living. Workers agitate for higher wages so as to cope with rising cost of living. In case of failure to pay the ... Read More
Discuss the methods/means to overcome a balance of payment deficit.
Adaptation to import substitutes to reduce import loss of foreign exchange Trade restrictions to reduce dumping Reduce corruption and swindling of government revenues Devaluation policy ... Read More
Discuss the methods for reducing foreign exchange expenditure when trying to overcome a balance of payment deficit.
Adaptation to import substitutes to reduce import loss of foreign exchange Trade restrictions to reduce dumping Reduce corruption and swindling of government revenues Devaluation policy ... Read More
Explain the factors responsible for unfavorable balance of payment.
Importation of expensive manufactured goods such as cars that increase foreign exchange expenditure Low output /limited industrialization leading to low export volumes Exportation of primary ... Read More
Arguments against emphasis on agricultural development in LDCs
Fluctuation in GDP of the country since production is mainly based on a substance level Low foreign exchange earnings due to poor quality of produces ... Read More