A primary market is a financial market in which fresh securities are issued.. Money market is a financial market in which only short-term debt instruments are traded.. Capital market is
Trang 1Short questions (Bổ sung)
1. American government’s revenue from taxation can be divided into 2 types What are they?
They are trust fund and federal fund
2. What factors cause the whole demand curve shift to the left or to the right?
Shift factors cause the whole demand curve…
3. What is a market economy?
It is an economic system in which the market is supposed
to be regulated by the law of supply and demand
4. How does the government influence the economy in the market economy?
The government influences the economy through its macroeconomic polocies
5. How do companies compete in the market economy? They are supposed to compete freely in the market economy
Trang 26. How do commercial banks make profits?
They make profits from the difference between selling rates and buying rates
7. What is progressive tax?
Progressive tax is a tax levied at a higher rate on higher income
8. What are tax deductibles?
Tax deductibles are the amounts that can be subtracted from the income on which tax is calculated
9. What is VAT?
VAT is a tax collected at each stage of production, excluding the already-taxed costs from previous stages
10.What is a planned economy?
It is a system whereby the structure of the market is planned by the stae
11. What is a mixed economy?
Trang 3It is an economic system in which some goods and services are produced by the government and some by private enterprises
12.What is GDP?
GDP is the total value of all goods and services produced
by a country in a year
13.What is capital transfer tax?
It is the tax imposed on gifts or inhertances over a certain value
14 What can the insured get in case of a loss?
The insured can get a promise from the insurance system
to be compensated when a loss occurs
15.How can a company’s employees with high salaries avoid paying taxes?
They receive perks such as company’s cars, free health insurance… They invest a part of their incomes in pension funds, life insurance policies…
Trang 416. What can the Government do if it wants to run an expansionary fiscal policy?
The Government can increase government spending or reduce tax rates or combine both
17 What can the Government do if it wants to run a contractionary fiscal policy?
The Government can reduce government spending or increase tax rates or combine both
18. What can the Central bank do if it wants to run a restrictive monetary policy?
The Central bank can increase reserve requirement, increase discount rate or sell government securities
19. What can the Central bank do if it wants to run an expansionary monetary policy?
The Central bank can reduce reserve requirement, reduce discount rate or buy government securities
20 What is wealth tax?
It is the annual tax imposed on people’s fortunes
Trang 521. What are economic relations? They are the relation between producers and consumers, buyers and sellers, management and labor
22. What is the unit of account/ measure of value? It is the unit which prices are quoted and accounts are kept
23. What is a primary market? A primary market is a financial market in which fresh securities are issued
24 What is long-term debt instrument? Long-term debt instrument is the debt instrument when its maturity is 10 years or longer
25. What is money market? Money market is a financial market in which only short-term debt instruments are traded
26. What is capital market? Capital market is the market in which long-term debt and equity instruments are traded
27. What is a securities market? A securities market is the market in which securities are exchanged
28. What are 2 types of funds from taxation in American? They are trust funds and federal funds
29. What are 2 kinds of debts? They are debt held by the public and debt held by federal accounts
Trang 630. What do resources include? Resources include the time and talent people have available, the land, buildings, equipment, tools and the knowledge of how to combine them to create useful products and services
Free talk (Bổ sung)
1. What is the difference between the economic theory of Adam Smith and Marxism theory?
Adam Smith believed that governments shouldn’t restrict or interfere in market ………maximum efficiency
Marxism stated that capitalism will fail …… class conflict
2. What are differences between microeconomics and macroeconomics?
- Microeconomics is the study of individuals and business decisions while macroeconomics looks at higher up country and government decisions
Trang 7- Some issues in microeconomics are price, demand, supply Some issues in macroeconomics are inflation, economic growth, GDP…
- Microeconomics uses bottom-up approach but macroeconomics uses top-down approach in study
3. What is the difference between demand and quantity demanded?
- Definition of demand and quantity demanded
- Demand is illustrated in a graph by the whole demand curve while QD is illustrated in a graph by a point of demand curve
4. What is the difference between a change in demand and
a change in quantity demanded (QD)?
- A change in demand is caused by shift factors of demand
A change in demand caused a shift of the entire demand
curve
- A change in QD is caused by the price of goods or
services A change in QD causes a movement along the
demand curve
5. By what way does the Treasury raise money?
Trang 8- The Treasury raises money by 2 ways: the first way is collecting taxes, the 2nd way is borrowing money by issuing bonds or borrowing from the surplus of trust fund
6 Under what circumstances can fiscal policy (FP) be expansionary?
A FP is expansionary when government spending is increased or taxation is reduced
An expansionary FP should be used when unemployment
is high or economy is slowing down
- Under what circumstances can fiscal policy (FP) be contractionary?
