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Lecture notes, cheat sheets
Macroeconomics. Crib
Directory / Lecture notes, cheat sheets Table of contents
1. MACROECONOMICS - A SPECIAL SECTION OF ECONOMIC THEORY Macroeconomics is the most important branch of economic theory, which explores the functioning of the national economy as a whole. In the macroeconomic approach to analysis, the main subject of study is Team work all economic entities and summarizing the results of this activity. Main feature This approach lies in the fact that the functioning of the national economy is characterized from positions that reject the details associated with the characteristics of the specifics of various sectors of the economy, the behavior of individual firms and households. This section of the economy deals mainly with global problems of the functioning and development of the national economy. К key problems of macroeconomics relate: - formation of the volume and structure of the social product; - factors and mechanism of economic growth; - causes of cyclical fluctuations and market changes in the economy; - interaction between the monetary and real sectors of the economy; - the nature and socio-economic consequences of inflation; - factors regulating employment on the scale of the national economy and determining the level of unemployment; - the impact of state policy on the results of the functioning of the national economy and trends in their change; - influence on the state and development of the national economy of international economic relations. The founder of modern macroeconomic theory was the British economist J. M. Keynes, who developed a scientific concept that explains the emergence of market fluctuations in the economy, and also proposed a special government action program to overcome the depression and smooth the economic cycle. The central links of Keynes's theory are the following provisions. First, the rejection of the classical doctrine of the smooth self-regulation of a market economy. Keynes argued that the market economy does not have this ability and, therefore, does not guarantee full employment, price stability and a high level of output. This logically led to the conclusion about the need for a stabilization macroeconomic policy of the state. Secondly, recognition of the determining role of demand in shaping the economic environment. Thirdly, the understanding of the national economy as an integral system with the property of emergence, i.e., the irreducibility of the characteristic features of its functioning to the properties of its constituent elements. The phenomena and processes studied by macroeconomics affect the life of every person in one way or another. Both producers and consumers are interested in the dynamics of the general price level, which affects the change in their welfare. Job seekers are interested in the prospects for expansion of business activities of firms; and managers of firms who predict the dynamics of demand for their goods - changes in consumer income. Equally important is the role of macroeconomic problems in international relations. This is determined by the fact that the parities of national currencies, the state of the general economic situation and the balance of payments of various countries are the main factors affecting the possibility of mutually beneficial international cooperation. 2. METHODS OF MACROECONOMIC ANALYSIS In macroeconomics, both general scientific and specific research methods are used. Among the basic general scientific methods, used in macroeconomic research include a combination of analysis and synthesis, the unity of the logical and historical aspects of consideration, the method of scientific abstraction, system-functional analysis, economic and mathematical modeling, a combination of positive and normative approaches. The main specific research method is the aggregation method. Its essence lies in the fact that the concepts used by macroeconomics are aggregates, which are scientific abstractions formed by combining, according to one or another feature, into a single whole a multitude of economic phenomena or processes. Such aggregates are not only generalizing indicators of the economic situation (national income, price level, interest rate), but also individual sectors of the national economy, acting as the main macroeconomic entities. The main selection criterion macroeconomic entities is the specific role that each of them plays in the organization of economic activity. These entities include: - the household sector, which includes all the families of the country and directs its activities to meet the needs; - the business sector, which brings together the entire set of firms registered within the country and organizing their activities in order to make a profit; - the public sector, representing all state institutions and institutions. This sector organizes the production of public goods, carries out social payments, redistributes the country's national income between individual sectors of the economy, ensures the supply of funds in the national economy and carries out one or another set of measures to regulate the country's foreign economic relations. Unlike other macroeconomic entities, the state, in carrying out its economic activities, is guided not by its own, but by national interests; - the foreign sector, which is understood as the totality of all economic entities that have a permanent location outside the country. The interaction of the foreign sector with the economic entities of the national economy is carried out on the basis of foreign economic relations through the mutual exchange of goods, services, national currency and capital. The main part of the interconnections of economic entities is formed in the process of their interaction in the markets. Macroeconomics analyzes the following aggregate markets: - goods market, uniting many markets where the entire volume of final goods and services produced in the country is sold; - securities (capital) market, which is represented at the macro level by the market of short-term government bonds; - money market, characterizing the entire volume of transactions related to the exchange of national currency for securities; - labor market, where labor as such is bought and sold; - real capital market (machines, equipment, etc.); - international currency market, where national currencies are exchanged. 3. THE SYSTEM OF MACROECONOMIC INTERRELATIONS OF THE MAIN SECTORS OF THE NATIONAL ECONOMY Millions of economic entities make decisions independently in the course of their activities, however, as a result of their interaction, stable patterns of development of the entire national economy are formed. Therefore, in order to understand the nature and directions of the impact of the decisions of individual economic entities on the mechanism of functioning of the entire national economy, it is of decisive importance analysis of the communication system, emerging between different sectors. This kind of analysis is carried out on the basis of a theoretical model of the circulation of products and incomes. Government sector connected with the rest of the economic system in the following ways: through taxes, through government purchases and through loans. Taxes paid to the government represent withdrawals of funds from households. However, this cash flow is partly offset by the reverse flow of transfer payments to households. For a reliable assessment of the flow of cash payments from households to the public sector of the economy, macroeconomic analysis takes into account only net taxes, which are understood as the difference between total tax receipts and transfer payments. The main feature of the flow of tax payments is that they link the public sector and households directly, and not through a system of market interactions. Transfer payments (pensions, scholarships, allowances) are only a part of the state's expenditures. Another part of these expenditures is government purchases, which include payments from federal and state government agencies for goods and services purchased from firms, as well as the salaries of all government employees. The difference between net taxes and government purchases is state savings. foreign sector, just like the state, it is connected with other economic entities in three ways. The first one is import of goods and services. Imported goods and services enter the country to the goods market, and the counter flow of cash payments - from the goods market to the foreign sector of the economy. The second way of linking the national economy with foreign countries is export of goods and services. Cash received in exchange for the value of goods and services sold to foreign buyers enters product markets, where it is merged with cash flows from the sale of goods to domestic households and the state. The difference between import payments and export earnings is called net exports. The third way of communication is to carry out various kinds of international financial transactions, connected both with obtaining loans and granting loans, and with transactional transactions for the purchase and sale of real and financial assets. These transactions lead to the emergence of certain streams of payments directed both inside the economic system and outside it. The first of these flows in the economy is usually called capital inflows, the second - capital outflows, although they reflect the movement of not real, but fictitious capital, i.e., various kinds of financial assets. 4. EQUILIBRIUM FUNCTIONING OF THE NATIONAL ECONOMY Economic balance - this is the concept of analysis, which characterizes the coincidence of buyers' plans regarding the volume of purchases with the plans of sellers regarding the volume of sales. Sellers and buyers in all markets are economically independent, sovereign entities, so in real life their plans can only coincide randomly. When plans don't match, imbalance situation, the way out of which is associated with the adjustment of the plans of sellers and buyers seeking to improve their economic situation. If all macroeconomic markets are competitive, and prices for goods and resources are highly flexible, then the process of adjusting the plans of buyers and sellers while maintaining unchanged economic conditions ends with the establishment of economic equilibrium. The concept of "general macroeconomic equilibrium" means that in all interconnected markets, equality of supply and demand is simultaneously achieved. In the market for final products and services, equilibrium will mean that producers maximize income, and consumers receive maximum utility from the products they buy. Achieving equilibrium in the market for factors of production assumes that all the production resources that come to it have found their buyer, and the marginal income of the owners of the resources, which forms the demand, is equal to the marginal product of each resource, which forms the supply. Equilibrium in the money market characterizes a situation in which the amount of expected funds is equal to the amount of money that the population and entrepreneurs want to have. Insufficient competitiveness of markets, inflexibility of prices or imperfection of information can become the causes of a permanent imbalance in certain macroeconomic markets. If one or more markets are in equilibrium and others are not, a macroeconomic situation of partial equilibrium occurs. The idea of macroeconomic equilibrium has its roots in the work of classical economists. So, A. Smith expressed the idea that in the conditions of free interaction between producers and consumers, it is not chaos that operates, but economic order of individuals, pursuing the interests of personal gain, which leads to the establishment of a general equilibrium, beneficial to all. The fundamental possibility of achieving general equilibrium under conditions of perfect competition in mathematical form was first proved by L. Walras. In theoretical terms, the concept of general economic equilibrium of L. Walras is important, first of all, for understanding the economy as a whole, as a system of interconnected markets. Later, a lot of mathematical models of macroeconomic equilibrium were developed for various types of economies: closed, open and mixed, separately for the private sector, etc. Currently, macroeconomic research is dominated by the understanding of the movement towards equilibrium as stochastic probabilistic process, based on the adjustment of expectations of economic agents. 5. PUBLIC PRODUCT: ESSENCE, MEASUREMENT INDICATORS In a broad sense, the concept "public product" used to characterize the total volume of national production - the totality of products and services produced in the country during the year. To measure the social product various macroeconomic indicators are used. These include gross product (GDP), final product (CP), net product (NP), gross domestic product (GDP), net national product (NNP) and national income (NI). EaP is calculated as the sum of all benefits produced per year, created in industries classified as material production (industry, agriculture and forestry, construction, freight transport, communications, catering industries, and a number of others), i.e., the very fact of creating a product is evaluated regardless of whether the product was sold or not. An intermediate product is also considered, i.e. a product used during the year in the production process. As a result, there is re-calculation of the cost of raw materials, materials, etc., taken into account at different stages of the production cycle of the same goods. In order to avoid double counting, we use end product indicator calculated as the difference between gross and intermediate products. Gross national product (GNP) is the market value of all final consumption goods and services produced during the year with the factors of production owned by a given country. In its economic sense, it is close to the KP indicator, but exceeds it by the cost of non-material production services. GDP is a kind of modification of GNP, but, unlike the last one, is defined as the value of the entire set of final goods and services produced in a given country during the year. On the basis of GDP, the final results of production activities on the territory of the country of all economic entities are taken into account, regardless of their nationality. The difference between GDP and GNP is twofold. On the one hand, when calculating GDP, the amount of income from the use of resources of a given country abroad (salary, interest, dividends, etc.) is subtracted from GNP. On the other hand, when calculating GDP, similar incomes of foreigners received in a given country are added to GNP. When GNP exceeds GDP, residents of a given country receive more income abroad than foreigners receive in this country. The opposite situation means that foreigners receive more income from productive activities in a given country than residents of this country abroad. In most countries, GDP is used as the main measure of the social product. In the United States and Japan, GNP is used as the main indicator. CHNP represents the amount of final products and services left for consumption after the replacement of decommissioned equipment. It is less than GNP by the amount of depreciation. National income - the amount of income of the entire population received from labor and ownership of property (land, houses and capital). 6. METHODS FOR CALCULATION OF GNP GNP can be calculated using one of two methods. End use method (by cost). When calculating GNP expenditures sum up the expenditures of all economic agents using GNP, households, firms, the state and foreigners (expenditure on our exports). In fact, it is about aggregate demand for GNP produced. Total expenses can be decomposed into several components: GNP = C + I + G + NE, where C is consumption; I- investments; G- public procurement; NE - net export. Consumption is the totality of goods and services purchased by households. Investment includes the value of goods purchased for future use. Investments are also divided into three groups: investments in fixed production assets; investment in housing construction; inventory investment. State procurements - is the total cost of goods and services purchased by government agencies (military equipment, construction and maintenance of schools, roads, maintenance of the army and the state administration, etc.). However, this is only part government spending included in the state budget. This does not include, for example, transfer payments such as social security payments and other benefits. Since these payments are made free of charge, they are included in GNP. Net export reflects the results of trade with other countries, the difference in the value of exports and imports of goods and services. At equilibrium in the sphere of foreign trade, the value of exports and imports are equal, and the value of net exports is zero; in this case, GNP is equal to the sum of domestic spending: C + I + G. If exports exceed imports, then the country acts as a "net exporter" in the world market, and GNP exceeds domestic spending. If imports are greater than exports, then the country is a "net importer" on the world market, net exports are negative, and spending exceeds production. This GNP equation is called basic macroeconomic identity. Distribution method (by income) When calculating GNP by income, all types of factor income are summed up, as well as depreciation and net indirect taxes on business, that is, taxes minus subsidies. GNP is usually divided into the following: types of factor income (the criterion is the method of obtaining income): - remuneration (wages, bonuses, etc.); - income of owners (income of unincorporated enterprises, small shops, farms, partnerships, etc.); - rental income; - corporate profits (remaining after wages and interest on loans); - net interest (as the difference between interest payments by firms to other sectors of the economy and interest payments received by firms from other sectors - households, the state, excluding interest payments on public debt). As with other methods of calculation, in this case there is a relationship between GDP and GNP: GNP = GDP + net factor income from abroad. Net factor income from abroad is equal to the difference between the income received by citizens of a given country abroad and the income of foreigners received in the territory of this country. 7. NATIONAL ACCOUNTING SYSTEM System of national accounts is a balance of interrelated indicators characterizing the production, distribution, redistribution and final use of the final product and national income. At the heart of building a system of national accounting (SNA) is the concept of "economic circulation", the core of which is the economic turnover. The national accounting system defines quantitative values of the most important macroeconomic indicators. To do this, for each of the economic entities and the national economy as a whole, a system of functional accounts is compiled, reflecting participation of this subject in the following business processes: - production of material goods and services; - income generation; - distribution of income; - redistribution of income; - use of income; - change of property; - crediting and financing. Although the gross national product (GNP) is most often used as a measure of total income, there are other measures of income used in the national accounting system that differ from GNP in some components. The net national product can be obtained from GNP by deducting depreciation charges (depreciation cost of fixed capital) from it. Net national product \uXNUMXd GNP - a / o, where a / o - depreciation; NNP = C + NI + G + NE, where NI - net investment = I - a / o. Indirect business taxes is the difference between the prices at which consumers buy goods and the selling prices of firms. These are value added tax, excise duties, import duties, taxes on monopoly activities, etc. If net indirect taxes on business, i.e., indirect taxes minus business subsidies, are subtracted from NNP, we get national income - an indicator representing the total income of all inhabitants of the country. National income \uXNUMXd NNP - k / n, where k / n - indirect taxes. The measure of personal income is obtained by subtracting social security contributions, corporate retained earnings, corporate income taxes, and adding transfer payments from national income. It is also necessary to subtract net interest and add personal income received in the form of interest, including interest on the public debt. Personal income is denoted by PI. Disposable personal income is calculated by reducing personal income by the amount of personal income tax and some non-tax payments to the state: DI=PI - T, where T are taxes. Disposable personal income is used by the household for consumption and savings. Consumption (C) - the most important and largest component of GNP. Savings (S) defined as income minus consumption. Gross national disposable income is obtained by summing GNP and net transfers from abroad (gifts, donations, humanitarian aid, etc.) minus similar transfers transferred abroad. Gross national disposable income is used for final consumption and national savings. 8. METHODS FOR CALCULATION OF GDP There are three main methods used to calculate GDP. Added value method For the correct calculation of GDP, it is necessary to take into account all products and services produced in a given year, but without repeated, double counting. That is why the definition of GDP refers to final goods and services. These goods are consumed within households and firms and do not participate in further production, unlike intermediate goods. If we include in GDP intermediate products used for the production of other goods (flour bought by a bakery to make bread), we get overestimated GDP (the price of flour will be taken into account several times). Eliminating double counting allows the value added indicator, which represents the difference between firms' sales of their finished products by purchasing materials, tools, fuel and services from other firms. Added value - is the market price of the company's products minus the cost of consumed raw materials and materials. By summing the value added produced by all firms in a country, one can determine the GDP, which represents the market value of all goods and services produced. Method of calculating GDP by expenditure Since GDP is defined as the monetary value of the final goods and services produced in a year, it is necessary to sum up all the expenses of economic entities for the purchase of final products. When calculating GDP on the basis of expenditure or flow of goods (this method is also called the production method), the following values are summed up: - consumer spending of the population (С); - gross private investment in the national economy (Ig); - public procurement of goods and services (G); - net exports (NX), which represents the difference between exports and imports of a given country. GDP = C + Ig + G + NX. Method of calculating GDP by income (pay-as-you-go method) GDP can be represented as the sum of factor incomes (wages, interest, profit, rent), i.e., to be defined as the sum of remuneration of the owners of factors of production. GDP includes the income of all entities operating within the geographic boundaries of a given country, both residents (citizens residing in the country, except for foreigners who stay in the country for less than a year) and non-residents. GDP also includes indirect and direct taxes on businesses, depreciation, property income and retained earnings. What is a cost for some subjects is income for others. Not all transactions carried out by economic entities for the calculated period (per year) are included in the GDP indicator. First, these are transactions with financial instruments: the purchase and sale of securities - shares, bonds, etc. Financial transactions are not directly related to changes in current real production. Secondly, the sale and purchase of second-hand things and second-hand goods. Their value was accounted for earlier. Thirdly, private transfers (for example, gifts), in this case it is only a redistribution of funds between private economic entities. Fourth, government transfers. 9. NATIONAL WEALTH To assess the final results of the country's development over the entire history of its existence, such an indicator as national wealth is used. National Wealth (NB) represents the totality of material wealth that has been accumulated in the country at a certain date. There is a direct and inverse relationship between national wealth and the social product created in the country. Direct dependence is determined by the fact that the social product is the main source of replenishment and renewal of the National Library. The inverse relationship lies in the fact that the very volume of the produced social product, the rate and absolute values of its growth depend on the accumulated national wealth, its size, structure and qualitative composition of its constituent elements. The structure of national wealth characterized by the following main components: - belonging to the population, firms and the state means of production, functioning both in the material and in the spiritual sphere (machines, machine tools, equipment, etc.); - stocks of finished products in the warehouses of firms; - strategic reserves of the state; - property of the population, materialized in real estate and consumer durables; - material and cultural values that are in the public domain; - natural resources involved in economic turnover, as well as explored minerals; - intangible spiritual values. Socio-economic progress of society, occurring under the influence of scientific and technological changes, is accompanied not only by an increase, but also by a change in the structure of national wealth. Increasing National Wealth and the progressive change in its structure are the material basis for improving the welfare of the entire population of the country. To measure the latter, the indicator of net economic well-being, which was introduced into economics by W. Nordhaus and J. Tobin, is used. In domestic macroeconomic science, it is relatively new. The need for its use is determined by the fact that none of the indicators of the social product calculated on the basis of the national accounting system and indicators of the social product allows an adequate assessment of the welfare of the nation. For example, the main element, not related to a social product, but increasing the well-being of the population, is free time. The growth of this component of economic well-being can, ceteris paribus, be a factor in the reduction of the social product. To determine the indicator of net economic well-being from the value of the indicator used to measure the social product (for example, gross national product), the monetary value of negative factors affecting welfare is subtracted, and the monetary value of non-market activities and free time are added. The quantitative values of all these estimates, as a rule, are determined by an expert. 10. NATIONAL INCOME, ITS DISTRIBUTION AND REDISTRIBUTION National Income (ND) - it is the net product of society, or newly created value. It is generally recognized that the national income is created in industry, agriculture, construction, transport, trade and public catering (partially), in the field of communications (partially). It is figuratively called the "national pie", which must be divided among different strata of society, social groups and individuals. The distribution of national income in a broad sense covers all spheres of social production: direct production, distribution, exchange and consumption. At the distribution stage necessary and surplus product are divided into primary income in the form of wages, profits, interest, rent, dividends, rent, etc. They are divided into labor and non-labor. К labor include income generated by workers at enterprises and in industries and coming to their individual disposal in the form of wages, as well as income of urban and rural workers from individual labor activity and subsidiary farming. К unearned, the source of which is a surplus product, includes part of the profits of entrepreneurs, interest, rent, profits of owners of commercial capital, etc. At the same time, part of the profit created by the productive labor of an entrepreneur is considered labor income, and unearned - only a part of the profit appropriated by him, exceeding the quantity and quality of his managerial labor, costs associated with organizational activities. As for rent, only absolute rent can be attributed to unearned income. After the distribution of the national income, it is redistributed. It is carried out through the mechanism of pricing in the sphere of circulation, the payment of various types of taxes to the state budget, social spending of the state, contributions of citizens to public, religious, charitable foundations and organizations. For example, from 40 to 55% of national income is redistributed through state budgets in the developed countries of the world. Based on the redistribution of national income, secondary or derivative incomes are formed, such as pensions, scholarships, salaries for military personnel, law enforcement officers, assistance to large families, etc. Taxes are the main source of secondary income. Thus, about 33% of the wages of the average American worker is deducted in the form of taxes. Redistribution of national income carried out through official (visible) and unofficial (invisible) channels. In the first case, this happens through the taxation mechanism, voluntary contributions to various funds, and also through the pricing mechanism, when the state or companies (usually large ones) officially announce that prices for a certain group of goods and services will be increased by so much percent. This practice is common in developed countries of the world. In the second case, the government and companies do not officially announce this, but carry out a small but repeated price increase. This leads to a gradual decline in the living standards of the population. 