Thursday, April 25, 2024

Economy

The economy of a country represents the sum total of financial transactions in that country. It is measured in Gross Domestic Product (GDP), the relative value of the currency and through figures for the balance of trade. Important economic indicators are interest rates that determine the cost of borrowing and the consumer price index (CPI) that follows changes in prices for goods and services. Inflation is measured in 12 months periods and reflects the changes of prices over that period.A government has 2 options for raising money. They tax the population (either their income or their asset wealth) and financial transactions (VAT) or they can borrow money. It is generally fine for a government to borrow money (especially from its own central bank). However, a government can run into trouble with high debt levels if the value of the currency drops and international banks lose confidence in the government.Until recently management of the economy was the key consideration in the election process. The right believes free and unregulated markets provide economic growth and can be used to provide social services. The left believe social services should not be privatised and that markets need to be regulated.However, Gen Z and younger Millennials are more motivated by environmental issues and identity issues when it comes to voting intentions.This brings an important question to the fore: what is the purpose of the economy? Is it to generate more money for certain individuals or is it to promote human rights and protect the planet from environmental destruction?

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