How_Money_Works_-_The_Facts_Visually_Explained

102 103 GOVERNMENT FINANCE AND PUBLIC MONEY Managing state finance Open market operations: selling bonds The central bank sells ...

Budget constraint Governments have financial constraints just as individuals and companies do. When spending exceeds income, the ...

105104 GOVERNMENT FINANCE AND PUBLIC MONEY Managing state finance HOW GOVERNMENTS RAISE MONEY Governments can raise funds to mee ...

How it works Governments have the unique privilege of being able to demand that anyone in their country pay taxes. These can be ...

106 107 GOVERNMENT FINANCE AND PUBLIC MONEY Managing state finance Because tax systems vary widely from country to country, it i ...

Government funds A typical government receives most of its financing in the form of taxes, but borrowing is also often necessary ...

108 109 Repaying the deficit The higher the deficit, the more of a government’s budget is required in order to pay it off. Gover ...

Public debt Public debt is the total sum of money owed by a country’s government, including its historic debt. Nations with big ...

Inflation can reduce debt Rising prices reduce the value of money, lightening the weight of internal debt repayment. ❯❯Public/na ...

NEWS Accountability How it works Democratic countries typically insist that governments report annually to their legislative bod ...

112 113 GOVERNMENT FINANCE AND PUBLIC MONEY Managing state finance TRANSPARENCY AND ACCOUNTABILITY IN CENTRAL BANKS Transparency ...

Attempting control Governments can attempt to manage the economy by adjusting policies such as taxes and influencing interest ra ...

114 115 GOVERNMENT FINANCE AND PUBLIC MONEY Attempting control DOMESTIC EXPENDITURE Amount spent by firms, households, and the g ...

Reading economic indicators Measuring performance Indicators are usually shown as the rate of change over time, because the econ ...

116 117 GOVERNMENT FINANCE AND PUBLIC MONEY Attempting control How it works The main indicators governments use to monitor the e ...

Deciding on economic policy Calibrating the economic machine Governments have a number of different controls they can adjust to ...

118 119 GOVERNMENT FINANCE AND PUBLIC MONEY Attempting control How it works Economic policy-making has been compared to trying t ...

Interest rates How it works Lenders charge interest on the money or other assets that they loan. This is a charge levied to cove ...

120 121 GOVERNMENT FINANCE AND PUBLIC MONEY Attempting control ❯❯Nominal rate An advertised interest rate, which does not factor ...

Investment decreases due to costly loans and low confidence Export prices rise Exports fall Import prices fall Imports increase ...