11. SAVINGS FUND AND CONSUMPTION FUND As a result of the distribution and redistribution of national income, final incomes are created that are used for consumption and accumulation. Накопление is a necessary condition for the expanded reproduction of all elements of the economic system: the technological mode of production, property relations and the economic mechanism. The material basis of such reproduction is production of a growing volume of material goods and services. The national income that goes to consumption and accumulation does not coincide with the amount of the national income created. The latter is reduced by the amount of losses. In addition, the national income used may differ from the created one by the amount of the foreign trade balance. If a country imports more goods and services than it exports, then the national income used will be greater than the national income generated, and vice versa. Of great importance for increasing the national income, accelerating socio-economic progress and expanding the reproduction of the economic system is the optimal ratio between consumption and the accumulation of national income. Between them constantly there is a contradiction. On the one hand, an excessively large consumption fund does not make it possible to build new factories, factories, introduce new equipment and technology, develop science, education, on the other hand, the excessive accumulation of a part of the created national income hinders the consumption of the population, the growth of its personal income, which undermines incentives for labor, forms a type of economy that is not focused on meeting the needs and interests of the population, that is, a costly economy. The ratio between consumption and accumulation is considered optimal in the proportion of 75:25. The main source of accumulation - accessory product. It is used for expanded production, construction of social and cultural facilities, as well as for the creation of insurance stocks and public reserves. For extended production it is required to produce not only such a quantity of means of production that will be used to renew means and objects of labor worn out throughout the year (substitution fund), but also a certain surplus of them for the construction of new factories, plants, etc. Since it is necessary to attract an additional number of workers to the newly built factories and plants, part of the funds from the accumulation fund should be directed to production of additional commodities. At the expense of the accumulation fund, productive and non-productive accumulation is carried out. The first is used for the construction of new factories, industrial infrastructure, equipping existing enterprises with equipment, etc. The second is carried out with the aim of building residential buildings, educational institutions, health care, and culture. It also provides for the production of additional commodities for workers who will work in this area, as well as the costs of their training and retraining. The main element of the accumulation fund is production accumulation, therefore, its norm is the most important part of the total accumulation. In the structure of production accumulation, the leading role belongs to the depreciation fund. 12. THE STATE AND ITS ROLE IN THE REGULATION OF THE NATIONAL ECONOMY State regulation of the economy (GRE) in a market economy is a system of standard measures of a legislative, executive and supervisory nature, carried out by authorized state institutions, public organizations in order to stabilize and adapt the existing socio-economic system to changing conditions. In modern conditions, GRE is an integral part of the reproduction process. It solves problems: - stimulation of economic growth; - regulation of employment; - encouragement of progressive shifts in sectoral and regional structures; - export support, etc. Subjects economic policy are carriers, spokesmen and executors of economic interests. Objects of the state survey - these are spheres, industries, regions, as well as situations, phenomena and conditions of the socio-economic life of the country where difficulties have arisen or may arise, problems that cannot be resolved automatically or resolved in a separate future. The main objects of the GRE: economic cycle; sectoral, branch and regional structures of the economy; conditions for capital accumulation; employment; money turnover; payment balance; prices; R&D; conditions of competition; social relations, including relations between the employer and employees, as well as social security; training and retraining of personnel; environment; foreign economic relations. The essence of the state countercyclical policy, or economic regulation, is to stimulate demand for goods and services, investment and employment during crises and depressions. For this, additional financial benefits are provided to private capital, and government spending and investment are increased. In the context of a long and rapid recovery in the country's economy, dangerous phenomena may arise: the absorption of commodity stocks, the growth of imports and the deterioration of the balance of payments, the excess of demand for labor over supply and hence the unjustified increase in wages and prices. In such a situation, the task of the GRE is to slow down the growth of demand, investment and production in order to reduce the overproduction of goods and the overaccumulation of capital and thus reduce the depth and duration of a possible decline in production, investment and employment in the future. The general goal of the GRE is economic and social stability, strengthening the existing system at home and abroad, adapting it to changing conditions. Allocate the following means of state regulation of the economy. 1. Administrative. Not associated with the creation of an additional financial incentive or the risk of financial damage. They are based on the power of state power and include measures of prohibition, permission and coercion. 2. The economic means of the GRE are divided into: 1) means of monetary policy: regulation of the discount rate; establishing and changing the size of minimum reserves; operations of state institutions in the securities market, such as the issuance of government bonds, their trading and redemption; 2) means of budgetary policy (revenues and expenditures of the central government and local authorities). 13. STRUCTURING OF THE NATIONAL ECONOMY. STRUCTURAL SHIFTS Structure of the national economy represented by the relationship between the country's available production resources; the volumes of their distribution among economic entities. On the formation of the structure are influenced by the following factors: - current market conditions; - capacity and level of monopolization of markets; - the degree of participation of the country in the international division of labor; - the level of development of productive forces, the scale and pace of scientific and technological progress; - the quality of natural resources and the state of the environment. Quantitative relationships between macroeconomic indicators that characterize structural ties in the economy are called proportions. Proportions include: - intersectoral; - intrabranch; - interregional; - interstate. Structure of the national economy is divided into three large groups: - sectoral structure of production; - organizational and economic structure; - socio-economic structure. The sectoral structure characterizes the share of individual industries in the total volume of national production. The sectoral structure undergoes significant changes in the course of development. The main reasons for sectoral structural shifts in the economy are the production of new or qualitatively improved goods, changes in consumer preferences, growth in household incomes, the development of new technologies and new production methods. For measuring degree of transformation two indicators are used in the sectoral structure of the national economy: structural change index и similarity index of two compared structures. The first indicator is based on an assessment of the shares of various industries in national production for two compared periods. The second measure is a mirror image of the first and is defined as 100% minus the first measure. Structural changes in the economy are characterized by a general pattern: large aggregates are more stable over time than small ones. In the sectoral structure, this pattern finds its manifestation in the relative stability of the share of such large groups of industries as industry, agriculture, and the service sector over relatively short time intervals. At intervals of considerable duration (10 years or more), patterns of change in global sectoral proportions are revealed. The organizational and economic structure reflects the relations that develop in the process of organizing the production of a social product. This structure is characterized by a system of proportions between the shares of the social product created by economic units, which are grouped according to the level of concentration or specialization of production. From the point of view of the concentration of production, it can be represented by the ratio of the shares of large, medium and small enterprises in sectoral production; GNP or GDP, etc. The socio-economic structure characterizes, on the one hand, the contribution of enterprises of various forms of ownership to the production of a social product, and, on the other hand, the differentiation of incomes of various groups of the population. 14. INTER-INDUSTRIAL BALANCE When analyzing and forecasting structural relationships in the national economy, the balance method "costs - output". The essence of the latter lies in the dual consideration of various industries and sectors of the economy, on the one hand, as consuming products, and on the other hand, as producing certain types of goods and services for their own consumption and the needs of other industries and sectors of the economy. Feature of this method is its focus on taking into account not only the final, but also the gross results of national production, reflected in the category of gross social product. therefore input-output method allows you to analyze and predict not only the movement of stocks or flows between different sectors of the economy, but also inter-industry relations that develop between sectors of the business sphere. The input-output method is based on the idea that the description of an economic system can be carried out by reducing processes and products, that is, by expressing them through other processes and products. In our country, the input-output model and the corresponding tabular (matrix) model are called the input-output balance model (IOB). Detailed scheme of input-output balance includes four sections (quadrants): - the first of them reflects the current production consumption (intermediate product); - in the second - the composition of the final product according to the nature of its use; - in the third - the structure of value added (depreciation, wages, business taxes); - in the fourth - the distribution of national income. The emergence and development of intersectoral balance in its modern version is inextricably linked with the name V. Leontief. Based on model of general economic equilibrium by L. Walras, V. Leontiev first developed matrix model and input-output table, reflecting the relationship between the volumes of final demand for products in the sectoral context, on the one hand, and the total volume and sectoral structure of the created stock of products necessary to saturate this demand, on the other. First input-output table V. Leontiev was compiled for the United States in 1936 in the context of 41 sectors of the economy. Currently, such tables are compiled for 400 industries. The value of the input-output balance model for the analysis of macroeconomic equilibrium is very high. On its basis, the following types of equilibrium can be obtained: - branch balance for any industry; - intersectoral equilibrium; - general macroeconomic equilibrium for GNP and final demand; - general macroeconomic equilibrium for the gross social product and the demand for final and intermediate products. In practice, all these types of equilibrium are achieved quite rarely, while in the IEP model they always exist. The intersectoral balance model is initially static. However, it is also used in a dynamic aspect to predict a balanced economic growth trajectory. To do this, on the basis of forecasts of the dynamics of final demand, the volumes and growth rates of the gross social product are calculated. 15. EVOLUTION OF INDUSTRY STRUCTURE IN THE MODERN RUSSIAN ECONOMY The transition from a centrally regulated economy to a market economy has as its inevitable consequence a change in the sectoral structure of the economy, due to the transformation of relative prices in the markets for goods, financial resources and factors of production. Fundamentals of sectoral and reproductive structures of the Russian economy formed in the late 20-30s, during the period of industrialization. The existing sectoral structure resembled a layered pyramid: its base consisted of nature-exploiting industries (mining, agriculture and forestry, and fishing); the next layer - industries of primary processing of natural raw materials; further - industries that produce mass products. The pyramidal structure of the structure of the economy was completed by the service sector, science and innovative services, in which the importance of such factors as skilled labor and information is high. Since the share of each next industry was less than the previous one, graphically this structure looked like a pyramid (triangle). After the completion of the process of formation of the pyramidal structure in the country, stake on high economic growth rates in the absence of manufacturers real economic incentives for efficient organization of production activities. This led to a "stretching" of the pyramid at its base, which could not but be accompanied by a "compression" of its upper floors. Under the conditions of a steady shortage of resources, the so-called "residual principle" of financing the industries included in the upper floors of the pyramid has developed. As a result, the structural structure of the economy took the form truncated pyramid, based on a disproportionately heavy foundation, consisting of nature-exploiting industries. After the start of market reforms the trend towards a relative expansion of the already weighted resource base has further intensified. Abolition of centralized finance systems all sectors of the economy, the liberalization of prices and foreign trade, the introduction of the internal convertibility of the ruble created the prerequisites for the operation of market criteria for selecting the most competitive producers. Since, according to world standards, the competitive enterprises in Russia turned out to be those associated with the extraction and primary processing of strategic types of raw materials, it was they who received the most favorable conditions for functioning in the domestic and world markets. Simultaneously with the expansion of the resource base of the already truncated pyramid, the production of consumer services and market relations related to servicing began to develop at a faster pace. This and other processes resulted in formation of a specific structural structure of the Russian economy. In this structure, the base is expanded, and the central part is narrowed to the limit. At the same time, on the upper floors, with a minimum amount of production in industries, culture, and science in general, there is a fairly wide "belt" that includes wholesale and retail trade, services of financial institutions and some other types of services. 16. MARKET OF GOODS AND SERVICES IN THE SYSTEM OF NATIONAL MARKETS In macroeconomics, under market of goods and services refers to the totality of relations associated with the sale and purchase of all goods produced in the national economy during a certain period and intended for final use. Since the total amount of final goods and services created in the country is measured by indicators of the social product calculated on the basis of the system of national accounts, the market for goods and services in its macroeconomic interpretation can be defined as a set of relations regarding the sale and purchase of a social product produced in the country. As part of relations representing in their unity market for goods and services, the following groups can be distinguished: - relations that determine the decisions of macroeconomic entities (households, firms, the state and the foreign sector) on the volume of final goods and services purchased; - relations that characterize the decisions of firms on the volume of production of final goods and services; - the relationship of purchase and sale that develops between buyers and sellers in the market itself. When analyzing the market for goods and services, these relations are considered either in static aspect (as decisions of economic entities taken in unchanged economic conditions), or in terms of comparative statistics (as a reaction of market entities to changing economic conditions). The market for goods and services is central link in the overall system of interconnected markets. The results and patterns of its functioning largely determine the state of other markets. In turn, the conjuncture and the mechanism of functioning of labor markets, money, securities, the international currency market and the international capital market have direct and reverse impact on the market of goods and services. To analyze the entire set of direct and feedback links between individual markets within their single system, macroeconomic models of general economic equilibrium. These models make it possible to establish the following nature of the macroeconomic relationships between the market for goods and services and other markets: - labor market determines the formation of the aggregate supply function in the market of goods and services. In turn, the aggregate demand for goods and services in the short run can have a decisive impact on the formation of demand for labor; - money markets (national currency) and securities have an impact on the market of goods by influencing the formation of aggregate demand functions. At the same time, the parameters of the equilibrium state of the goods market (price level, sales volume) or the process of adaptation to the state of equilibrium taking place on it affect the interest rate, the amount of demand for money, as well as the magnitude of supply and demand in the securities market; - international financial markets in an open economy directly affect the aggregate demand for goods and services. The existence of a stable relationship between individual markets within the framework of a single system should be taken into account in the implementation of the macroeconomic policy of the state. 17. AGGREGATE DEMAND In macroeconomics, under aggregate demand refers to the total expenditures planned by all macroeconomic entities for the acquisition of all final goods and services created in the national economy. In accordance with the distribution of costs between individual sectors of the economy as part of aggregate demand distinguish the following main elements: - consumer spending of households (C); - investment expenditures of the private sector (/); - public procurement (b); - net exports (NX). As a result, aggregate demand as a whole can be represented as the amount of said expenses. Most of the total demand make up the expenditures of the population on goods and services for consumer purposes, i.e. element C, often called for short consumption. The share of this indicator in the national income of the country reaches about 50% in Russia, and about 67% in the USA. Investment spending refers to the demand of firms and households for investment goods. Firms buy these commodities to increase their stock of real capital and rebuild depreciated capital. The acquisition of houses and apartments is also part of the investment. The total investment is about 15-20% of the country's GNP. The third element of aggregate demand is public procurement of goods and services. It includes spending by all levels of government on services (eg education, health care), the purchase of goods, and the payment of wages to government officials. The share of government purchases in the total volume of expenditures on the purchase of goods and services depends on the degree of state participation in the redistribution of the national income of the country, the level of taxation rates and the size of the state budget deficit. In Russia, its value is about 30% of the country's national income. Net export is the difference between exports (payments by foreigners for goods and services produced in the country) and imports (expenditures by economic entities of a given country to pay for goods and services produced abroad). There are three other main effects that can influence the change aggregate demand: - interest rate effect. With an increase in the price level, the demand for money increases, and this, with a constant amount of money in circulation, causes an increase in the interest rate, which in turn reduces incentives for investment and consumer spending. With high interest rates, many consumers lose their interest (or ability) to get loans to buy cars, furniture, real estate and other goods; - wealth effect is that an increase in the price level reduces the real value of many financial assets that generate fixed income (bonds, deposits). Feeling poorer because of the depreciation of savings, consumers begin to save on purchases; - effect of import purchases. An increase in the general price level in one country will encourage more goods to be imported into that country, and the value of exports will decrease. As a result, there will be a reduction in net exports, and, consequently, in the overall value of aggregate demand. 18. CONSUMPTION AND SAVING The essence of consumption stages of the reproduction process It consists in the individual and joint use of consumer goods by the population in order to meet the material and spiritual needs of people. Considering consumption as element of aggregate demand It refers to household expenditures for the purchase of goods and services. At macroeconomic analysis the problem of the formation of consumer spending in the current period is treated as a problem of intertemporal choice of consumers. Households make a choice between consuming today or increasing consumption in the future. But the ability to increase consumption in the future depends on savings in the present period. At the same time, savings made in the present period are nothing more than a deduction from current consumption, since savings are is part of disposable income not used for consumption. In other words, the identity is true: Y = C + S, where Y is disposable income (national income less net taxes). Due to the dual role of savings (as a source of additional future consumption and a deduction from current consumption), the problem of consumer choice at the macro level is presented as the problem of distributing disposable income for consumption and savings. In macroeconomic terms Of particular importance is the question of what factors have a decisive influence on the choice of consumers, i.e. e. determine the functions of consumption and savings. Among the the main objective factors of consumption include the level of prices, property of consumers, the real interest rate, the level of consumer debt, the level of taxation of consumers. Subjective factors include the marginal propensity to consume and consumer expectations regarding future changes in price levels, money incomes, taxes, availability of goods, etc. Among all these factors, the most important is the marginal propensity to consume, which is a parameter that establishes a quantitative relationship between consumption and disposable income. The marginal propensity to consume (C) shows how much of each unit of their additional disposable income households use to increase consumption. Quantitatively, it is measured as the ratio between the change in consumption and the change in disposable income that caused it. Similarly, the marginal propensity to consume can be defined marginal propensity to save. The marginal propensity to save is the portion of each additional unit of disposable income that goes into saving. Quantitatively, it is calculated as the ratio of the change in savings to the change in disposable income that determined it. Along with the concepts of "marginal propensity to consume" and "marginal propensity to save," economic theory operates with the concepts of "average propensity to consume" and "average propensity to save." Average propensity to consume is the ratio of total consumption to disposable income. Average propensity to save (savings rate) is the ratio of total savings to disposable income. 19. FUNCTIONAL PURPOSE OF THE INVESTMENT Investment level has a significant impact on the volume of national production and its growth rate. The construction of new enterprises, the construction of residential buildings, the laying of roads, and, consequently, the creation of new jobs depend on the process of investment, or capital formation. Keep in mind that investments have different impact to the market for goods and services in the short and long periods. In the short run, investments act as an element of the aggregate demand for goods. In the long run, investment will increase the stock of capital, which will lead to an increase in the country's productive capacity and an increase in aggregate supply. The main feature of investment as an element of aggregate demand lies in the fact that they are highly dependent on changes in the economic situation and therefore their value is very unstable. Depending on the functional purpose emit three types of investment spending. 1. Investments in fixed assets of enterprises - expenses of firms on buildings, structures, machinery and equipment that they acquire for use in their production activities. Such investments are made to expand the amount of capital employed or to restore depreciated capital. 2. Inventory investment are those goods that firms set aside for storage, including raw materials, work in progress, and finished goods. Stocks are created by firms with different purposes. The most important of them is smoothing fluctuations in output with temporary changes in sales volume. In addition, the reasons for the formation of reserves may be the technological features of production, the need to ensure its continuity and efficiency, etc. 3. Investments in housing construction - expenditures of households on the acquisition of newly built houses or apartments for subsequent residence or subsequent leasing. Economists Study Investments for a Better Understanding the nature of the change in the output of goods and services. Therefore, the central place in the theory of investment is occupied by the question of what factors determine the intentions (plans) of firms to increase their physical capital and inventories, i.e. net investment of the business sector of the economy. Studies show that two factors have the most significant impact on the volume and dynamics of investments - change in the real volume of national income and the real interest rate. The change in the volume of investment can be affected by many not only economic, but also political circumstances. Inflation rates, expectations of future changes in the economic situation, a change of government, rumors, fears, and even the president's illness can affect entrepreneurs' assessment of the feasibility of investing. The sensitivity of the investment decisions of entrepreneurs to parameters that do not affect the consumer decisions of households determines the high instability of investments. Therefore, investments are considered the most dynamic element of aggregate demand, which can cause not only economic growth, but also cyclical fluctuations in the economy. 