A FP is contractionary when government spending is reduced or taxation is increased
A contractionary FP should be used when inflation is high
7 What does an insurance policy involve?
- An insurance policy is signed between the insurance company and the insured
Trang 9It involves the information about the responsibilities and benefits for the insured and the insurance company
8 What do you think is the most important function of money? Why?
Medium of exchange is the most important function because money as a medium of exchange has made the trading process much cheaper, more convenient
9 What is a restrictive monetary policy? Under what circumstances should monetary policy be restrictive?
- The monetary policy is restrictive when the money supply is reduced
- The MP should be restrictive when inflation is high
- The Central bank runs a restrictive MP by increasing RR,
or increasing DR or selling government securities
10 Different types of taxes:
- Based on the things imposed taxes:
+ income taxes are the taxes imposed on incomes
(personal/individual income taxes; corporate income taxes)
+ sales taxes (are the taxes imposed on sales)
+ customs duties (on imports)
Trang 10+ excise taxes (on special goods/ services)
+ VAT = value added tax is the tax imposed on each stage
of production, excluding the already-taxed costs from previous stages
…
Tax evasion means making false declarations to the tax authorities/ tax offices
Tax avoidance means reducing tax bills to a legal minimum
Based on tax rates
+ progressive taxes: (income taxes) are the taxes imposed
at a higher rate on higher incomes
+ regressive taxes: (VAT, sales tax, …) are the taxes
imposed at a certain tax rate on every value
• Based on manner of paying taxes:
+ direct taxes (income taxes, wealth tax, …)
Are the taxes in which the tax payer has to contribute tax bills directly to the tax offices
+ indirect taxes: are the taxes in which the producers/
providers contribute the tax bills to the tax offices instead
of the tax payer (the last consumers have to incur these
types of taxes)
Trang 1111 Taxation has some advantages For example,
One advantage of income taxes is to redistribute wealth/ so
on (functions)
But there are disadvantages in the tax system One
disadvantage of income taxes is that business profits are taxed twice, via corporate income tax on the company’s profits and on dividends via personal income tax (It is unfair for the tax payers in the case.)
Another disadvantage of income taxes is to discourage people to work harder and invest more,
because higher incomes will be liable/ applicable to higher tax rates (because income taxes are progressive.)
12 Tax avoidance
Individuals reduce tax bills (tax payables) to a legal
minimum by:
+ receiving perks instead taxable money.
(perks = non-pay benefits such as company’s cars/ free health insurance, subsidized lunches/ bonuses, other allowances, …) – loopholes in tax laws
+ investing a part of their incomes in life insurance
policies, pension funds, or other investments to delay
paying taxes until the future - tax shelters
Trang 12 Loopholes in tax laws are the legal ways in which individuals/ firms can avoid paying taxes
Tax shelters mean delaying the payment of taxes
Tax deductibles refer to the amounts of money subtracted from the taxable money
(for example, donations to charities)
13 For what purposes do multinational corporations participate in the Forex?
They participate in the Forex because they demand foreign currencies for international (cross border) investment business and acquisition of profits.
For what purposes do import – export companies participate in the Forex?
They participate in the Forex because they demand foreign currencies for international (cross border/ foreign) trade.
What do banks as dealers do in the market?
They buy and sell (trade in) foreign currencies
How do banks as dealers benefit from the participation in the Forex?
They can earn profits on the difference between buying
rates (bid rates) and selling rates (offer rates).
Trang 13What is an exchange rate?
An exchange rate is the rate in which one currency is exchanged for another
Who are market makers? – the central banks
They establish the markets and at any time quote exchange
rates based on the international demand and supply of currencies to supervise the market’s operations in order to ensure the market’s stability
(floating rates) –Who are brokers?
What do brokers do in the Forex?
They contact banks throughout the world, so that at any time they could know the best exchange rates to provide consultancy to their customers (mostly banks as dealers) They don’t deal on their own account, but they charge commissions for their services
Why is Forex ( foreign exchange market) an OTC market? Forex is an OTC market because transactions are made throughout the day(24 hours a day) via telephone and computer link It has not fixed trading hours and physical trading place
14 The debt market is a financial market in which debt instruments are traded
Trang 14The equity market is a financial market in which equity instruments are traded
A primary market is a financial market in which new issues of a security are sold to initial buyers by the corporation or government agency borrowing funds
A secondary market is a financial market in which securities that have been previously issued (already-issued securities) can be resold
Exchanges are the securities markets which have a single location to conduct trades
OTC markets are markets which have no single location to conduct trades, but transactions are made via through electronic means of communication/ via telephone or computer link
The money market is a financial market in which only short-term debt instruments are traded
The capital market is a financial market in which long-term debts and equity instruments are traded
15 What are the differences between primary and secondary market?
Trang 15- Fresh
securities are
issued and
sold to the
initial
buyers
- Information
of the market
is
confidential
so it is not
popular to
the public
issuers to
raise new
capital
- Outstanding securities are traded
- This market is popular to the public
- Secondary market facilitates the selling of securities in the primary market
- Issuers acquire no new capital