Finance and Money

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5 Terms

1
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raise taxes & improve collection (current account)

demand reeducation

imports fall

2
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raise taxes & improve collection (capital account)

attracts foreign capital because of increased confidence in government commitment to prudent macro-economic policy

3
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reduce spending (austerity) (current account)

demand reduction

imports fall

4
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reduce spending (austerity) (capital account)

attracts foreign capital because of increased confidence in government commitment to prudent macro-economic policy

5
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privatization (current account)

more efficient industries will export more

capital will flow to sectors where country has a comparative advantage - increasing export competitiveness