20. TOTAL OFFER Aggregate supply in macroeconomics, the sum of all final goods and services produced in a country that firms are willing to offer on the market during a certain period at each possible price level is called. In other words, this - real volume of national production at different values of the price index for final goods and services. The dependence of the real volume of national production on the price level is called aggregate supply curve. The nature of the influence of the price level on the volume of national production and, consequently, the form of the aggregate supply curve depends to a decisive extent on the length of the period of time under consideration. Therefore, one should distinguish long term и short run aggregate supply curves. In macroeconomics (as opposed to microeconomics), the main criterion for separating the short-term and long-term periods is the flexibility of prices, and not the stability of the capital stock. In the macroeconomic interpretation of time periods, it is assumed that in the long run, all prices for both goods and resources are flexible and change in the same proportion, and in the short run, either all prices or prices for labor do not have such flexibility. There are two reasons why firms can expect that commodity prices and resource prices will change in the same proportion in the long run. The first reason is based on the influence of the dynamics of commodity prices on the wages of workers. The second reason is that many products are both finished goods and resources. If firms expect proportional changes in prices for goods and resources, they have no incentive to increase output when the price level rises, because they expect their costs to rise in the same proportion as prices. Therefore, the aggregate supply curve in the long run looks like a vertical straight line. If firms expect that within a certain period resource prices (and hence production costs) will remain unchanged, then, in response to an increase in aggregate demand, they will increase the real volume of supply at the prevailing level of commodity prices. Then the aggregate supply curve in the short run will take the form of a horizontal straight line. If they expect that with an increase in aggregate demand resource prices will rise but to a lesser extent than commodity prices, the aggregate supply curve will be positive in the short run. In addition to the price level, aggregate supply is influenced by many non-price factors under the influence of which the aggregate supply curve can shift to the left or to the right. These factors include: - change in the amount of resources used; - change in resource performance; - changes in taxes and subsidies. The above factors, other things being equal, can, to one degree or another, affect shifts in the aggregate supply curve both in the short term and in the long term. 21. MACROECONOMIC EQUILIBRIUM Model "income - expenses" allows us to consider the mechanism of formation of the equilibrium volume of national production in the short term, under the assumption of stability of all prices. To analyze this mechanism in the context of changing prices, as well as to identify the specifics of the economy's adaptation to the state of equilibrium in the short and long term, we use model "aggregate demand - aggregate supply". Macroeconomic balance achieved when aggregate demand equals aggregate supply. According to classical economic theory, the equilibrium value of the real volume of national production is completely determined by supply factors and, above all, by the volume of available production resources and their productivity. Aggregate demand only affects price level. If aggregate demand increases, then the price level rises, and a decrease in aggregate demand leads to a decrease in the price level. From this it is concluded that inexpediency of state intervention in the economy, since the expansionist policy of the state can only lead to an inflationary rise in prices, and the restrictive one (aimed at reducing aggregate demand) can cause deflation in the economy. Representatives of modern economic thought believe that in the short term, the formation of the equilibrium volume of national production is influenced by both aggregate demand and aggregate supply. In this case, the process of adjustment to equilibrium is associated with changes in both real output and the price level. Therefore, we can conclude that state restriction policy will result in deflation and a reduction in output, and expansionist - stimulate not only the growth of business activity, but also the development of inflationary processes in the economy. Since the aggregate supply curve can be horizontal, vertical, or sloping, equilibrium can be reached at three different points. The intersection of the horizontal supply curve with the demand line reflects the situation of economic equilibrium with high unemployment and price rigidity. The intersection of the sloping curve with the demand line characterizes macroeconomic equilibrium under conditions of underemployment, the presence of "bottlenecks" in the economy, and wage growth lagging behind commodity price growth. The point of intersection of the vertical curve with the demand line is the equilibrium at full employment. Views neoclassical и neo-Keynesians on the question of the appropriateness of public policy are different. Representatives of the neoclassical direction It is believed that the economy cannot deviate far from full employment, and therefore in such a situation state intervention in the economy is ineffective, since its consequence will be mainly a change in the price level, and not in real output and employment. From the point of view neo-Keynesians government expansionist policy in the short term can have a significant effect in the form of an increase in the real volume of national production and the level of employment in the economy. 22. ESSENCE, GOALS, MAIN CHARACTERISTICS OF ECONOMIC GROWTH Under economic growth refers to long-term changes in the real volume of national production associated with the development of productive forces in the long-term time interval. If all factors of production are used fully and with the greatest efficiency (the economy is at the frontier of its production possibilities), then the real volume of production reaches its maximum value. This so-called "potential output". If production resources are used insufficiently efficiently or not in full, then the actual value of the real volume of production will be less than the potential one. Essence of economic growth is to resolve and reproduce at a new level the main contradiction of the economy: between limited production resources and limitless social needs. This conflict can be resolved in two main ways: - Firstly, by increasing production capabilities; - secondly, due to the most efficient use of existing production capabilities and the development of social needs. However, the process does not end there: at each new stage of development, with the expansion of production capabilities, not all social needs are satisfied. There are two main approaches to interpreting the forms of manifestation of economic growth. The most common is the understanding of economic growth as the final characteristic of the development of the national economy over a certain period, measured either by the growth rate of real GNP, or by the rate of increase in these indicators per capita. At present, the second approach prevails. Under economic growth This refers to the development of the national economy in which the rate of increase in real national income exceeds the rate of population growth. Considering economic growth from the point of view of the interests of the whole society, one can single out its main goals: increasing the material well-being of the population and maintaining national security. Under efficiency of economic growth the improvement of all components of the multifaceted concept of "production efficiency" is understood. These include improving the quality of goods and services, increasing their competitiveness, mastering the production of new goods, mastering new technologies, increasing the return on the use of production resources, etc. Concept "quality of economic growth" in economic theory, it is associated with the strengthening of the social orientation of the country's economic development. The main components of the quality of economic growth are: - improving the material well-being of the population; - increase in free time; - increasing the level of development of social infrastructure sectors; - growth of investments in human capital; - ensuring the safety of working conditions and people's lives; - social protection of the unemployed and disabled; - maintaining full employment. Many economists believe that low (2-4% per year), but stable economic growth rates are most preferable. 23. FACTORS AND TYPES OF ECONOMIC GROWTH Under economic growth factors economics refers to those phenomena and processes that determine the possibility of increasing the real volume of production, increasing the efficiency and quality of growth. On way of influence There are direct and indirect factors for economic growth. Direct called those that directly determine the physical capacity for economic growth. Indirect factors affect the possibility of turning this possibility into reality. They can contribute to the realization of the potential inherent in direct factors, or limit it. К direct There are five main factors that directly determine the dynamics of aggregate production: - increasing the number and improving the quality of labor resources; - growth in the volume and improvement in the qualitative composition of fixed capital; - improvement of technology and organization of production; - increasing the quantity and quality of natural resources involved in the economic turnover; - the growth of entrepreneurial abilities in society. indirect factors are: - reducing the degree of monopolization of markets; - decrease in prices for production resources; - reduction of income taxes; - expanding the possibility of obtaining loans; - growth in consumer and government spending; - increasing the competitiveness of the country's products in the world market. There are two main types of economic growth: extensive и intensive. The main feature of the extensive type economic growth is that the expansion of the volume of material goods and services is achieved by increasing the number of applied direct growth factors: the number of employees, means of labor, land, raw materials, fuel and energy resources. With extensive growth constant proportions remain between the growth rates of real output and the real total costs of its creation. Specifics of the intensive type of economic growth is that the expansion of production is ensured by the qualitative improvement of direct growth factors: the use of advanced technologies, the use of labor with higher qualifications and labor productivity, etc. In this case, the growth rate of real production volumes will exceed the rate of change in total costs for its production. In accordance with the allocation of types of economic growth direct growth factors divided into two main groups: extensive and intensive. In reality, extensive or intensive types of economic growth do not exist in their pure form. The quantitative improvement of growth factors, carried out on the basis of the introduction of the achievements of scientific and technological progress, always requires investment in capital goods or labor. In turn, the growth of the labor force and the means of production is accompanied by a change in their qualitative characteristics. That's why when analyzing real economic growth, and not its theoretical models distinguish predominantly extensive и predominantly intense growth types. 24. EQUILIBRIUM AND ECONOMIC GROWTH Under equilibrium economic growth is understood as such a development of the national economy in the long run, in which the volumes of aggregate demand and aggregate supply, increasing from period to period, are constantly equal to each other. From this definition it follows that with an equilibrium growth aggregate demand and aggregate supply increase at the same rate which allows the economy to maintain a constant price level. The sequence of equilibrium states that characterize changes in real macroeconomic indicators over time is called equilibrium trajectory of development. In macroeconomics, there are two main types of equilibrium trajectories of economic growth: sustainable и unstable. The stable ones include such equilibrium trajectories, the deviation from which, caused by this or that factor, the economy is able to overcome on the basis of its inherent mechanism of self-regulation. This means that the broken equilibrium is automatically restored after a certain period has elapsed. The main distinguishing properties of unstable equilibrium trajectories are: - the ability of a market economy to maintain equilibrium in the process of development in the event that such equilibrium was once achieved; - the absence of internal adaptation mechanisms in the economy that ensure the restoration of equilibrium after its violation. Thus, the instability of equilibrium trajectories means that, with the external conditions of development unchanged, the achieved equilibrium can be maintained in the economy for an arbitrarily long time, but the imbalance leads to an increase in the deviation of the real development trajectory from the equilibrium one and requires state intervention to restore it. In macroeconomics, there are two main types of equilibrium models of economic growth: neoclassical и neo-Keynesian. The main methodological premise of neoclassical models is the hypothesis of perfect competition in both commodity and resource markets. The immediate consequences of this kind of hypothesis are the assumptions: about the automatic restoration of general macroeconomic equilibrium due to price flexibility; about maintaining full employment, etc. Thus, when building neoclassical models, we are essentially talking about "dynamic static": the nature of development in the future is completely analogous to its state in the present. One of the most widely known Neoclassical models of equilibrium growth is R. Solow's model. Neo-Keynesian models of equilibrium economic growth. According to the concept Keynes the achievement of macroeconomic equilibrium at full employment in the case when effective demand is insufficient to realize the entire potential volume of the social product involves additional spending initiated by the state by increasing the state budget deficit or increasing the money supply in the country. The most famous models: E. Doma-ra model, R. Harrod model, which are often combined into one, called the Harrod-Domar model. 25. CYCLE AS A GENERAL FORM OF ECONOMIC DYNAMICS Theory of economic cycles along with the theory of economic growth refers to theories of economic dynamics. The theory of growth explores the factors and conditions of growth as a long-term trend, the theory of the cycle - the causes of fluctuations in economic activity over time. The direction and degree of change in the set of indicators characterizing the equilibrium development of the economy form the economic conjuncture. The nature of the cycle is still one of the most controversial and understudied problems. The idea of cyclicity as the fundamental principle of the world soared in world science since ancient Greece and ancient China (especially in the writings of Chinese Taoists). Scientists-economists drew attention to the problem of cyclicality relatively recently - at the beginning of the XNUMXth century. It was then that studies of crisis and cyclical phenomena in the economy appeared in the works of J. Sismondi, K. Rodbertus-Jagetsov and T. Malthus. Moreover, the problems of the crisis and the cycle were, as a rule, dealt with by representatives of side currents of economic thought. Economists of the orthodox direction rejected the idea of cyclicity as contradictory Say's law (according to which demand is always equal to supply). Researchers involved in the study of cyclical dynamics are conditionally divided into those who do not recognize the existence of periodically repeating cycles in social life, and those who argue that economic cycles manifest themselves with regular ebb and flow. Representatives of the first direction, to which the most authoritative scientists of the modern Western neoclassical school belong, believe that cycles are the result of random influences (impulses, shocks) on the economic system, which causes a cyclic response model, i.e., cyclicity is the result of a series of independent impulses affecting the economy. The foundations of this approach were laid in 1927 by the Soviet economist E. Slutsky. However, only 30 years later this direction was widely recognized in the West. Representatives of the second direction tend to consider the cycle as a kind of fundamental principle, an elementary indivisible "atom" of the real world. The cycle in this interpretation is a special, universal and absolute formation of the material world. The structure of the cycle is formed by two opposite material objects that are in it in the process of interaction. Despite the fact that, nevertheless, the cyclical movement is confirmed empirically, at the present time neither statisticians nor economists are able to give accurate forecasts of the economic situation, but can only determine general present trend: - firstly, it is difficult to take into account all the factors, especially during the period of economic instability and political upheavals; - secondly, the international environment has a significant impact on the national economy; - thirdly, even having correctly determined the trend, it is difficult to predict the exact dates for passing through the stages of the cycle and change the economic policy in time; - Finally, the actions of entrepreneurs can exacerbate undesirable market deviations. 26. STAGES OF THE ECONOMIC CYCLE There are four phases of the cycle, consecutively replacing each other: crisis, depression, revival and recovery. There are other classifications: for example, some modern researchers distinguish only two phases: recession and recovery. Crisis It manifests itself primarily in the overproduction of goods, the reduction of loans and the increase in loan interest. This leads to a decrease in profits and a fall in production, an increase in bank debts, bank failures and bankruptcies of enterprises in other areas of the economy. After the crisis comes depression. Production is no longer declining, but it is not growing either. Commodity surpluses are gradually dissipated, but trade is sluggish. The interest rate drops to a minimum. Gradually, however, "points" of growth appear in the national economy, and a transition to revival takes place. Enterprises that have adapted to the new market conditions increase the output of goods, carry out new industrial construction, the rate of profit rises, the rate of loan interest and wages begins to increase. lifting phase. The level of gross national product exceeds the highest pre-crisis point, production continues to increase, employment, commodity demand, price levels and the rate of loan interest are growing. But gradually, the scale of production again goes beyond effective demand, the market is overflowing with unsold goods, and a new cycle begins. Until the 50s. XNUMXth century during crises, there was a general decrease in the price level, associated with a fall in effective demand, and an increase in unemployment. At present, the monopolistic sector of the economy, supported by the state, is not only able to maintain the pre-crisis level of prices, but often contributes to their growth. A number of economic indicators are used to characterize the economic situation. Depending on how the value of economic parameters changes during the cycle, they are divided into pro-cyclical, counter-cyclical and acyclic. Procyclic parameters increase in the boom phase, and decrease in the crisis phase (capacity utilization, money supply aggregates, the general price level, enterprise profits, etc.) countercyclic parameters indicators are called, the value of which increases during a recession, and decreases during an upswing (unemployment rate, number of bankruptcies, stocks of finished products, etc.) Acyclic parameters are called, the dynamics of which does not coincide with the phases of the economic cycle (for example, the volume of exports). In addition, there are three types of parameters on the basis of synchronization - leading, lagging and corresponding. Leading reach a maximum or minimum before approaching a peak or trough (changes in stocks, money supply). lagging reach their maximum or minimum after a peak or trough (unemployment, wage costs). Matching Options change in accordance with fluctuations in economic activity (national product, inflation rate, industrial output). 27. CLASSIFICATION AND PERIODICITY OF CRISES More than 1380 types of cyclicity are known to modern science, but the economy mainly operates with four to six of them. Juglar cycles. First of all, economic science singled out a cycle of 7-12 years, which later received the name of Zhuglyar. However, this cycle has other names: "industrial cycle", "business cycle", "medium cycle". The cycle was named after K. Zhuglyar for his great contribution to the study of the nature of industrial fluctuations in France, Great Britain, and the USA based on a fundamental analysis of fluctuations in interest rates and prices. As it turned out, these fluctuations coincided with investment cycles, which in turn initiated changes in GNP, inflation and employment. Kitchen cycles (stock cycles). Kitchen focused on the study ofshort waves from 2 to 4 years based on the study of financial accounts and sales prices in the movement of commodity stocks. Kuznets cycles. In the 1930s in the United States, studies of the so-called "building cycle" when economists built the first statistical indices of the total annual volume of housing construction and found in them successive long intervals of rapid growth and deep recessions or stagnation. Then the term "construction cycle" appeared, which defines these 20-year fluctuations. Kuznets in 1946 concluded in his studies that indicators of national income, consumer spending, gross investment in industrial equipment, as well as in buildings and structures, exhibit interrelated 20-year fluctuations. At the same time, he noted that in construction these vibrations have the largest relative amplitude. The mechanism of this cycle is described by a chain that another scientist (Abramovitz) deduced: income - immigration - housing construction - aggregate demand - income. That is, in other words, the growth of GNP or the mass of commodities stimulates the influx of population and the birth rate, this leads to an acceleration of investment, including in housing construction, then the reverse process occurs. Cycles of Kondratieff. The beginning of the "great" rise in his cycles Kondratiev associated with the massive introduction of new technologies into production, with the involvement of new countries in the world economy, with changes in the volume of gold mining. At the same time, the general picture of the rise was described as follows: the introduction of technical innovations goes hand in hand with the expansion of the investment process, which in turn stimulates production and demand. Unemployment is falling and wages are rising. These processes affect the entire economy and change the way people live. Each recovery is followed by a fairly short period when the economy is preparing for the coming long recession, but at the same time maintains the appearance of prosperity. Then an excess of production capacity is discovered, mass liquidations of enterprises take place, unemployment rises, prices fall. Most cycles are industrial. From the point of view of the structure of the economy, there are also agricultural and other cycles, which do not cover the entire economic system, but only certain sectors: agriculture, energy, etc. 28. FEATURES IN APPROACHES TO THE PROBLEM OF CYCLES Now there is no unified cycle theory. Moreover, many economists deny the cyclical development of the economy in principle. As a rule, they are predominantly supporters of the neoclassical and monetary schools. These economists prefer not to talk about cyclicality (since a cycle implies a more or less constant periodicity), but about non-cyclical fluctuations caused by a combination of arbitrary economic factors. However, even among economists who recognize cyclicity, there is no unity regarding the nature of this phenomenon. In the most general sense, there are three approaches to explaining cyclicity: exogenous, endogenous and eclectic. Supporters exogenous approach associate the nature of the cycle with exclusively external causes, adherents endogenous approaches are looking for the internal patterns of the phenomenon. eclecticism trying to find and combine the rational principles of the first two currents. Theories of external factors. The founder of this direction is considered to be the English economist Jevons, who connected the economic cycle with the 11-year cycle of solar activity. He published a number of works in which he studied the effect of sunspots on crop yields, on grain prices and on the trading cycle, on employment, etc. He also argued that the Kuznets cycle is equal to two solar cycles (22 years), the Kondratiev cycle is five solar cycles. monetary theory. A purely monetary interpretation of the cycle - the cycle is a "purely monetary phenomenon" in the sense that the change in the cash flow is the only and sufficient cause of the change in economic activity, the alternation of prosperity and depression, etc. When the demand for goods expressed in terms of money (or cash flow) increases, trade becomes brisk, production expands, prices rise. When demand decreases, trade weakens, production decreases, prices fall. Cash flow, that is, the demand for goods, expressed in money, is directly determined by consumer costs. If the cash flow could be stabilized, then fluctuations in economic activity would disappear. Marxist theory. Marxists believe that the formal possibility of cyclicity (under capitalism) is already inherent in simple commodity production and follows from the functions of money as a means of circulation and means of payment in the event of a break in acts of purchase and sale. However, this possibility turns into reality only at a certain stage of development - in the "machine" period. Economic crises are generated by the so-called "basic contradiction of capitalism" - between the social character of production and the private capitalist form of appropriation of capital. As capital accumulates and the productive forces grow, more and more socialization of production: concentration and centralization of capital, the formation of industrial centers, large capitalist enterprises. Products are the result of the labor of many millions of workers, but their appropriation remains private capitalist. There are also many other theories of the origin of cycles: theory of overproduction (or underconsumption), investment theory in fixed capital psychological theories. 29. CONCEPTS OF EMPLOYMENT OF THE POPULATION Employment theory has come a long way of evolutionary development and is distinguished by a variety of conceptual approaches, methods and research tools. Theoretical views on this problem are characterized by many directions and schools in the structure of world economic thought. neoclassical school considers the labor market as an internally heterogeneous and dynamic system of relations, subject to market laws. The market mechanism serves as its regulator. The price of labor (the level of wages) affects the demand and supply of labor, regulates their ratio and maintains the necessary balance between them. By raising or lowering wages, the demand for labor and its supply are regulated. If, as a result of the excess of labor supply over demand, unemployment occurs, then it affects prices in the direction of their reduction, and consequently, wages, until equilibrium is established in the labor market. The classical model is based on the principle of self-regulation of the labor market. Keynesian direction considers the labor market as an inert system, where the price of labor is rather rigidly fixed. The main parameters of employment: the level of employment and unemployment, the demand for labor, the level of real wages - are not set in the labor market, but are determined by the size of effective demand in the market of consumer and investment goods and services. The labor market only forms the level of wages and the amount of labor supply that depends on it. Demand for labor is governed by aggregate demand, investment and production volumes. By influencing aggregate demand in the direction of its increase, the state contributes to an increase in the demand for labor, which leads to an increase in employment and a decrease in unemployment. Within the framework of the Keynesian concept, employment is affected not only by aggregate demand, but also by how the increase in total demand is distributed among different industries, i.e., the structure of aggregate demand. An effective means of ensuring a sufficient level of employment is the expansion of the investment activity of the state, providing it with the optimal amount of investment, taking into account the specific conditions of economic development. The Keynesian model is based on state intervention in the management of macroeconomic processes, and the mechanism for its implementation is based on patterns and phenomena of a psychological nature. Representatives of the monetary school substantiate the proposition that the market economy is a self-adjusting system, the price mechanism of which itself determines the rational level of employment. In such a system state intervention leads to a failure of the mechanism of self-regulation of the market, and the monetary impact on aggregate demand by the state will ultimately lead to the unwinding of an inflationary spiral. Institutional sociological school is based on the premise that employment problems can be solved through various types of institutional reforms. 30. LABOR MARKET. EQUILIBRIUM IN THE LABOR MARKET Labor market is a category of market economy. The main elements of the labor market are the demand for labor, the supply of labor and the price of labor. The labor market has a number of features. Its constituent elements are living people who act as carriers of the labor force and are endowed with such human qualities as psycho-physiological, social, cultural, religious, political, etc. These features have a significant impact on the interests, motivation, degree of labor activity of people and are reflected in the state of the labor market. The fundamental difference between labor and all other types of production resources is that it is a form of human life, the realization of his life goals and interests. That is why labor cost is not just a kind of price for a resource, but the price of living standards, social prestige, well-being of the worker and his family. Therefore, when analyzing the categories of the labor market, it is necessary to take into account the existence of "human" elements, behind which are living people. The labor market is a system of economic methods, mechanisms and institutions that ensure the involvement of the economically active population, able-bodied citizens in the national economic turnover and the use of their labor force (labor services) as a commodity, the equilibrium price and quantity of which is determined by the interaction of supply and demand. Functions of the labor market determined by the role of labor in the life of society, when labor is the most important source of income and welfare. There are two main functions of the labor market. Social function is to ensure a normal level of income and well-being of people, a normal level of reproduction of the productive abilities of workers. economic function the labor market lies in the rational involvement, distribution, regulation and use of labor. The labor market performs a number stimulating features, contributing to the development of competitiveness among its participants, increasing interest in highly efficient work, advanced training and changing professions. The labor market is a competitive market. Due to the extreme complexity of its structural and functional organization, there is always a certain discrepancy between jobs and labor resources. Part of the jobs that require high qualifications for their replacement remains unoccupied, and a part of people who do not have the necessary special training cannot find work. The labor market is a dynamic market all structural and functional components of which are extremely mobile. This applies to demand, supply, labor costs, large segments and small sectors, certain categories of workers and individual economic agents. A number of factors influence the dynamics of the labor market: - natural-climatic and geographical; - demographic; - migration (volumes and directions of migration flows); - economic (the level of division and specialization of labor, the volume, structure and dynamics of the main macro- and microeconomic indicators, structural changes in production, inflation, investment activity, etc.); - social; - organizational and managerial; - legislative. 31. UNEMPLOYMENT AND ITS TYPES Unemployment is an integral part of the labor market. It is a complex, multifaceted phenomenon. The adult population with a labor force is divided into several main categories depending on the position that it occupies in relation to the labor market. Working-age population These are all those who, due to their age and state of health, are able to work. Out of the adult population, institutional population, focused on non-market structures, i.e., on such institutions of the state as the army, police, state apparatus. The rest of the adult population is non-institutional. The composition of the employed population includes those who are focused on the market structures of the economy. Unemployed those people of working age who are currently unemployed, entering the labor market and actively searching for it are considered. Employed persons, as well as persons employed part-time or weekly, are classified as employed. to the labor force include both the employed and the unemployed. Distinguish the following types of unemployment: frictional, structural, seasonal, cyclical, technological, regional. Frictional unemployment associated with a certain amount of time spent looking for a job. There is always some level of unemployment in the labor market associated with the movement of people from one area to another, from one enterprise to another. It takes time for workers to find jobs that suit them and for employers to find a workforce of a certain skill. This job search time forms the basis of frictional unemployment. Structural unemployment associated with technological changes and shifts in production that change the structure of demand for labor. Structural unemployment is due to the emergence of a professional and qualification mismatch between the structure of vacant jobs and the structure of workers. The development of the economy is constantly accompanied by the following structural changes: new technologies appear, new goods that replace the old ones. There are shifts in the structure of demand in the capital market, the goods market and the labor market. As a result, there are changes in the professional and qualification structure of the labor force, which requires its constant territorial and sectoral redistribution. Seasonal unemployment due to seasonal fluctuations in the volume of production of certain industries: agriculture, construction, crafts, in which during the year there are sharp changes in the demand for labor. Seasonal fluctuations in the demand for labor, as a rule, are determined by the peculiarities of the rhythm of the production process. Therefore, the size of seasonal unemployment in general terms can be predicted and taken into account when signing contracts between employers and employees. Cyclical unemployment. It is based on cyclical fluctuations in output and employment associated with the economic downturn and lack of demand. Cyclical unemployment is associated with a decrease in real GNP and the release of part of the labor force, which leads to an increase in the number of unemployed. 32. ECONOMIC AND SOCIAL COSTS OF UNEMPLOYMENT In any society, unemployment is always associated with certain economic and social costs. Economic losses of society measured by the cost of non-produced goods and services, a reduction in tax revenues to the state budget, an increase in the cost of paying unemployment benefits, the maintenance of a significant apparatus of state bodies for labor, employment and social security. There is a depreciation, underutilization of the accumulated scientific and educational potential of society, the quality of life of the unemployed and their families is deteriorating. The proportion of the economically active population is decreasing as a result of negative changes in the birth rate, an increase in mortality, a decrease in life expectancy, and an increase in the outflow of the most qualified personnel abroad. It should also be taken into account that as a result of reforms, privatization, changes in ownership and organizational and legal forms of enterprises, accompanied by a decline in production and job cuts, increased processes of pushing highly skilled workers out of the real sector of the economy. Most of them cannot find the proper application of their abilities in the market sector, cannot get a job in their specialty, which is why both the worker himself and society as a whole lose. Recently, unemployment has received a broad international dimension. Currently, the development and implementation of interstate programs to overcome unemployment in various regions within the CIS countries, as well as the countries of the European Union. Unemployment leads to strengthening of socially negative processes, the growth of tension, the "social pathology" of society. An unemployed person not only cannot use his knowledge and skills, loses income and livelihood, but also loses his status and significance in society, becomes psychologically unstable, uncertain about the future. American scientist Brener based on an analysis of data on the population of the United States, noted that over 30 years, an increase in unemployment by 1% while maintaining it for a five-year period leads to an increase in indicators of "social pathology": total mortality by 2%, the number of suicides - by 4,1% , the number of murders - by 5,7%, the number of prisoners in prisons - by 4%, the number of patients with mental illness - by 4%. In general, the total costs of society associated with the growth of government spending to overcome the socially negative consequences of unemployment are quite significant. Mass unemployment represents one of the most acute socio-economic problems and is a real threat to the existence of society and civilized forms of relations between people. Therefore, in the fight against mass unemployment in the most developed countries of the West, the most serious attention has always been paid. In the practical policy of the governments of these countries, the employment improvement program has always occupied and occupies one of the central places. 33. OAKEN'S LAW If the actualthe unemployment rate is higher than the natural rate of unemployment then the country receives less of the gross national product. Calculation of potential losses of products and services as a result of rising unemployment is carried out on the basis of the law formulated American economist A. Oken. (Y - y) / y \uXNUMXd bx (U - U *), where Y is the actual volume of production (gross domestic product); Y* - potential gross domestic product (at full employment); U - actual unemployment rate; U* - natural unemployment rate; b - Okun's parameter, is established empirically (3%). natural unemployment - Unemployment at full employment - the rate of unemployment with non-accelerating inflation. In Western inflation, the term is used to refer to this indicator. NAIRU (Non-Accelerating-Inflation Rate of Unemployment). Natural rate of unemployment reflects the economic feasibility of using labor, just as the degree of utilization of production capacities reflects the feasibility and efficiency of using fixed capital. Quantitatively, this figure in the United States of America is 5,5% -6,5%. Unemployment rate at full employment is understood as the smallest form of unemployment, achievable under the existing institutional structure and not leading to accelerating inflation. If the actual unemployment rate is 1% higher than the natural rate, then the actual output will be lower than the potential one by b%. According to Okun's calculations, in the sixties in the United States, when natural rate of unemployment was 4%, parameter b was equal to 3%. The difference between the actual and natural unemployment rates characterizes the level of conjunctural unemployment. According to Okun's law, the excess of the actual unemployment rate by one percent over its natural level leads to a decrease in the actual gross domestic product compared to the potential (at full employment) GDP by an average of 3%. So, if in a given year the actual gross domestic product was $4500, the actual unemployment rate was 8%, and the natural rate was 6%, then the economy received less output by $270, which is 3% x 2% = 6% of the actual output. gross product. Potential GDP at full employment would be $4770. Concerning real practice, the reality of the United States economy is that if, on average, there is an increase in employment of 200 thousand new jobs every month, this leads to a decrease in the annual unemployment rate by 1,2% and an increase in the level of gross domestic product by just over 3%. Okun's Law works really well for the American economy, but in other countries such a close relationship is not found. Because of this, many economists dispute this law and try to say that there is no serious relationship between unemployment and the amount of product produced in the country. 34. METHODS OF OVERCOMING UNEMPLOYMENT Methods for overcoming unemployment defines the concept that guides the government of a particular country. Pigou and his followers those who believe that the root of evil is in high wages, offer: - to promote the reduction of wages; - explain to trade unions that the increase in wages they are seeking, turns into an increase in unemployment; - the state to employ workers who claim a low income, in particular to encourage the development of the social sphere. Of Pigou's recommendations, it is widely used division of the wage rate and working hours among several workers. Use of part-time work reduces unemployment even in the face of unfavorable conditions. In the 1950s in the policy of state regulation were used Keynesian methods. Keynesians believed that a self-regulating economy could not overcome unemployment. The employment rate depends on the so-called "effective demand" (simplified - the level of consumption and investment). J. M. Keynes wrote: "The chronic tendency towards underemployment, characteristic of modern society, has its roots in underconsumption ..." Underconsumption is expressed in the fact that as the consumer's income increases, due to psychological factors, his "propensity to save" exceeds the "urge to invest", which entails decline in production and unemployment. Thus, the Keynesians, having shown the inevitability of the crisis of a self-regulating economy, pointed to the need for state economic influence in order to achieve full employment. First of all, it should increase effective demand, lower interest rates and increase investment. Neo-Keynesians introduce the concept "employment multiplier", which is considered as the increase in total employment in relation to primary employment in industries that are highly interconnected with each other, in which investments are made. In the 60s. Keynesian advocates used phillips curve, in order to keep unemployment and inflation under review and take into account their negative impact in the long run. Monetarists opposed the Keynesian interpretation of the Phillips curve as a simple and accessible solution to the problem of choosing the goals of economic policy. Inflation is not seen by them as the "inevitable price" for achieving a high level of employment. In 1967 M. Friedman suggested the existence of a "natural rate of unemployment", which is strictly determined by the conditions of the labor market and cannot be changed by public policy measures. If the government tries support employment above its "natural level" with the help of traditional budgetary and credit methods of increasing demand, these measures will have a short-term effect and will only lead to higher prices. From the position monetarists, the higher the inflation rate, the more the participants in the reproduction process take into account the upcoming price increase in their actions and try to neutralize it with the help of special clauses in labor agreements, contracts, etc. 35. STRUCTURE OF THE MONEY SUPPLY AND ITS MEASUREMENT The main element of a market economy are money, which ensure the continuity of the national economic circulation, the circulation of income and expenditure. Money supply is a set of cash and non-cash means of payment that ensure the circulation of goods and services in the country at a certain moment. Liquidity - the ability to quickly convert an asset into cash without losing its value or at minimal cost. Money (coins and paper money) are the most liquid assets. Bank demand deposits are also highly liquid assets, since the owner can withdraw cash from them on demand. The liquidity of the individual components of the money supply is different. The money supply is usually structured according to the degree of liquidity of its components. As liquidity decreases, the components of the money supply consistently include assets that are less and less capable of performing the function of a means of payment. The structure of the money supply characterized by monetary aggregates, located as they are enlarged (each previous aggregate is included in the next one). The following are used to measure the money supply: monetary aggregates: M0, M1, M2, M3. Unit Mo - this is cash (paper and metal) in circulation. Unit M1 includes M0 plus money on current accounts of the population and on settlement accounts of enterprises, demand accounts in banks, traveller's checks. Money in the narrow sense means the M1 aggregate, with the help of which most exchange operations are performed. Monetary aggregate M2 includes M1 plus money in time and savings accounts with commercial banks, deposits with specialized financial institutions and some other assets. The funds included in this aggregate cannot be directly transferred from one person to another and used for transactions. They serve primarily as a store of value. Monetary aggregate M2 is money in the broadest sense of the word. It is most commonly used for macroeconomic analysis. Unit M3 is the largest. It includes the M2 aggregate plus large term deposits, agreements to purchase securities with repurchase at a stipulated price, bank certificates of deposit, government (treasury) bonds, commercial paper, etc. This aggregate includes short-term government bonds (GKOs), federal loan bonds (OFZ), bonds of the state savings loan, bonds of the state internal currency loan. The components of the money supply are reflected in liabilities of the consolidated balance sheet of the banking system. The dynamics of monetary aggregates strongly depends on the dynamics of the interest rate. When the interest rate rises aggregates M2 and M3, which include interest-earning assets, will grow faster than aggregate M1. For financial stability in the country, the most preferable are the stability of the base interest rate and the uniform dynamics of the money supply, adequate to the real needs of the economy. 36. DEMAND AND SUPPLY OF MONEY. EQUILIBRIUM IN THE MONEY MARKET Money market - this is a money market, in which, as a result of the interaction of the demand for money and the supply of money, an equilibrium value of the amount of money and an equilibrium interest rate are established. Equilibrium interaction of supply and demand for money is provided by special monetary institutions. Money offer. The totality of various financial resources circulating in the market as money forms the money supply. Money supply in the economy regulated mainly by the Central Bank, and also, in certain cases, to a small extent depends on the behavior of the population and large commercial financial structures. Money supply curve reflects the dependence of the amount of money in circulation on the level of the interest rate (with a constant monetary base). The monetary base is cash plus the reserves of commercial banks held by the Central Bank. The money supply curve can be vertical when the central bank realizes the goal of keeping the money supply constant and controls the money supply with confidence regardless of interest rate fluctuations. This situation is typical for tight monetary policy, aimed at curbing inflation. The money supply curve may be horizontal when the objective of monetary policy is maintaining a stable nominal interest rate. This is achieved by fixing the discount rate of the Central Bank and linking the rates of commercial banks to it. This policy is called soft monetary policy. Money supply curve may have an oblique form when the Central Bank allows a certain increase in the amount of money in circulation, and, accordingly, the nominal interest rate. As a rule, this takes place when the Central Bank keeps the reserve requirement constant, but does not conduct operations on the open market. This combined policy is usually applied when changes in the demand for money are driven by fluctuations in GDP. money multiplier is the ratio of the money supply to the money supply. The demand for money is determined by the amount of money that economic agents want to use as means of payment. It shows what part of their income economic entities prefer to keep in the most liquid form - cash. Holding cash in hand associated with opportunity costs and deprives their owner of the income that he could receive if he bought other types of property with them. Demand curve for money has a negative slope because as the interest rate decreases, the demand for money increases. Equilibrium in the money market is established in the process of interaction between the demand for money and the supply of money and is characterized by such a state of the market in which the volume of demand for money is equal to the volume of money supply. Equilibrium in the money market means the equality of the amount of money that economic agents want to have in their portfolio of assets, the amount of money offered by the Central Bank under the conditions of the given monetary policy. 37. MONEY AND THEIR FUNCTIONS Money is not a commodity, but a universal equivalent that measures the price of a commodity. Money appeared from the moment the need for exchange arose. As part of natural economy, when all the necessary products for consumption were produced by the economy itself, there was simply no need for the emergence of money. However, over time, there is an increasing specialization of individual farms in certain types of products, and in order to get the missing products, there is exchange. Over time, exchange links became so wide that it became difficult to equally express the value of one commodity in terms of the quantity of many other commodities. Thus arose the need for a universal equivalent, which would be easily shared and would be of value to all participants in the economy. That's how money came about. In many countries, for a long time, gold, silver and other metals acted as money. And later - after the appearance of paper money - for a long time their value was "pegged" to gold in order to ensure their purchasing power. The essence of money is manifested in their functions. 1. Money as a measure of value. This is the equating of goods to a certain amount of money, which gives a quantitative comparison of the magnitude of the value of the goods. The value of a commodity expressed in money is its price: a) money appears in an ideal form (it is imaginary money). Through money in an ideal (abstract) form, we can express the profit or loss of an enterprise, talk about product prices, etc.; b) with the help of money, one can judge the scale of prices - that is, the amount of gold that this or that product ultimately costs. 2. Money as a medium of exchange. They exchange goods and services between people, enterprises, countries. Money avoids the inconvenience of barter. For money as a means of circulation is characterized by such a feature as a one-time parting with them. That is, participants in economic activity may not directly exchange money for goods, but simply give money to their counterparty, receiving in return a promise to deliver goods either later or over a certain period of time. 3. Money as a means of payment - non-cash money. Money is the final stage in the process of exchange and acts as an independent embodiment of commodity value. In everyday life, it is cash and non-cash money. Cash contribute more to inflation than non-cash. Due to the fact that cash payments are more difficult to track for regulatory authorities, one of the features of cash payments is that taxation can be completely or partially avoided. 4. Money as a means of accumulation, savings and the formation of treasures. 5. World money. Monetary system - this is a form of organization of money circulation in the country, i.e., the movement of money in cash and non-cash forms. It includes elements: the monetary unit, the scale of prices, types of money in the country, the procedure for issuing and circulation of money, as well as the state apparatus that regulates monetary circulation - the Central Bank, the Ministry of Finance, treasury bodies, control bodies (Accounts Chamber). 38. EVOLUTION AND TYPES OF MONEY Money in its development acted in two forms: real money and signs of value (substitutes, substitutes). Valid Money - money, the nominal (indicated on them) value of which corresponds to their real value, i.e. the value of the metal from which they are made. First coins appeared almost 26 centuries ago in ancient China and the ancient Lydian state. In Kievan Rus, the first minted coins date back to the 2th-XNUMXth centuries. The countries switched to gold circulation in the XNUMXnd half of the XNUMXth century. Real money is characterized by stability, provided by a certain and unchanged gold content of the monetary unit, by the free movement of gold between countries. Gold circulation lasted until the First World War. Real money substitutes (signs of value) - money, the nominal value of which is higher than the real value, that is, the social labor spent on their production. These include: metal signs of value (worn out gold coins and small coins made of copper and aluminum); paper denominations, usually made of paper. Distinguish between paper money and credit money. Paper money appeared as substitutes for the gold coins in circulation. In Russia, since 1769, the right to issue paper money belongs to the state. Excessive issuance of money to cover the budget deficit leads to their depreciation. Paper money has two functions: a medium of exchange and a means of payment. They are usually not redeemable for gold and endowed by the state with a forced exchange rate. Credit money. Their appearance is associated with the function of money as a means of payment, where money is an obligation that must be repaid after a specified period of time with real money. Credit money has gone through the following development path: bill, accepted bill, banknote, check, electronic money, credit cards. Bill - a written unconditional obligation of the debtor to pay a certain amount at a predetermined date and place. Distinguish promissory notes and bills of exchange, the difference between which is that the payer for a promissory note is the person who issued the bill, and for a transferable one - some third party. commercial bill - a bill of exchange issued on the security of goods. A bank bill is a bill of exchange issued by a bank to its client. Bill - an indefinite debt obligation secured by a guarantee of the central bank of the country. Banknotes are issued strictly defined dignity and in essence they are national money throughout the state. Check - a monetary document of the established form, containing an unconditional order of the account holder in a credit institution to pay a certain amount to the check holder. There are three main types of checks: nominal - to a certain person without the right to transfer; bearer - without specifying the name of the recipient; order - to a certain person, but with the right of transfer by endorsement. With electronic money the vast majority of interbank transactions are carried out. The introduction of computers created the conditions for replacing checks and checkbooks with credit cards. Кредитные карты increasingly used in the retail and service industries. 39. MODERN CREDIT AND MONETARY SYSTEM Monetary system - this is a set of credit relations, forms and methods of lending carried out by financial institutions that create, accumulate and provide economic entities with funds in the form of a loan on terms of urgency, payment and repayment. The modern monetary system of the state consists of the banking system (the Central Bank and commercial banks) and the totality of the so-called "specialized non-bank financial institutions" capable of accumulating temporarily free funds and placing them with the help of a loan. The banking system has two levels. First level The Russian banking system is occupied by the Central Bank of the Russian Federation. It is a government agency and is exclusively federally owned. The main purpose of the Central Bank is to support the purchasing power of the ruble through the fight against inflation, ensuring the stability of the banking system. He performs the following functions: - issue of national banknotes, organization of their circulation and withdrawal from circulation on the territory of the Russian Federation, regulation of the value of the money supply; - general supervision over the activities of the country's financial institutions and the implementation of financial legislation; - granting loans to commercial banks as a lender of last resort; - issue and redemption of government securities; - regulation of bank liquidity using traditional methods of influencing bank assets: policies of discount rates on the open market and required reserves; - regulation of foreign exchange circulation in the country and control over foreign exchange operations of economic entities. Second level the banking system is an extensive network of commercial banks providing a wide range of credit and financial services: credit and settlement services for business entities, acceptance of deposits, mediation in payments; purchase and sale of securities, placement of government loans; management of clients' property by proxy, consultations on financial and credit issues. As investors banks can invest in bonds and other securities. Bank - a monetary institution engaged in attracting and placing financial resources. The Bank carries out active and passive operations. With the help of passive operations, the bank mobilizes resources, and with the help of active operations, it places them. In addition to the banking system, the structure of the credit system includes non-bank credit and financial institutions. They are represented by such state structures as the Employment Assistance Fund, the Pension Fund of the Russian Federation, the State Social Insurance Fund, road and environmental funds. Non-state institutions are represented by investment, financial and insurance companies, pension funds, savings banks, pawnshops and credit cooperatives. These institutions, formally not being banks, carry out many banking operations and compete with banks, concentrate huge financial resources and therefore have a great impact on the sphere of money circulation. 40. BANKING SYSTEM, ITS STRUCTURE AND FUNCTIONS Banking system - one of the highest achievements of economic civilization. In Russia there is two-tier banking system. First level - Central (issuing) bank. The Central Bank is called the "Bank of Banks" because commercial banks have accounts and keep their reserves in it. Functions of the Central Bank: 1) money issue; 2) regulation of money circulation; 3) implementation of the official monetary and foreign exchange policy. Money or bank issue - the function of meeting the needs of the national economy in cash. The main tasks of the Central Bank: carrying out state policy in the field of monetary circulation, credit and settlements, ensuring a stable purchasing power of the monetary unit, regulating and controlling the activities of commercial banks. Important regulators of macroeconomic proportions and the behavior of financial intermediaries are methods of influencing bank liquidity (bank active funds): the accounting policy of the Central Bank, the open market policy and the policy of minimum reserves. There are 6 specialized state banks in Russia: 1) State Central Bank (State Bank); 2) Industrial Construction Bank (Promstroybank); 3) Bank of the agro-industrial complex (Agroprombank); 4) Bank for Housing and Communal Services and Social Development (Zhilsotsbank); 5) Bank of labor savings and lending to the population (Sberbank); 6) Bank for Foreign Economic Relations (Vnesheconombank). Central bank occupies a special position among all legal entities engaged in management or economic activity. Representing a government body, the Central Bank also acts as a commercial bank, although making a profit is not the goal of the Central Bank. The Bank of Russia transfers half of its profits to the federal budget. The Bank of Russia and its institutions are exempt from paying taxes, fees, duties and other similar payments. The Central Bank owns such resources, which no commercial bank is able to possess, since the Central Bank: - monopoly issues cash and organizes its circulation; - acts as a lender of last resort for commercial banks; - manages public debt on behalf of the government; - provides cash services to the budget, maintains accounts of extra-budgetary funds, serves authorities, issues short-term loans to the government and local authorities. Second level are private and public banking institutions or commercial banks. These include: - actually commercial (deposit) banks, the main activity of which is related to the acceptance of deposits and the issuance of short-term loans; - investment banks, who are engaged in placing their own and borrowed funds in the Central Bank, act as intermediaries between entrepreneurs who need funds for long-term investments and long-term investors; - mortgage banks, providing long-term loans secured by real estate; - savings banks and credit societies; - insurance and pension funds. 41. MONEY CREATION BY THE BANKING SYSTEM Banks (banking system) have the ability to create money, that is, to increase the money supply. Banks' ability to create money is based on their excess reserves and the multiplier principle. The Central Bank sets a certain minimum percentage of the value of certain categories of deposits, which fixes the amount of funds required to be kept by each commercial bank in the form of reserve deposits with the Central Bank. Required reserve ratios (r) set as a percentage of the volume of deposits. Their value varies depending on the types of deposits. For example, for term deposits, r is lower than for demand deposits. Based on the established norm of required reserves, their value is determined. Required reserves represent part of the amount of deposits that commercial banks are required to keep in the form of interest-free deposits with the Central Bank. Mandatory reserve requirements are used by the Central Bank for deposit insurance, for interbank settlements and for regulating the activities of the credit and banking system. The amount of credit resources each individual commercial bank is determined by the amount of its excess reserves, which is the difference between the total amount of reserves and required reserves. Commercial banking system is generally able to lend in excess of its excess reserves due to the bank multiplier effect. Bank multiplier (b) or money supply multiplier is the reciprocal of the required reserve ratio and expresses the maximum amount of credit money that can be created by one currency unit of excess reserves at a given reserve requirement: b = 1/r. The activity of banks is aimed at making a profit, and they strive to ensure that all their financial resources generate interest income. Therefore, banks use almost all their excess reserves to provide loans or purchase securities. The commercial banking system can provide loans, i.e., create money by multiplying your excess reserves. The banking system can lend several times its excess reserves, while each individual commercial bank can lend ruble for ruble against its excess reserves. reserves, which an individual bank loses, the banking system as a whole does not lose. The briefly described process of creating money by banks is called credit and banking animation. The bank multiplier, like any multiplier in the economy, works both to increase and decrease. The higher the Central Bank sets reserve requirement, the smaller the share of funds can be used by commercial banks for lending operations. An increase in the required reserve ratio reduces the money multiplier and leads to a reduction in the money supply. Therefore, by changing the required reserve ratio, the Central Bank can change the money supply in the economy. 42. MONETARY POLICY Under the state's monetary policy refers to a set of economic measures to regulate monetary circulation aimed at ensuring sustainable economic growth by influencing the level and dynamics of production, employment, inflation, investment activity and other macroeconomic indicators. Money-credit policy conducted mainly by the Central Bank. The ultimate goal of the monetary policy pursued by the Central Bank and state institutions is to organize the stability of monetary circulation, ensuring the achievement of sustainable growth in national production, characterized by full employment and the absence of inflation. Monetary policy is regulation of money circulation: during an economic downturn, by increasing the money supply to stimulate spending; and during economic growth accompanied by inflation, by limiting the money supply to limit spending. The subject of monetary policy is the Central Bank of the country, which through certain methods affects the supply and demand in the money market. It has instruments of direct action (transactions with government bonds on the securities market) and indirect action (changes in the discount rate and the required reserve ratio). As for operations with government securities (operations on the open market), by selling government securities, the Central Bank reduces the supply of money in the economy, and by buying it increases it. The required reserve ratio and the discount rate were discussed above. Monetary policy has the most direct impact on such important macroeconomic indicators as GDP, employment, and the price level. If the state of the national economy is characterized decline in production and rising unemployment, then the Central Bank, in order to stimulate the growth of production, begins to pursue a policy of increasing the money supply through measures that contribute to increase in excess reserves of commercial banks. The implementation of such a set of measures is called cheap money policy. Its goal is to stimulate the growth of production and employment by expanding the money supply and cheapening credit (cheaper money spent on investment). If the economic situation is characterized excessive spending and high inflation, then the Central Bank, in order to stabilize the economy, begins to pursue a policy of reducing overall spending and limiting or reducing the money supply through a set of measures to reduce the reserves of commercial banks. The implementation of such a set of measures is called expensive money policy. Its purpose is to lower overall spending and curb inflation by limiting the money supply and making credit more expensive (money more expensive). As a result of a decrease in the money supply monetary resources will become expensive, the rate of interest will increase, credit will rise in price, investment demand in the economy will decrease, investment, production and employment will decrease. 43. MONETARY REFORM Monetary reforms represent a deep transformation of the country's monetary system, carried out by the state in connection with the disorder of monetary circulation and in order to strengthen the national currency, stabilize the monetary unit. The main types of monetary reforms: full or partial replacement of banknotes with the issuance of new money while maintaining their face value; denomination in the form of consolidation of monetary units; denomination in the form of consolidation of banknotes with their simultaneous replacement or even with a change in the monetary unit; one-time devaluation (or revaluation) of the country's currency. Monetary reforms are a complete or partial transformation of the monetary system carried out by the state in order to streamline and strengthen monetary circulation. Monetary reforms are carried out by various methods, depending on the economic situation of the country, on the degree of depreciation of banknotes, and on the policy of the state. Types of monetary reforms: - the transition from one type of monetary system to another or from one monetary product to another; - replacement of a defective and depreciated coin with a full-fledged coin or non-changeable banknotes with changeable ones; - change in the system of issue of money; - stabilization of the currency or partial measures to streamline monetary circulation; - Formation of the monetary system. The goal of any monetary reform is to stabilize the country's monetary system. Monetary reforms, restoring the exchange of banknotes for full-fledged cash coins, were carried out many times in the XNUMXth-XNUMXth centuries. (we have Peter's reforms, reforms under Catherine II). The first premise successful implementation of the monetary reform is to increase production and trade and the interest of the working people. Second premise improvement of monetary circulation - the elimination of the state budget deficit and the reduction of civil spending. Third premise stabilization of money - compression of the money supply in circulation. The increase in the discount rate of the Central Bank, the restriction of credit operations of banks leads to a slowdown in economic growth and an increase in unemployment. Fourth premise - elimination of the deficit in the country's balance of payments and the accumulation of gold and foreign exchange reserves to maintain the exchange rate. Devaluation (revaluation): decrease (increase) in the exchange rate of a monetary unit, officially registered and not associated with market fluctuations in the exchange rate. Devaluation - this is a depreciation of the national currency in relation to any foreign currency (gold, silver). Revaluation is the appreciation of the national currency in relation to its exchange rate. Denomination - Enlargement of the monetary unit in relation to the old one (for example, in Russia on January 1, 1961, a denomination was carried out and the new ruble was equated to 10 old ones. We also carried out a denomination in 1922). In the course of the monetary reform, devalued paper money is withdrawn from circulation, new ones are issued, the monetary unit or its gold content is changed, and a transition is made from one monetary system to another. Monetary reforms in the USSR: in 1922-1924 a unified monetary system was created, chervonets (hard currency) were issued, as well as treasury notes, silver and copper coins; in 1947 money exchange 10:1. In 1961 the money was exchanged for the newly issued 10:1. 44. CREDIT AND ITS MAIN FORMS Loan capital called capital in the form of money, provided on loan by its owners on the terms of repayment for a fee in the form of interest. The movement of this capital is called credit. Credit - this is the movement of value on the terms of repayment. Sources of loan capital 1. Cash, intended for the restoration of fixed capital and accumulated as its value is transferred in parts to the created goods in the form of depreciation. 2. Part of working capital, released in cash due to the mismatch in time between the sale of manufactured goods and the purchase of raw materials, fuel and materials necessary to continue the production process. 3. Capital temporarily free in the intervals between the receipt of funds from the sale of goods and the payment of wages. 4. Value to be capitalized accumulated during expanded reproduction up to a certain value, depending on the scale of enterprises and their technical level. 5. Cash income and savings of individuals, including all segments of the population. An important source of loan capital is the money savings of the state. Credit system is a functional subsystem of the market economy, mediating the processes of capital formation in the economic system and its movement between subjects and sectors of the economy. loan money - These are paper tokens of value that arose instead of gold on the basis of credit. Types of credit money: promissory note, banknotes and check. There are the following types of loans. 1. commercial loan is a loan provided by some enterprises to others in the form of the sale of goods with a deferred payment. The instrument of commercial credit is a bill. Promissory note - a bill of exchange issued by the borrower in the name of the creditor, indicating the place and time of issuance of the debt obligation, the amount of the latter, the place and time of payment. A bill of exchange (draft) is a written order from one person to another to pay a certain amount to a third party or bearer. The object of a bill of exchange is commodity capital. The purpose of a commercial loan is to accelerate the sale of goods and the profits contained in them. 2. Bank loan provided by the owners of funds, banks, special credit institutions to borrowers in the form of cash loans. The object is money capital. The goal is to make a profit on loans (credits). 3. Consumer credit provided to private individuals. Its objects are durable goods (furniture, car, TV), a variety of services. 4. State loan - a set of credit relations in which the state and local authorities act as borrowers or creditors. 5. International credit - the movement and functioning of loan capital between countries. Loan features: 1) redistributive, with its help, free cash capital and income are accumulated and converted into loan capital, which is transferred for a fee for temporary use; 2) saving production costs; 3) control function - the bank tightly controls the loan; 4) acceleration of scientific and technical progress; 5) service of commodity circulation. 45. CONCEPT AND ESSENCE OF INFLATION Inflation is one of the most important macroeconomic issues. It appears as a long-term process, which manifests itself in an increase in the general price level. As a result, monetary aggregates depreciate in relation to real assets. This is the essence of this phenomenon, which depends on many factors. The latter appear in the form inflationary shocks or impulses, feeding and establishing the inflationary process. However, not every change in the prices of individual goods, aggregate demand or supply necessarily develops into inflation or is it. The economy can absorb an inflationary shock. In contrast to inflation deflation is understood general fall in prices and costs. A slowdown in average price growth is called disinflation. Inflation is measured using price index. The price index determines their general level in relation to the base period. But one should not think that inflation is only a phenomenon of one of our countries. Virtually all other industrial countries, with the exception of West Germany and Japan, experienced high rates of inflation. In some years of the period of the 80s. in some countries annual inflation rates were in double or even triple digits. Inflation in Israel was so severe that in one five-year period in the 80s. the price of a tank of petrol rose to 30 shekels. Five years before, that amount would have been enough to buy a car. The annual growth rate of inflation in Bolivia in 1985 was 3400%. This means that a $20 meal in 1984 cost $1985 in 680. In 1987, Brazil's annual inflation rate was about 400%. As an economic phenomenon, inflation has existed for a long time. It is believed that its appearance is connected almost with the emergence of money, with the functioning of which it is inextricably linked. The term inflation (from the Latin inflatio - "swelling") was first used in North America during the Civil War of 1861-1865. and denoted the process of swelling of paper money circulation. In the XNUMXth century the term was also used in England and France. The most concise definition of inflation - an increase in the general level of prices, the most common is the overflow of the circulation channels of the money supply in excess of the needs of trade, which causes a depreciation of the monetary unit and, accordingly, an increase in commodity prices. However, the interpretation of inflation as an overflow of money circulation channels with depreciating paper money cannot be considered complete. Inflation, although it manifests itself only in the growth of commodity prices, is not a purely monetary phenomenon. Inflation is a subtle socio-economic phenomenon generated by disproportions in reproduction in various spheres of the market economy. At the same time, inflation is one of the most acute problems of modern economic development in almost all countries of the world. The essence of inflation lies in the fact that the national currency depreciates in relation to goods, services and foreign currencies that maintain the stability of their purchasing power. Some Russian scientists add gold to this list, still giving it the role of a universal equivalent. 46. TYPES OF INFLATION There are several types of inflation. First of all, those that distinguish from the standpoint of the rate of price growth (the first criterion). In theory and practice, there are several "levels" of inflation. 1. Creeping (moderate) inflation, which is characterized by relatively low rates of price growth, up to about 10% or a few more percent per year. This kind of inflation is common in most developed market economies and does not appear to be unusual. The average inflation rate in the countries of the European Community has been about 3-3,5% in recent years. Many modern economists consider such inflation necessary for effective economic development. Such inflation makes it possible to effectively adjust prices in relation to changing conditions of production and demand. 2. Galloping inflation (growth in prices by 20-2000% per year). Such high rates in the 80s. were observed, for example, in many countries of Latin America, some countries of South Asia. 3. Hyperinflation - prices grow astronomically, the discrepancy between prices and wages becomes catastrophic, the well-being of even the most affluent strata of society is destroyed, the largest enterprises become unprofitable and unprofitable (the IMF now takes a 50% rise in prices per month for hyperinflation). All these types of inflation exist only when it is open, i.e., with a relatively free market. When inflation is suppressed, the rise in prices for goods and services may not be observed, and the depreciation of money may be expressed in a shortage of supply. First of all, this is expressed in the lack of necessary goods and services. Deficit which, in turn, leads to a change in the psychology of consumers and producers. The former create a rush demand, while the latter, on the contrary, hold back goods both in the hope of another permission to raise the price level, and in order to sell them on the black market. From the point of view of price growth for various commodity groups, i.e., according to the degree of balance of their growth: - balanced inflation; - unbalanced inflation. RџSЂRё balanced inflation the prices of various commodities are unchanged relative to each other, and with an unbalanced one, the prices of various commodities are constantly changing in relation to each other, and in different proportions. Inflation imbalance is a big problem for the economy. But it is even more terrible when there is no forecast for the future, there is no certainty even that the commodity groups that are leaders in price growth will remain leaders tomorrow. It is impossible to rationally choose the areas of capital investment, calculate and compare the profitability of investment options. Industry cannot develop under such conditions. Only short speculative-intermediary operations are possible, fertilized by spontaneous, unbalanced jumps in relative prices. Also, inflation can be expected and unexpected. Expected inflation can be predicted and predicted in advance with a reasonable degree of reliability, it can often even be a direct result of government actions. Unexpected inflation characterized by a sudden jump in prices, which negatively affects the system of taxation and monetary circulation. 47. INFLATION FUNCTIONS Under inflation functions understand the positive socio-economic consequences of inflation. It is clear that positive features inflation can perform only if it is not excessively high. Inflation performs two main functions: - stimulating; - evolutionary. The first implies that the expectation of some price increase in the future encourages consumers to buy goods today. In this way, inflation encourages consumers to buy goods today, not postponing purchases for the future, and thereby maintains a constant demand in the country. For example, Japan has experienced zero and intermittently even negative inflation over the past few years, and therefore, as a consequence, there is a decrease in demand, as consumers begin to hope to purchase this or that product in the future at a lower price. Accordingly, the state of the economy begins to tend to a crisis, since there is an increase in stocks of finished products in warehouses, and, as a result, a decrease in production up to its complete stop. Under evolutionary function the fact that inflation serves as a factor of "natural selection" is understood. Under the conditions of inflationary development of the economy, weak enterprises that are not able to survive in harsh conditions are ruined and, thus, only the strongest and most efficient enterprises remain functioning in the national economy. All other functions are essentially socio-economic consequences of inflation. 1. Inflation is an unauthorized government tax paid by the private sector. It is paid by all holders of real cash balances. It is paid automatically as money capital depreciates during inflation. Funds are redistributed from the private sector (firms, households) to the state. inflation tax shows a decrease in the value of real cash balances. It is usually regressive - poorer people bear the brunt of the inflation tax than richer people. 2. Inflation reduces the economic well-being of individuals. Keeping cash leads to lost profits in the form of interest, which can be charged at the bank. 3. The state can receive additional revenues from the private sector due to the impact of inflation on taxation. With a progressive system of taxation of nominal incomes, inflation contributes to increased withdrawal of funds from households. An increase in prices leads to an increase in the nominal income of individuals, and they fall into the group with a higher tax rate. As a result, with a constant or decreasing real income, tax payments increase. Household disposable income is declining due to the interaction of inflation and the tax system. 4. Inflation redistributes not only bank capital, but also all other financial assets and incomes. 5. Inflation affects the competitiveness of domestic goods. 6. In an economy with part-time employment, moderate inflation, slightly reducing the real income of the population, forces it to work harder and better. 48. CONSEQUENCES OF INFLATION Growth of money in circulation accelerates the payment turnover, promotes the activation of investment activity. In turn, the growth of production will lead to the restoration of equilibrium between the commodity and money supply at a higher price level. This process is controversial. On the one hand, monetary profits increase, capital investments expand, and on the other hand, price increases lead to the depreciation of unused capital. Not everyone wins, but first of all the strongest firms with modern equipment and the most perfect organization of production. Social groups living on non-fixed incomes are in a better position if their nominal incomes grow at a rate that outstrips price growth. To understand this, it is essential to understand the difference between monetary or nominal income and real income. Cash (nominal income) is the amount of money that a person receives in the form of wages, rent, interest or profit. Real income is determined by the amount of goods and services that can be bought with the amount of nominal income. If your nominal income increases at a faster rate than the price level, then your real income will rise. Conversely, if the price level rises faster than your nominal income, then your real income will decrease. The mere fact of inflation - a decrease in purchasing power, that is, a decrease in the number of goods and services that can be bought - does not necessarily lead to a decrease in the standard of living. Inflation reduces purchasing power; however, your real income, or standard of living, will only fall if your nominal income keeps up with inflation. It should be noted that inflation affects redistribution in different ways depending on whether it is expected or unforeseen. In case of expected inflation the recipient of the income can take steps to prevent the negative effects of inflation, which would otherwise be reflected in his real income. However, this issue is controversial, since usually, in order to avoid losses caused by the depreciation of money, manufacturers, suppliers, intermediaries raise prices, thereby spurring inflation. People who borrow money can benefit from inflation, unless it is stipulated that the interest on the loan must take into account inflationary price increases. Some wage workers are also suffering from inflation. Those who work in unprofitable industries and lack the support of strong, militant unions may find themselves in a situation where price increases outstrip their money incomes. Gain from inflation may be received by managers of firms, other recipients of profits. If the prices of finished goods rise faster than the prices of inputs, then the firm's cash receipts will rise at a faster rate than its costs. Therefore, some income in the form of profits will overtake the wave of inflation. Inflation can take a heavy toll on savers. As prices rise, the real value, or purchasing power, of savings set aside for a rainy day will decrease. During inflation decrease in real value term bank accounts, insurance policies, annuities and other assets with a fixed value. 49. RELATIONSHIP OF INFLATION AND UNEMPLOYMENT Strict regulation of aggregate demand can keep prices unchanged, but only due to rising unemployment. This creates a painful dilemma for those involved in macroeconomic management: they have to choose in the short term between controlling inflation and raising unemployment. Consider first a situation in which wages are determined by an agreement between trade unions and employers for a period of one year. Suppose that in the current period wages for the next year are agreed in advance before the price level P becomes known, that is, before we learn about the rate of inflation: P = (P - P') / P. (The sign above the variable indicates a percentage change.) Consider the factors that affect the wage level determined by the agreement. According to typical models of wage setting during negotiations, two factors are considered to be the most important - the unemployment rate at the time of negotiations and the expected inflation rate between the current and next year. Our analysis begins with the simple idea that the level of wages is significantly influenced by the situation in the labor market. We proceeded from this position earlier when we argued that nominal wages are adjusted for any discrepancy between actual and possible output. The level of output also affects the change in real, and not just nominal wages. When unemployment is low, employers have a hard time attracting new workers, and they try by all means possible to keep their workers. Under these conditions, the positions of the workers and trade unions in the negotiations are quite strong. In such a "tight" labor market, real wages tend to rise. But when unemployment is rampant, workers and unions find themselves in a position of weakness, as firms easily find new employees. Wage increases are extremely difficult to achieve, and workers may be forced to accept even a reduction in their real wages. The usual descending demand curve and rising labor supply curve (which we consider normal) reflect state of the labor market. Complete balance occurs at a wage equal to (w/P), where w is the growth rate of nominal wages, and the unemployment rate L. Note, however, that real wages are not flexible enough to guarantee perfect equilibrium in any given year. Due to time lags in salary adjustments the latter, as a rule, differs from the level (w/P) and approaches it only gradually. This slow approach to equilibrium may reflect, in particular, the fact that under overlapping labor agreements, only some rates are adjusted in the current period, while all the rest are fixed by previously concluded agreements. 50. STAGFLATION Recently, economists have begun to single out a special new type of inflation - stagflation. As you know, stagflation is a simultaneous increase in the general level of prices, a decrease in production volumes and, consequently, an increase in unemployment. Stagflation is closely related to supply and demand inflation. And the reasons are the structural imperfection of the market and the lack of competition, since monopolies have no incentives to reduce costs. Many researchers also believe that Stagflation can be caused by inflationary expectations: in conditions of inflationary demand, the owners of factors of production begin to overestimate the cost of their services, anticipating a possible drop in income due to inflation. This leads to an increase in production costs and a decrease in aggregate supply. Observed the process of a simultaneous rise in prices (due to inflation of demand) and a fall in production volumes. Thus, stagflation is the worst of all the evils of inflation, combining the problems of inflationary demand and costs, so the fight against this phenomenon is extremely difficult. In practice, the types of inflation are often intertwined, so many economists both abroad and in our country consider inflation as a multifactorial phenomenon that opposes the growth of production and the full-fledged economic development of the country. The fight against it cannot be calculated for any specific period and make up the economic program of the new leader, but is a constant, daily duty of the government. Economic stagnation with simultaneous inflation is called stagflation, and the combination of inflation and a sharp economic downturn is called slampflyation. Many economists explain the emergence of stagflation as a series of supply disruptions. Adverse shocks to aggregate supply lead to a simultaneous increase in inflation and unemployment. Reduce the unemployment rate in the short term you can expansionary fiscal or monetary policy. The price to pay for this decline will be an acceleration in price growth. Another explanation for the beginning of stagflation in the economy is given by representatives neoclassical school. Their analysis is based on theories of adaptive and rational expectations. Stagflation is a situation where an increase in the general price level occurs with a simultaneous reduction in production, i.e., the price and output change in different directions. Economists explain the causes of stagflation in different ways. In an economy with a well-established market mechanism, an increase in prices for some goods leads to a decrease in prices for other goods, i.e., market equilibrium must be observed, and in the absence of an adequate level of competition, there is a "rigidity" of prices in the direction of their decrease. Another point of view: stagflation is caused by monopolies and their power over the market. Because the monopolist's demand curve coincides with the demand curve for the product, hence the amount of output that can be sold increases as the price decreases, and it is often more profitable for the monopolist to produce less and sell more. 51. ANTI-INFLATION REGULATION OF THE ECONOMY Diverse negative social and economic consequences inflation forces the governments of different countries to pursue a certain economic (anti-inflationary) policy. The purpose of anti-inflationary policy is to make inflation manageable and moderate enough. To do this, a wide range of monetary, budgetary, tax methods, measures in the field of income policy, as well as various stabilization programs, including radical monetary reforms, are used. Methods of fighting inflation can be direct and indirect. Indirect methods: - regulation of the total amount of money through their management by the Central Bank; - regulation of the lending and accounting process of commercial banks through their management by the Central Bank; - required reserves of commercial banks, operations of the Central Bank on the open securities market. Direct Methods regulation of the purchasing power of the monetary unit, i.e. the fight against inflation, include: - direct and direct regulation by the state of loans and thus - the money supply; - state regulation of prices; - state (by agreement with trade unions) regulation of wages; - state regulation of foreign trade, import and export of capital and the exchange rate. All economists agree that the control and management of aggregate demand through the implementation of fiscal or monetary policy can slow down the development of inflationary processes. Hence arises the need for state control over wages and prices. Under the control of wages and prices is understood any sequence of a number of actions (from very moderate to forced imposition of ceilings on wage and price growth), carried out within the framework of economic policy. Another way not so much to fight inflation as to mitigate inflationary consequences is indexation. Индексация implies that wages, taxes, debt, interest rates, and more become insensitive to inflation if nominal money payments are adjusted in response to price changes. Sometimes indexation is used to make life easier in the face of inflation. However, if inflationary processes are caused by a sharp disruption ("shock") of supply, and not by excess demand, then indexation may worsen rather than improve things. Indexation and control, at best, make it easier to mitigate the effects of inflation. When inflation really gets out of hand, something more substantial needs to be done. What is needed in this case is change in the economic policy regime. "Currency Corridor" is a way of forcibly limiting the dollar exchange rate in order to overcome inflation. However, an undervalued exchange rate inevitably leads to an increase in imports, a reduction in domestic production and exports. Additional currency for imports can be taken only from previously created reserves or through loans. 52. CONCEPT OF FINANCE Finance represent economic relations associated with the formation, distribution and use of centralized and decentralized funds of funds in order to perform the functions and tasks of the state and ensure conditions for expanded reproduction. The main features of finance: - monetary relations between two subjects, i.e. money is the material basis for the existence and functioning of finance (where there is no money, there can be no finance); - subjects have different rights in the process of these relations: one of them (the state) has special powers; - in the process of these relations, a nationwide fund of funds is formed - the budget (hence, we can say that these relations are of a stock nature); - a regular flow of funds to the budget cannot be ensured without giving taxes, fees and other payments of a state-compulsory nature, which is achieved through the legal rule-making activities of the state, the creation of an appropriate fiscal apparatus. Finance as a scientific concept usually associated with those processes that appear on the surface of social life in various forms and are necessarily accompanied by the movement (cash or non-cash) of money. Whether we are talking about the distribution of profits and the formation of intra-economic funds at enterprises or the transfer of tax payments to state budget revenues, or the contribution of funds to extra-budgetary or charitable funds - in all these and similar financial transactions, there is a movement of funds. Being very conspicuous, cash flowin itself does not reveal the essence of finance. To comprehend it, it is necessary to identify those common properties that characterize the internal nature of all financial phenomena, they are united by underlying relations between various participants in social production, or social relations. By nature, these relations are production (economic), since they arise directly in social production. Economic relations are extremely diverse: they arise at all stages of the reproduction process, at all levels of management, in all spheres of social activity. In this case, homogeneous economic relations, characterizing one of the aspects of social life, being presented in a generalized abstract form, form economic category. Finance, expressing the relations of production that actually exist in society, having an objective character and a specific public purpose, act as an economic category. Monetary nature of financial relations - an important sign of finance. Money is a prerequisite for the existence of finance. There is no money - there can be no finance, for the latter is a social form conditioned by the existence of the former. The most important sign of finance is that financial relations are always associated with the formation of cash income and savings, which take the form of financial resources. 53. FUNCTIONS OF FINANCE Finance perform two main functions: distributive и control. That part of finance that functions in the sphere of material production and participates in the process of creating cash income and savings, performs not only distribution and control, but also the function of generating cash income (regulating) With the help of finance the state is implementing distribution of the social product not only in kind-monetary form, but also in value. In this regard, it becomes possible and necessary to control the provision of cost and natural-material proportions in the process of expanded production. Actively participating in the distribution and redistribution of national income, finance contributes to the transformation of the proportions that have arisen during the initial distribution of national income into the proportion of its use. The ultimate goal of the distribution and redistribution of national income and gross domestic product, carried out with the help of finance, is to develop productive forces, create market structures for the economy, strengthen the state, and ensure a high quality of life for the general population. Control function of finance closely related to distribution - it is first of all ruble control in the process of objectively existing monetary relations. It permeates the entire system of relations associated with both the movement of value and the change in forms of value, and represents value control through the form of ownership. Since finances express relations that arise on the basis of real money turnover, control over the ruble as a function of finances is only control of real money turnover. Finance exercises control at all stages of the creation, distribution and use of the social product and national income. Their control function is manifested in all the variety of economic activities of enterprises. The ruble is controlled by production and non-production costs, the correspondence of these costs to income, the formation and use of fixed assets and working capital. It operates at all stages of the circulation of funds, in financing and lending, cashless payments, in relations with the budget and other parts of the financial system. The object of the control function of finance are the financial performance of enterprises, organizations, institutions. One of the important tasks of financial control - verification of exact compliance with the legislation on financial matters, timeliness and completeness of the fulfillment of financial obligations to the budget system, tax service, banks, as well as mutual obligations of enterprises and organizations for settlements and payments. Regulating function associated with state intervention through finances (government spending, taxes, loans) in the reproduction process. In order to regulate the economy and social relations, financial and budget planning, state regulation of the securities market are also used. However, today in the Russian Federation the regulatory function is poorly developed. 54. FINANCIAL SYSTEM AND ITS ELEMENTS Financial system includes three main links: public finance, household finance and enterprise finance. Of these three links, the finances of enterprises are the main one, because the first two links are formed on their basis. public finance consist of two main elements: the state budget and off-budget funds. The state budget - this is the annual plan of income and expenditure of the state, this is money that allows the state to perform economic and social functions (and, more recently, political ones). The state budget consists of the government budget and local budgets (oblast, city, district, village council). Therefore, the approval of state budgets for the next year is always stormy. Governments are trying to infringe on the rights of the regions, and the latter are trying to leave more funds at their disposal. Extrabudgetary funds represent those funds that are accumulated outside the system of the state budget and have a strictly designated purpose: a pension fund, a social insurance fund, etc. The budget consists of two parts: revenue and expenditure. In countries with developed market economies, 80-90% of the budget revenue is formed from taxes on enterprises and the population. The rest comes from the use of state property, foreign economic activity. The structure of the expenditure part of the budget includes expenditures on social and cultural needs (health care, education, social benefits, etc.), expenditures on the development of the national economy, defense, and public administration. In a socially oriented economy taxation builds on the principles obligation to pay, social justice, and ties to gain. Use of financial resources It is carried out mainly through special-purpose funds, although a non-fund form of their use is also possible. financial funds - an important component of the general system of monetary funds, functioning in the national economy. stock form The use of financial resources is objectively predetermined by the needs of expanded reproduction and has some advantages over the non-stock form: - allows you to more closely link the needs of people with the economic opportunities of society; - ensures the concentration of resources in the main directions of development of social production; - makes it possible to more fully link public, collective and personal interests and the more actively influence production. The central place in the financial system is occupied by the state budget - the largest monetary fund that the government uses to finance its activities. At the expense of the state budget, the army, the police, and a significant part of the healthcare system are supported; with its help, the state has an impact on economic processes. Due to its special position, the state budget interacts with other parts of the financial system, providing them with assistance if necessary. 55. STATE BUDGET The main link of the financial system is the state budget. It is the largest centralized monetary fund owned by the government. The totality of its organizational structures forms budget system. It is formed taking into account the totality of socio-economic, legal, administrative features. The structure of the budget system a country depends primarily on its government structure. In countries that have unitary device, the budget system has a two-tier structure - the state and local budgets. In countries with federal government (USA, Germany, Russian Federation) there are intermediate links - the budgets of states, lands, subjects of the Federation. Through the budget system as a whole and the state budget in particular, the distribution and control functions of the budget are implemented. distribution function involves the concept of the formation of funds in the state through various channels of receipt and their use to fulfill state goals and functions. In some countries this function is performed by state treasury through their regional offices. Control function manifests itself in the implementation of control measures over the process of formation and use of funds in various structural parts of the economy. It is carried out by tax inspections and tax police, state treasuries, the Central Bank and other bodies. The state budget forms government centralized fund for the maintenance of the state apparatus, the armed forces, health care, education, payment of social benefits. The budget is a powerful lever of state regulation of the economy, influencing the economic situation, and implementing measures to stabilize it. The impact of the state on the economy occurs through financing, the issuance of subsidies, transfers, etc. The budget has its own structure. Structure of the budget by income as follows: - taxes, excise duties, customs duties, etc. - income from state property, state enterprises; - receipts of social insurance funds, pension and insurance funds; - Other income. The main directions of state budget expenditures: spending on health care, education, benefits, subsidies to regional authorities for these purposes; expenses for maintaining the market situation and economic growth: investments, subsidies, implementation of targeted programs and plans; defense spending; foreign policy expenses, loans to foreign states; maintenance of the apparatus of the state, police, justice, etc.; payments on public debt; other expenses. Expenditure part of the budget characterizes the direction and goals of budget allocations for the development and regulation of economic processes. They are always targeted and, as a rule, irrevocable. The irrevocable provision of public funds from the budget for targeted development is called budget financing. This mode of spending financial resources differs from bank lending, which, as a rule, assumes the repayment nature of the loan. 56. LOCAL BUDGETS Local government is an indispensable component of a democratic state system. It is exercised by the people themselves through freely elected representative bodies. To perform the functions assigned to local representative and executive bodies, they are endowed with certain property and financial and budgetary rights. The financial base of local authorities are their budgets. The budgetary and property rights granted to these bodies enable them to draw up, consider, approve and execute their budgets, dispose of the enterprises transferred to their jurisdiction and receive income from them. Local budgets - one of the main channels for bringing the final results of production to the population. Through them, public consumption funds are distributed among individual groups of the population. From these budgets, to a certain extent, the development of industries is also financed, primarily the local and food industries, public utilities, the volume of products and services of which are also an important component of ensuring the livelihoods of the population. The local budget is a centralized fund of financial resources of a separate municipality, the formation, approval and execution, as well as control over the execution of which are carried out by the local government independently. The economic essence of local budgets manifested in their purpose. They perform the following functions: - formation of monetary funds, which are financial support for the activities of local authorities; - distribution and use of these funds between branches of the national economy; - control over the financial and economic activities of enterprises, organizations and institutions subordinate to these authorities. Local budgets are of great importance in the implementation of national economic and social tasks, primarily in the distribution of state funds for the maintenance and development of the social infrastructure of society. These funds pass through the system of local budgets, which include more than 29 thousand city, district, settlement and rural budgets. State implementation of social policy requires large material and financial resources. The distribution of national monetary resources between the links of the budget system is based on principles of independence of local budgets, their government financial support. Based on these principles local budget revenues are formed at the expense of own and regulating sources of income. Federal state authorities, state authorities of the constituent entities of the Russian Federation provide municipalities with minimum local budgets by fixing revenue sources to cover the minimum necessary expenses of local budgets. Minimum required expenditures of local budgets are established by the laws of the constituent entities of the Russian Federation on the basis of standards for minimum budgetary security. The revenue part of the minimum local budgets is formed by fixing income sources on a long-term basis by federal law, the law of the subject of the Russian Federation. 57. TAXES AND TAX SYSTEM Tax - these are funds forcibly withdrawn by the state or local authorities from individuals and legal entities, necessary for the state to carry out its functions. These fees are made based on state law. In modern conditions, taxes perform two main functions: fiscal and economic. fiscal function is the main one. Using it, the state forms monetary funds. economic function involves the use of taxes as a tool for the redistribution of national income, the interest of producers and entrepreneurs in the development of various types of activities for the production of goods and services. Using this function of taxes, the state influences the real process of production and investment of capital investments. The collection of taxes is based on the use of various tax rates. Distinguish the following types of bets: - fixed rates are set in absolute amount per unit of taxation, regardless of the amount of income; - proportional rates act in the same percentage to the object of tax without regard to the differentiation of its value; - progressive rates Assuming a progressive increase in the tax rate as income increases. This type of betting serves as a tool for withdrawing funds from people who receive large incomes; - regressive rates They expect taxes to decrease as income rises. These rates are most beneficial for those with large incomes, and the most burdensome for individuals and legal entities with low incomes. Direct taxes directly paid by a particular payer. As a rule, they are directly proportional to solvency. Indirect taxes - These are mandatory payments included in the price of a product or service. A large part of them are excise taxes. The totality of taxes, fees, duties and other payments levied in the state, as well as the methods of their construction, forms tax system. It establishes specific methods for the construction and collection of taxes. Principles of the tax system Neutrality of the tax system is to ensure equal tax standards for equal tax payers. The principle of justice provides the possibility of an equivalent withdrawal of tax funds from various categories of individuals and legal entities, which does not infringe on the interests of each payer and at the same time provides the budget system with sufficient funds. The principle of simplicity involves the construction of the tax system, taking into account the needs of society, the capabilities of the state and the existing tax base. At the same time, the internal and external interests of the state, the interests of enterprises, industries, regions, and citizens should be taken into account. In countries with a federal structure, when designing the tax system, the principle of even distribution of the tax burden across individual regions and subjects of the Federation is widely used. The tax systems of developed countries, built taking into account the principles under consideration, imply widespread use of incentives. 58. LAFFER CURVE The tax system, built taking into account tax incentives and rational tax rates, provides an incentive function for the development of production and an increase in the tax base. On the contrary, an unjustified increase in rates creates conditions for a decrease in production volumes and "avoidance" from paying taxes. An example of large-scale measures to stimulate the general economic environment can serve as a major reduction in tax rates in the early 80's. XNUMXth century in the USA. The theoretical justification for this program was the calculations of the American economist A.Laffer, who proved that the reduction of tax rates to the maximum optimal value contributes to the rise in production and income growth. According to Laffer's reasoning, an excessive increase in tax rates on corporate income reduces their incentives for capital expenditures, slows down scientific and technological progress, and slows down economic growth. Graphical display of the relationship between budget revenues and the dynamics of tax rates is called Laffer curve.  In the figure, tax rates R are plotted along the y-axis, budget revenues V are plotted along the abscissa. With an increase in the tax rate R, the state's income as a result of taxation V increases. The optimal rate R1 ensures the maximum revenues to the state budget V1. With a further increase in taxes, incentives to work and entrepreneurship fall, and with 100% taxation, government revenue is zero, since no one wants to work without receiving income. An increase or decrease in tax rates has an inhibitory or stimulating effect on investment dynamics as well. The tax system of any state is inherently not static, but rather dynamic. This is due to changes in the economic environment, goals and objectives of economic growth. The main drawback of most existing tax systems is the consideration of the return of each of the taxes in a static system that does not take into account the development of social relations. The tax systems of developed countries involve the widespread use of stimulating benefits. The most important of them are the investment tax credit, accelerated depreciation, allowance for the depletion of subsoil during the extraction of natural resources. Investment loan essentially represents the indirect financing by the state of capital investments of private entrepreneurship due to tax exemption for the payback period of capital expenditures. It is designed mainly for the introduction of innovative technologies, the replacement of obsolete equipment, and the production of competitive products. The amount of credits, calculated as a percentage of the value of the equipment, is deductible from the amount of tax, and not from taxable income. This reduces the cost of newly purchased equipment by the amount of the discount. With accelerated depreciation the state allows depreciation to be written off on a scale that significantly exceeds the actual depreciation of fixed capital. In fact, this is nothing more than a tax subsidy to an entrepreneur. An increase in depreciation reduces the amount of profit taxed, and this accelerates the turnover of fixed capital. 59. PUBLIC DEBT State debt - the inevitable generation of a budget deficit, the causes of which are associated with a decline in production, with an increase in marginal costs, unsecured emission of money, an increase in the cost of financing the military-industrial complex, an increase in the volume of the shadow economy, non-production costs, losses, theft, etc. Public debt is divided into internal and external. Domestic debt represents the amount of debt to its citizens and enterprises. It exists as the sum of issued and outstanding debt obligations. External debt - debts to citizens and organizations of foreign states. This is the heaviest debt, since the state is bound by a number of targeted obligations on it, on the one hand, and on the other hand, it has to be paid in valuable goods and pay high interest. In some developing countries, annual loan repayment obligations exceed all foreign economic activity. In general, the consequences of public debt lead to a significant reduction in the opportunities for growth in consumption for the population of a given country, as well as an increase in taxes to pay for growing debt and related interest. If you have significant debt there is a redistribution of incomes of various segments of the population, as well as an outflow of national capital abroad. With the advent of debt comes the obligation to manage it. This is understood as a set of actions of the state to repay and regulate the amount of public debt, as well as to attract new borrowed funds. The repayment of the public debt and interest on it is carried out by either refinancing (issuance of new loans in order to pay off the bonds of old loans), or conversion and consolidation. Conversion - changing the terms of the loan and the amount of interest paid on it or turning it into long-term foreign investment. In this case, foreign creditors are invited to purchase real estate, participate in a joint investment of capital, and privatize state property. Private national firms of the creditor country redeem the obligations of the debtor country from their state or bank and, with mutual consent, use them to acquire property. The consequence of this conversion is increase in foreign capital in the national economy without the flow of financial resources into the country. Consolidation - change in loan conditions associated with a change in maturity, when short-term liabilities are consolidated into long-term and medium-term ones. Such consolidation is possible only with the mutual consent of the governments of the borrower and the lender. The Burden of Public Debt and the imposition of conditions during its formation lead to the fact that in modern conditions, countries are trying to move from a policy of deficit financing to deficit-free budgets. New budget policy finds expression primarily in: - changes in the revenue side of state budgets; - stimulation of investment activity; - expansion of the tax base due to the growth of incomes and profitability of the national economy. 60. TYPES OF INCOME OF THE POPULATION Under the income of the population refers to the amount of money and material goods received or produced by households over a certain period of time. Their role in human life is determined by the fact that the level and structure of consumption of the population directly depends on the amount of income. individual household income, usually subdivided into four groups: - income received in the form of payment for labor, which takes the form of wages; - income received through the use of other factors of production: income from capital ownership - interest, income from land ownership - rent, entrepreneurial income; - transfer payments: old-age pension, stipend, additional benefits (above wages), unemployment benefits, child benefits, etc.; - income received from employment in the informal sector of the economy. Natural income of the population - all receipts of agricultural products: products of agriculture, cattle breeding, poultry farming; various products, services and other products in natural form, obtained from home gardens, garden plots, households, self-procurement of gifts of nature. The ratio between cash and in-kind income changes periodically, but still the most common form of income is monetary form. The poor strata of the population always have a high share of in-kind incomes. During the period of deterioration of the economic situation in the country, the share of in-kind income increases. The aggregate income of the entire population, family, and individual is important for characterizing the well-being of the population. Growth in total income at constant prices and taxes indicates an increase in the ability of the population to meet their needs. Aggregate income is the total amount of means of subsistence that comes at the disposal of the population, including free and preferential services from public consumption funds. Part of total income are mobile income, which make up total income excluding services from public consumption funds. Main types of income 1. Wage. Wage or wage rate is the price paid for the use of labor. Although in practice wages can take various forms of bonuses, fees, commissions, monthly salaries, all this is denoted by one term "wages", which will mean wage rates per unit of time - per hour, day, etc. Such a designation has a certain advantage because it reminds that the wage rate is the price paid for the use of a unit of labor services. 2. Other income of the population: - payments on state insurance; - bank loans for individual housing construction, economic equipment for young families, members of consumer associations; - interest on deposits in savings banks accrued at the end of the year; - Income from increasing the value of shares, bonds, winnings and repayment of loans; - lottery winnings; - temporarily free funds resulting from the purchase of goods on credit; - payment of various types of compensation (injury, damage, etc.). 61. SOURCES OF INCOME OF THE POPULATION In economics the concept of "income" (income) includes all cash receipts of a particular person or household for a certain period of time (month, year). Sources of income usually subdivided into three groups: - income received by the owner of the factor of production - labor; - income received through the use of other factors of production (capital, land, entrepreneurial abilities); - the so-called "transfer payments" - that is, income as a result of the redistribution of the total social product. As for labor, everything is clear here. The remuneration for work is wages (see the previous question). In different countries of the world, wages range from 50 to 70% of the income of the population. Income derived from the use of other factors of production are expressed as interest, profit and rent. Economic rent is understood as the amount received by the owner of an economic resource in excess of the transfer fee. Owners of both land, labor and capital can receive economic rent. However, it should be noted that the economic content of the term "rent" varies depending on the level of aggregation. In macroeconomics, where the components of the national income are considered, "rent" means only rental fees, received by the owners of land and other natural resources with a rigidly fixed total supply. The next type of income is interest or loan interest. The lending rate is the price paid for the use of money. More accurately, lending rate - this is the amount of money that is required to be paid for the use of one ruble per unit of time (month, year). Under economic profit the difference between the total revenue and all the costs of a firm, an individual entrepreneur, etc. Consider income as a result of the redistribution of the total social product. Before the product produced enters into private consumption, i.e., takes the form of private income, the following items should be deducted from it. 1. Fund for the replacement of consumed means of production, i.e., the cost of consumed constant capital is depreciation. 2. accumulation fund, i.e., all possible funds for the development of production at the enterprise. 3. Reserve and insurance funds to ensure a stable and continuous production process. 4. management costs - the costs of ensuring the normal functioning of state and economic management structures. 5. social funds, aimed at meeting mass needs, education, health care, culture, and other social funds to meet the needs of disabled members of society (pensions, benefits, scholarships). In the paragraphs listed from the second to the fifth, the characteristics of the distribution directions of the created surplus product are given. The remaining part of the undistributed product is aimed at satisfying private needs, i.e., it is income distributed among the various participants in the production. 62. NOMINAL AND REAL INCOME Under income of the population is understood the amount of money and material goods received or produced by households in a certain period of time. The role of income is determined by the fact that the level of consumption of the population directly depends on the level of income. To assess the level and dynamics of the income of the population, indicators of nominal, disposable and real income are used. Nominal income (NT) - the amount of money received by individuals during a certain period, it also characterizes the level of cash income, regardless of taxation. disposable income (DI) - income that can be used for personal consumption and personal savings. Disposable income is less than nominal income by the amount of taxes and obligatory payments, i.e., these are funds used for consumption and savings. To measure the dynamics of disposable income, the indicator "real disposable income", calculated taking into account the price index, is used. Real income (RI) represents the amount of goods and services that can be purchased with disposable income over a given period, i.e. adjusted for changes in the price level. The desire to maximize one's income dictates the economic logic of behavior for any market entity. Income is the ultimate goal of the actions of every active participant in the market economy, an objective and powerful incentive for his daily activities. Income there is a monetary value of the results of the activity of an individual (or legal) person as a subject of a market economy. In economic theory, "income" refers to a sum of money that regularly and legally comes into the direct disposal of a market entity. Income is always represented by money. This means that the condition for obtaining it is effective participation in the economic life of society: we live on a salary or at the expense of our own entrepreneurial activity - in any case, we must do something useful for other people. Only then will they give us part of the money at their disposal. Therefore, himself fact of earning money there is objective evidence of the participation of this person in the economic life of society, and income - an indicator of the scale of such participation. After all, money is perhaps the only thing in the world that cannot be given to oneself: money can only be received from other people. The direct dependence of income on the results of market activity is violated in only one case - with an objective impossibility to participate in it (pensioners, young people of pre-working age, disabled people, dependents, unemployed). These categories of the population are supported by the whole society, on behalf of which the government regularly pays them cash benefits. Of course, these payments form a special element of total income, but, strictly speaking, they are not "market" ones. Market income is always the result of our useful - for other people - efforts. This means that it is largely determined by the coincidence of the goods and services we offer with the demand presented by "other people". The interaction of supply and demand is an objective mechanism for the formation of income in a market economy, including the income of the population. 63. DISTRIBUTION OF PERSONAL INCOME AND SOCIAL STRUCTURE OF SOCIETY Functional distribution of income reflects its real distribution among citizens in conditions where it is possible to unambiguously identify the social status of both a person of hired labor and an owner of material capital. In modern conditions there is erosion of social status, expressed in the fact that employees are simultaneously owners of capital, owning various types of securities, real estate, organizing private business. If about 90% of the population is accounted for by national statistics as persons of hired labor, and at the same time the share of owners (including family members) reaches 50, then there is a diversification of social status, which, if not eliminates, then significantly smoothes out the problem of class confrontation. Total income of the population are formed from different sources and redistributed among families depending on their size and composition. The personal distribution of income is highly unequal, which can be measured on the basis of Pareto-Lorenz-Gini methodology. According to "Pareto law" there is an inverse relationship between the level of income and the number of their recipients, in other words, the personal distribution of income is steadily uneven, and the level of unevenness in the distribution of income is "Pareto ratio" - Approximately the same in different countries. In the Pareto concept income differentiation is regarded as a constant and independent of social and political factors. On the basis of data on the distribution of income, all families can be grouped into certain income groups. Comparing the share of each of the groups in total income, you can build a graph illustrating the differentiation of income. If incomes are distributed evenly, then each group of families should receive income corresponding to its share, and the income distribution schedule will be represented by the bisector of OA in the figure. In the table, this situation is characterized as absolute equality. The opposite of absolute equality, hypothetical absolute inequality corresponds to a situation where 1% of families receive 100% of the income, while the others receive nothing. In this case, the income distribution graph is represented by a curve coinciding with the axes of the coordinate system with a vertex at point B.  In fact, the distribution of income is reflected by curves of the form I, II, III. The closer the curves of the actual distribution to the bisector of OA, the more uniform the distribution of income is in reality. The difference in the types of actual distribution curves is due to the fact that they take into account income I - before taxes, II - after taxes, III - taking into account transfer payments. The inverse relationship between the relative values of income (wealth) and the number of their recipients, expressed graphically, is called concentration curve, or Lorenz curve. The degree of inequality (or the degree of concentration) is mathematically expressed by the area of the figure above the curve of the actual distribution, correlated with the area of the triangle OAB- Gini index. Generalization of data based on the described methodology is used to assess the degree of inequality in income distribution. 64. REASONS FOR INCOME DIFFERENTIATION The amount of income closely related to the wealth and well-being of families. The relationship between income and wealth is direct (the level of income determines the amount of wealth) and inverse (the higher the wealth, the higher the income from it). The actual data on the distribution of wealth are assessed by experts as less reliable than information on current incomes. Income differentiation in comparison with the differentiation of wealth (property differentiation) is quantitatively more stable. In different countries, the ratio between the degree of differentiation of income and wealth is different, but if the differentiation of income has changed little in recent years, then the differentiation of wealth, according to experts, is growing. This indirectly confirms that the outpacing growth in the share of income from property is largely the result of inflationary redistribution. Differentiation of income is formed under the influence of various factors, associated with personal achievements or not dependent on them, having an economic, demographic, sociobiological or political nature. Among the reasons for the uneven distribution of income highlight the following. 1. Differences in physical and intellectual abilities, differences in education and qualifications, professional initiative and risk appetite. The abilities of people (physical, mental) are infinitely diverse, in addition, there are still differences in temperament. However, these personal differences do little to help us understand the mystery of economic inequality. Physical characteristics (height or hip circumference) and psychological characteristics (intelligence quotient or musical ear) reveal little about the difference in earnings of different people. 2. Hard work and motivation. Different people can work in different ways. Workaholics spend 70 hours a week at work, never take vacations, and endlessly push back their retirement. The "moderate person" will work exactly as long as necessary to pay for the bare necessities. The difference in income can be large simply because the effort they put into the work of different people differs. At the same time, no one can say that their economic opportunities are not equal. 3. Profession. One of the most important causes of income inequality is professional activity. At the bottom of the income pyramid are domestic workers, fast food restaurant staff, and unskilled workers. A full-time McDonald's restaurant worker or full-time car washer can earn as little as $9000 a year today. At the top of the income pyramid are highly paid professionals. 4. Origin, size and composition of the family, position in the market, luck, luck and discrimination. 5. Property ownership. The largest differences in income are due to the difference in inherited and acquired wealth. People at the top of the income pyramid tend to get most of their money from property income. The poor, on the other hand, own few material goods and, therefore, do not receive any income from their non-existent wealth. 65. STANDARD OF LIVING AND POVERTY Standard of living - the degree of satisfaction of the material, spiritual and social needs of the population. But it must be borne in mind that the standard of living is a dynamic process that is influenced by many factors. Standard of living assesses the quality of life of the population and serves as a criterion in choosing the directions and priorities of the economic and social policy of the state. Often the concept of standard of living is identified with such concepts as "welfare" "way of life" and others, but most fully the essence of the standard of living reveals the following definition. Standard of living - is a complex socio-economic category, which reflects the level of development of physical, spiritual and social needs, the degree of their satisfaction and the conditions in society for the development and satisfaction of these needs. Indicators only make it possible to assess the current situation, identify past trends, and transfer them to the future, but they do not make it possible to accurately predict the dynamics of living standards. This can be done only with a detailed analysis of the conditions (factors) that influence and even determine possible changes in the standard of living of the country's population. As mentioned above, these factors are usually divided into groups. Let's consider them in more detail. The most significant factors that can dramatically affect the change in the standard of living of the population are political factors. They include the nature of the social (state) system, the stability of the institution of law, the observance of human rights, the correlation of different branches of government, the presence of opposition, various parties, etc. life in the country. It is obvious that the politics and the economy of the country are closely interconnected. They are able to support, correct or "interfere" with each other. have a strong impact on the standard of living of the population economic forces, which include the presence of economic potential in the country, the possibilities for its implementation, the amount of national income, etc. In addition to those discussed above, the factors that determine the standard of living include: working conditions, leisure conditions, social security, social conditions (including environmental conditions, crime rates, etc.), personal savings. As experience shows, any quantitative estimates for each of these factors and for them as a whole are practically impossible. These living conditions are directly dependent on the total resources available in the country for consumption and accumulation, most fully measured by GDP. The standard of living in the country can also be judged by the ratio of the wealthy to the poor. In world practice, two main forms of poverty are distinguished: absolute - in the absence of income necessary to meet the minimum living needs of an individual or family, and relative - when income does not exceed 40-60% of the average income in the country. Cross Country Comparison of Poverty is conditional due to the unequal base (minimum subsistence level), which is the basis for calculating the poverty threshold. 66. INDICATORS OF LIVING STANDARDS OF THE POPULATION Standard of living reflects the volume and structure of consumption, social and working conditions of work, the development of the service sector, the structure of non-working and free time, the size of personal property. In such a broad sense, this category characterizes the economic situation of the population. In a narrower sense, the standard of living refers to the level of satisfaction of needs and the corresponding level of income. The standard of living of the population as a socio-economic category ultimately determined by a combination of a large number of factors due to cultural, geopolitical, historical and other features of the state. The standard of living of the population in a particular country is directly proportional to the level of economic development in the country as a whole. The state's statistical assessment of the position of its citizens appears to be the most important element in a comprehensive study of economic development problems. The standard of living is determined by a system of indicators, each of which gives an idea of any one side of human life. There is a classification of indicators according to individual characteristics: general and private; economic and socio-demographic; objective and subjective; cost and natural; quantitative and qualitative; indicators of the proportions and structure of consumption; statistical indicators, etc. К general indicators include the size of the national income, the consumption fund of national wealth per capita. They characterize the general achievements of the socio-economic development of society. К private indicators include working conditions, housing and household amenities, the level of socio-cultural services, etc. Economic indicators characterize the economic side of the life of society, the economic possibilities of meeting its needs. This includes indicators characterizing the level of economic development of society and the welfare of the population (nominal and real incomes, employment, etc.) Socio-demographic indicators characterize the sex and age, professional and qualification composition of the population, the physical reproduction of the labor force. Dividing indicators into objective и subjective associated with the justification of changes in people's lives and are divided depending on the degree of subjectivity of the assessment. К cost indicators include all indicators in monetary terms, and natural characterize the volume of consumption of specific material goods and services in physical terms. It is important to characterize the standard of living quantitative и qualitative indicators. Quantitative ones determine the volume of consumption of specific material goods and services, while qualitative ones determine the qualitative side of the population's well-being. As independent indicators, one can single out indicators that characterize proportions и distribution structure of the population's welfare. play an important role in determining the standard of living statistics, which include general indicators, indicators of income, consumption and expenditures, monetary savings, accumulated property and housing of the population, and a number of others. 67. STATE REGULATION OF THE DISTRIBUTION OF INCOME Formation of the total income of the population covers their production, distribution, redistribution and use. The distribution of income is formed at the stage of formation of the income of the owners of production factors (functional distribution). Personal distribution of nominal income is the result of redistribution. Passing through the family budget, the volume of per capita income varies depending on the size and structure of families, the ratio of dependents and persons with independent incomes. The value of real incomes depends on the parameters of the inflationary process. The main channel for the redistribution of income is state regulation this process. Tax systems and government transfers, social security and insurance systems show that the modern state is involved in large-scale income redistribution activities. State regulation consists of material, institutional and conceptual components. Social regulation is not the exclusive privilege of the state, it covers not only the redistribution of income, but also other indicators of living standards. Objects of social regulation are environmental protection and consumer protection. Social regulation is carried out by business units, trade unions, the church and other non-governmental organizations. Material basis of state regulation depends on the volume of national production and its share, which is redistributed centrally, through the state budget. Institutional framework related to the organization of the redistribution process and the activities of the relevant institutions. The conceptual basis of state regulation is a theory that acquires the status of government doctrine. State redistribution of income is carried out through budgetary and financial regulation. The state, in accordance with the priorities of social policy and the current special social programs, provides social benefits in the form of cash and in-kind transfers, as well as services. Social payments and services are diverse. They are differentiated according to the sources of formation and methods of financing, the conditions for providing them to the circle of recipients. Cash payments are related to compensation for loss of income as a result of full or partial disability, birth of children, loss of breadwinners or job (unemployment benefits, compensation for retraining costs and other payments to the unemployed). Cash social benefits are supplemented wholly or partially free services in the health, education, housing and transport sectors. All social transfers can be lump-sum or paid periodically over a set period of time. The amount of social benefits may depend on the statutory minimum per capita income or wages. Social transfers can take the form of tax credits. All social payments are made into the system of social insurance and social security, supplemented by state charity. 68. SYSTEM OF SOCIAL PROTECTION The main principles of social protection in market conditions are: 1) protecting the standard of living by introducing various forms of compensation for price increases and indexation; 2) providing assistance to the poorest families; 3) issuance of assistance in case of unemployment; 4) ensuring the social insurance policy, setting the minimum wage; 5) development of education, protection of health, environment, mainly at the expense of the state; 6) conducting an active policy aimed at ensuring qualifications. The more difficult the situation in a particular country, the more and louder calls for social protection of the population sound in it. The complexity of the situation under such conditions lies in the fact that if there is an economic recession in the country, production is declining, the national product is declining, then the government's ability to allocate additional funds for social protection of the population is extremely limited. The burden on the state budget increases, the government is forced to resort to increasing taxes, and as a result, the income of workers decreases. socially vulnerable people with an income below the subsistence minimum are considered. When referring certain groups of people to the category of socially vulnerable, one should take into account not only their current monetary income, but also monetary savings, accumulated wealth, the so-called "property qualification". In current practice, families with a low monetary income per family member (most often these are families with many children), families that have lost their breadwinner, mothers raising children alone, the disabled, the elderly, pensioners receiving insufficient benefits, students living on scholarships, the unemployed, people affected by natural disasters, political and social conflicts, illegal persecution. In some cases, children are classified as socially vulnerable groups. All these people need social support from society and the government. Social support can take several forms: in the form of financial assistance, the provision of material benefits, free food, shelter, shelter, medical, legal, psychological assistance, patronage, guardianship, adoption. The question of whom, in what types and forms, to what extent to provide social support, is one of the most difficult in the social economy. Since it is simply impossible to help everyone who wants help and those who need it, a number of economists and sociologists advise the following recipe: "Help only those who cannot help themselves." Of course, it is not easy to identify who is able and who is not able to help himself, but the recipe deserves attention. During the period of transition to a market economy, the most acute the problem of social protection of the population from rising prices (inflation) and unemployment. In order to ensure that rising prices for goods and services do not lead to a decrease in consumption and living standards, it is partially applied income indexation. This means that salaries, pensions, scholarships, and other types of income increase as retail prices rise. 69. STATE REGULATION OF THE ECONOMY State regulation carried out in two main directions: - regulation of market relations; - regulation of commodity-money relations. It consists mainly in defining the "rules of the game", i.e. development of laws, regulations that determine the relationship of persons operating in the market, especially entrepreneurs, employers and employees. These include laws, regulations, instructions of state bodies that regulate the relationship of producers, sellers and buyers, the activities of banks, commodity and stock exchanges, as well as labor exchanges, trading houses, establishing the procedure for holding auctions, fairs, rules for the circulation of securities, etc. . This area of state regulation of the market is not directly related to taxes. The basis for regulating the development of the national economy, social production, when the main objective economic law operating in society is the law of value. Here we are talking mainly about the financial and economic methods of state influence on the interests of people, entrepreneurs in order to direct their activities in the right, beneficial direction for society. Minimized in market conditions methods of administrative subordination of entrepreneurs, the very concept of a "superior organization" that has the right to manage the activities of enterprises with the help of orders, commands and orders is gradually disappearing. But the need to subordinate the activities of entrepreneurs to the goals of combining their personal interests with the public does not disappear. At the same time, it is impossible to order, to force. Adequate to market relations is only one form of influence on entrepreneurs and hired workers, sellers and buyers - a system of economic coercion combined with material interest, the ability to earn almost any amount of money. In a market economy, the familiar word "pay" is dying out, where people do not receive, but earn (the exception is the unemployed), and even then they, as a rule, earned their allowance by labor in the previous period. Thus, the development of a market economy is regulated by financial and economic methods - by applying a well-functioning taxation system, maneuvering loan capital and interest rates, allocating capital investments and subsidies from the budget, public procurement and the implementation of national economic programs, etc. The central place in this complex economic methods occupy taxes. Maneuvering tax rates, benefits and penalties, changing the terms of taxation, introducing some and canceling other taxes, the state creates conditions for the accelerated development of certain industries and industries, contributes to the solution of problems relevant to society. Thus, at the present time there is perhaps no more important task for us than the development of agriculture and the solution of the food problem. If the share of income from non-agricultural activities on a collective farm or state farm is less than 25%, then they are also exempt from taxes, if more than 25%, then the profit received from such activities is taxed in the general manner. 70. TYPES OF STATE REGULATION OF THE ECONOMY There are the following types of state regulation: - complete state monopoly in the management of the economy. It was characteristic of the USSR and the countries of the socialist community, but is still preserved in some post-communist states; - various options for combining market and state regulators. Implemented in the "Japanese", "Swedish" models, in the model of a socially oriented market economy of Germany, Austria, in the "Chinese" version of development; - extreme liberalism, recognizing as effective only the conditions of unlimited private enterprise. It is predominantly in the USA. The effectiveness of state regulation is predetermined by the presence of a strong legislative, executive and judicial state power. Institutional structures of state regulation include administrative bodies. The degree of isolation of these governing bodies, which determines the possibility of realizing economic interests and consistency in decision-making, depends on the level of centralization of government in the country. Thus, the UK is characterized by a lower degree of centralization of the bureaucracy's control over politics than in France. The highest administrative structures of the United States are dominated by a significant number of relatively autonomous bodies. Germany is characterized by a more integrated management system - a mechanism for mediation and aggregation of interests and their models. So, corporate model involves the creation of special institutions to achieve a balance of interests. it liberal corporatism in Sweden, New Zealand, private capitalism in Japan, "societal" capitalism in Switzerland. В pluralistic model (Italy, Great Britain) there are no special mechanisms for coordinating interests. They are carried out within the framework of political processes involving parliament, government, trade unions and parties. There are two main models of state regulation through certain state bodies. 1. Reactive (adaptive) model, characteristic of the USA. It allows you to clearly respond to changes and "misfires" of the market. This is provided mobility of structures and functions of regulatory bodies, varying levers of direct and indirect regulation at the macro- and micro-level, a combination of various forms of joint activities of the state and private business. 2. Proactive model of state regulation (Japan) assumes the prevention of possible failures in the market mechanism by "accurate" dosage of the volume of state intervention, the use of forecasting, coordinating or corrective recommendations in the negotiations between the state and entrepreneurs. 71. METHODS OF STATE IMPACT ON THE ECONOMY The state influences the market mechanism through its spending, taxation, regulation and public enterprise. Government spending considered one of the important elements of macroeconomic policy. They affect the distribution of both income and resources. Government spending consists of government purchases and transfer payments. State procurements represent, as a rule, the acquisition of public goods (defense costs, the construction and maintenance of schools, roads, scientific centers, etc.). Transfer payments - these are payments that redistribute tax revenues received from all taxpayers to certain segments of the population in the form of unemployment benefits, disability payments, etc. Another important instrument of state influence is taxation. Taxes - the main source of budgetary funds. In countries with a market economy, various types of taxes are levied. Some are visible, such as an income tax, while others are less obvious as they are imposed on producers of raw materials and affect households indirectly through higher commodity prices. Taxes cover both households and firms. Significant amounts come into the budget in the form of taxes. State regulation is designed to coordinate economic processes and link private and public interests. It is carried out in legislative, tax, credit and subvention forms. The legislative form of regulation regulates the activities of entrepreneurs. An example would be antitrust laws. Tax and credit forms of regulation involve the use of taxes and credits to influence the national output. By changing tax rates and benefits, the government affects the narrowing or expansion of production. When changing the terms of credit, the state affects the decrease or increase in production. Subvention form of regulation involves the provision of government subsidies or tax incentives to certain industries or enterprises. These usually include industries that form the general conditions for the formation of social capital (infrastructure). On the basis of subsidies, support can also be provided in the field of science, education, training, and in solving social programs. State Enterprise carried out in those areas where thriftiness is contrary to the nature of private firms or where huge investments and risks are required. Main different from private enterprise is that the primary goal of state entrepreneurship is not to generate income, but to solve socio-economic problems, such as ensuring the necessary growth rates, smoothing out cyclical fluctuations, maintaining employment, stimulating scientific and technological progress, etc. This form of regulation provides support for unprofitable enterprises and sectors of the economy, which are vital for reproduction. This is first of all economic infrastructure sectors (energy, transport, communications). 72. NATIONAL PLANNING Economic planning is not only a diverse practical activity, but also a vast area of economic science that has arisen under its influence. The conclusions of the science of economic planning are tested by practice and at the same time arm it with new effective methods and recommendations. In the system of economic sciences, state planning stands between political economy and sectoral economies. Political economy studies the laws of development of social reproduction. The analysis of these laws constitutes the theoretical basis of the science of planning, which concretizes the characteristics of the patterns of reproduction of the social product, explores the specifics of the manifestation of economic laws that determine the content of national economic plans. Branch economies proceeding from the basic provisions of the science of planning the national economy, they study the features of the planned organization of reproduction processes in individual sectors. Economic planning makes use of the conclusions, evidence, and research methods applied by industrial economics and other economic sciences, such as statistics, finance and credit, accounting, etc. In addition, the science of planning is closely related to mathematics, engineering and natural sciences. National economic planning is both economic and social planning. In solving the problems of economic development, plans (especially long-term plans) have always provided for the solution of major social problems. planning methodology can be defined as a set of its principles, i.e., the most general, fundamental patterns of development, substantiation of plan targets and ensuring the implementation of plans, and planning methodology (an integral part of the methodology) as a set of methods, techniques, methods of development, justification, verification of the fulfillment of plan targets. The planning methodology and methodology are the same for all types of plans, but specific techniques are used at various stages of planning. Among the methodological principles of planning, it is necessary to highlight general principles of economic management: - unity of politics and economics with the priority of the political approach; - scientific management; - democratic centralism; - combination of interests of society, collectives, individual. The principles and methods developed by the science of planning the national economy, the principles and methods for developing and substantiating plans have been repeatedly tested in practice and make it possible to successfully solve the most complex tasks of the planned organization of social production, maintain high and stable rates of economic development, and ensure the steady growth of people's well-being and culture. Without long-term plans, it is impossible to determine the main directions for the development of the economy and culture, to carry out fundamental structural changes in the economy, and to ensure the solution of the most important social problems. The fundamental questions of scientific and technological progress, the creation of new branches of production and new industrial centers, the integrated development of the republics and economic regions, and the improvement of the living standards of the working people can also be resolved only in long-term plans. 73. MAIN FEATURES OF THE WORLD ECONOMY world economy - the system of national economies of all countries of the world, united by the international division of labor, the totality of their economic interrelations and relationships, including foreign trade, the export of capital, the migration of labor, the conclusion of economic agreements, the creation of international economic organizations, the exchange of scientific and technical information. The world economy should be viewed as objective result of economic growth, the result of the immanent desire of social production for the most positive economic effect, as a result of the interaction of factors driving the production of material goods: a continuously deepening division of labor, specialization, internationalization of production, free movement of goods and capital in the geo-economic space. Consequently, the the world economy is a global economic organism, in which the interconnection and interdependence of all countries and peoples of the planet have developed and are growing. It is characterized by the increasing internationalization of productive forces, the creation of a diverse system of international economic relations, and the formation of international mechanisms that regulate economic exchange between countries. The growing and strengthening integrity of the modern world is objectively expressed in the world economy. The material basis of the world economy forms world market of goods, goods, services, capitals, securities. Modern world social development is characterized by the strengthening of ties and interaction between countries. The trend towards unification is caused by the need to solve the global problems facing humanity, such as the threat of a nuclear catastrophe, environmental problems, health care and space. But the deepest basis for strengthening the integrity of the world is the growing interdependence of states in the economic sphere. No country in the world can claim full-fledged development if it is not drawn into the orbit of world economic relations. The international community brings together states that have their own national and economic identity. The main criteria Distinguishing various economic systems are the possibilities of using advanced equipment and production technology, as well as the degree of mastery of the principles of the market structure of the economy. In accordance with these classification features, one can distinguish "industrialized" и "new industrial" countries; "high income states" exporting raw materials and energy carriers; least developed and poorest countries in the world. Distinguish countries with developed, developing market economy, as well as countries with non-market economies. The importance of international economic cooperation is especially great for countries lagging behind in their development. Only through global economic relations can we immediately ensure the flow of missing consumer and industrial goods, gain access to new technologies and additional markets. Therefore, the efforts of the government and other power structures are needed to ensure the reasonableness and consistency of international contacts. 74. STAGES OF FORMATION OF THE WORLD ECONOMY Having arisen at the manufacturing stage of the development of social production (XVI century), the world market was actively formed under the influence of the movement of commercial capital, which was economically and politically established in most European countries. The initial stage of the formation of the world economy many associate with the final victory over feudal production, when the industrial revolution was completed, which made large-scale industry more dependent on international exchange. began to dominate free competition: significantly accelerated the formation of the world system global crises of overproduction. At the beginning of the X!X century. most of the states were closed business units. Most goods were produced and consumed locally, with foreign trade playing a secondary role. The world economy in these conditions was not a single system, but rather a mechanical sum of the economies of individual countries and regions, little interconnected. However, an industrial society has its own laws, one of which is the constant growth of specialization and cooperation in production. Already by the end of the X!X century. the economic development of large European states becomes impossible without the use, for example, of the raw materials of other states, and the accelerated development of the latter without the import of industrial goods and capital from more developed countries. The next stage in the formation of the world market, which dates back approximately to the end of the XNUMXth - beginning of the XNUMXth century, was associated with an increase in the volume of international trade, a change in the structure of commodity flows, which led to the interweaving of national economies, the formation of monopolies, the export of capital, and the formation of the so-called "world socialist system". In recent years, the improvement of market mechanisms in the world has gone in different ways, depending on the prevailing relations in each national economy. It covers changes in property relations, the nature of state intervention in market relations, and directions for the development of macroregulation methods. World market is derived from the domestic markets of countries. At the same time, it has an active inverse effect on the macroeconomic balance of isolated economic systems. Segments of the world market are determined both by traditional factors of production (land, labor and capital) and by relatively new ones - information technology and entrepreneurship, the importance of which is growing under the influence of the modern scientific and technological revolution. Markets for goods and services, capital and labor force, formed at the national level, are the result of the interaction of world demand, world prices and world supply, are affected by cyclical fluctuations, operate in conditions of monopoly and competition. Maturity of world economic relations is determined by the ratio of the growth rates of trade and material production. The changes taking place in the sphere of international economic relations are evidenced by data on the structure of trade, the share of transactions carried out in the labor market and the capital market, the dynamics of world prices, the directions of movement of goods, services, and capital. 75. DYNAMICS OF INTERNATIONALIZATION OF ECONOMIC PROCESSES world economy differs from the national presence of a single world market. Its functioning is significantly affected economic policy of developed countries. Distinctive feature world market favors the functioning of the system of world prices and international competition. The latter reduces various national values to a single international one. world price determined by the conditions in those countries that supply the world market with the bulk of goods. There is fierce competition between countries for markets. It often proceeds in the price form of textile, automotive, computer trade wars. Various types of non-price competition associated with the efficiency of using the achievements of the scientific and technological revolution and organizational and managerial measures have become widespread. The dynamic development of the world economy, the strengthening of the internationalization of production processes were largely ensured flexibility of the joint-stock form of ownership. In recent decades, the world has seenProcesses of horizontal and vertical movement of property. A huge wave of mergers and acquisitions swept the United States, Western Europe and many developing countries. The privatization of a significant part of state property in countries with market economies, the rapid development of small and medium-sized businesses in the field of R&D contribute to a more flexible adaptation of property relations to changes in production and the adjustment of the latter to the needs of the market. The processes of acquiring property by non-residents in other countries are intensifying. As a result, foreign corporations quickly adapt to national conditions, circumvent customs restrictions, gain access to the country's resources and make fuller use of its advantages, and bring their technological and managerial experience. At the turn of the 80-90s. in almost all developed countries economic reforms aimed at strengthening the role of market forces in the process of reproduction. The nature of state intervention in market relations, directions and methods of macroregulation have changed. The improvement of the market mechanism in the world proceeded in different ways, depending on the prevailing relations in each national economy. Particular attention is paid to the creation of regulatory mechanisms at the international level. Throughout the XNUMXth century there was an increase in the internationalization of economic processes in the world economy. It manifested itself in the growth of economic interaction between states, the expansion of the sphere of international economic relations. The material basis of the modern world economy is internationalization of production. It appears in a variety of organizational and economic forms of connection between production in some countries and the consumption of its results in others. The integrating forces that lead national systems to the path of forming the world economy are objective factors in the development of production. They are primarily the international division of labor and the specialization of individual countries in the production of certain goods and services in order to sell them in other countries. 76. GLOBAL PROBLEMS OF THE WORLD ECONOMY As the major global issues distinguish those that, firstly, are of a planetary nature; secondly, they threaten all mankind with either death or serious regression in further development; thirdly, they require an urgent solution by the efforts of the entire world community. These problems themselves take the form of contradictions, disproportions and violations in certain spheres of human life. Different authors classify them differently. The following seems to be the most appropriate. classification. 1. Intersocial problems - war and peace, the cessation of the arms race, the demilitarization of the economy, the problem of overcoming the backwardness of developing countries and the development of man, ensuring his future. 2. Global problems of a humanitarian, cultural and ethnic nature - demographic problem, overcoming hunger, diseases. 3. Global problems in the field of interaction between society and nature - environmental protection, food problem. Very relevant the problem of interaction between man and society with the natural environment. In our time, it has acquired a qualitatively new character, since the very essence of environmental crises has changed: now they are the result not of natural disasters, as it was before, but of human economic activity. And if earlier environmental pollution was of a local nature, now it is not limited to individual states, but spreads to the entire planet. Is of great importance space exploration - the space age has only three decades, but it has already made it possible to understand the common destinies, that the resources of the Earth are not unlimited. The essence of the problem here is that space research is very complex and its cost is growing exponentially every day, and beyond the power of any one state. Food problem is closely related to demographic development. The scale and rate of population growth act both as a factor influencing the state of food, environmental and other problems of a planetary nature, and as an independent global problem. The main population growth in the world is in developing countries with a low level of economic and cultural development. Demographic processes require conscious control on the part of the states concerned. In the second half of the twentieth century. science has taken a leap forward. Hence the technical and industrial progress of mankind, unprecedented in history. But precisely global technological progress has generated negative global consequences due to a sharp and not always justified increase in the consumption of natural resources, including non-renewable ones, which has caused pressure on the natural potential of the planet; due to negative anthropogenic development on the natural environment; rapid demographic growth that is not accompanied by a corresponding increase in the food base; different levels of development of countries; constant improvement in the production of weapons - all this is the reason for the aggravation of global problems. 77. INTERNATIONAL REGIONAL ECONOMIC INTEGRATION International regional integration is a process of rapprochement and interweaving of national economies and the corresponding mechanisms for regulating the economy, social and political relations of the countries of a particular region. It covers theproduction and circulation, economic and political superstructure. Due to the relative independence of each of these sectors integration is divided into several separate integrations by sectors: national production, commodity markets, financial markets, area of economic policy adoption. Each of them has its own pace, depth and even territory of development of the integration process. The totality of these separate integrations in the sphere of base and superstructure forms international regional integration. The development of integration leads to qualitative changes that require political and legal formalization. The following political and legal forms: free trade area, customs union, common market, economic union and full economic integration. Free trading zone characterized by the elimination of tariffs and quotas between member countries. Each participant has the right to apply its own rules in trade with third countries. Creation of a customs union implies the absence of tariff restrictions on the movement of goods within the bloc and the introduction of a common external tariff. The impact of the customs union on trade is to create new commodity flows and change existing trade directions. The first impact should be seen as a positive effect of the creation of a customs union. It arises as a result of the abolition of customs duties and other measures to protect inefficient national production. Social wealth increases as imports of cheaper goods increase. Trade flow deviations are expressed in the replacement of some countries - sources of imports by others. The influence of this factor can be positive (cheaper source of imports), negative (more expensive source of imports), zero. Common Market It is distinguished by the elimination of barriers to the movement of not only goods, but also factors of production. These measures are aimed at leveling the conditions of competition, increasing social welfare. economic union is an "advanced" common market in which member countries carry out harmonization of their economic policies. As a result, discrimination caused by state regulation of the economy disappears. The free circulation of goods is ensured by the absence of tariff customs duties, quantitative barriers and non-tariff restrictions; capital - liberal monetary policy; people - the opening of borders, the recognition of documents on education. As a result, there will be increased competition, free development of market forces. Full regional integration. Several autonomous national economies will gradually turn into one large economy, in which the interests of the whole take precedence over the interests of individual states. Creation of supranational institutions of regulation, making binding decisions will make it possible to pursue a common economic policy. 78. STRUCTURE OF WORLD TRADE Considering structure of world trade in the first half of the 2th century. (before World War II) and in subsequent years, we see significant changes. If in the first half of the century 3/1 of the world trade was accounted for by food, raw materials and fuel, then by the end of the century they account for 4/1 of the trade. The share of trade in manufacturing products increased from 3/3 to 4/1. And finally, more than 3/90 of all world trade in the mid-XNUMXs. is a trade in machinery and equipment. Commodity structure of world trade changes under the influence of scientific and technological revolution, the deepening of the international division of labor. Currently, manufacturing products are of the greatest importance in world trade: they account for 3/4 of the world trade turnover. Particularly rapidly growing is the share of such types of products as machinery, equipment, vehicles, chemical products, manufacturing products, especially science-intensive goods. The share of food, raw materials and fuel is approximately 1/4. One of the fastest growing areas of international trade is the trade in chemical products. It should be noted that there is an increasing trend consumption of raw materials and energy resources. However, the growth rate of trade in raw materials lags markedly behind the overall growth rate of world trade. This lag is due to the development of substitutes for raw materials, their more economical use, and the deepening of their processing. Growing fastest export of electrical and electronic equipment, which accounts for more than 25% of all exports of engineering products. The geographical structure of world trade is characterized by the predominance of countries with developed market economies of industrialized countries. So, in the mid-90s. they accounted for about 70% of world exports. Unlike most developing countries, "new industrial countries" in particular, the four "little dragons" of Asia (South Korea, Taiwan, Hong Kong, Singapore) are showing rapid growth in exports. Their share in world exports in the mid-90s. was 10,5%. China, which has been gaining economic momentum in the last decade, has reached 2,9% (it was less than 1%). The United States in world exports is 12,3%, Western Europe - 43%; Japan - 9,5%. Describing the main trends in the geographical orientation of international trade, it should be emphasized that the development and deepening of the international division of labor between industrialized countries leads to an increase in their mutual trade and a decrease in the share of developing countries. The main commodity flows flow within the framework of the "big triad": USA - Western Europe - Japan. A noticeable trend in modern international trade is an increase in the volume of trade between developing countries. The export expansion of the "new industrial countries" is especially noticeable. Since the exports of industrialized countries are dominated by sophisticated technology, developing countries are of relatively less interest to them as markets for such products. Sophisticated equipment is often not needed by developing countries, because it does not fit into the established production cycle. Sometimes they just can't afford it. 79. TYPES OF WORLD TRADE international trade is a form of communication between producers of different countries, arising on the basis of the international division of labor, and expresses their mutual economic dependence. The following definition is often given in the literature: "International trade is process of buying and selling between buyers, sellers and intermediaries in different countries". International trade includes export and import of goods, the ratio between which is called the trade balance. The UN statistical reference books provide data on the volume and dynamics of world trade as the sum of the value of exports of all countries of the world. International trade is the paid total trade turnover between all countries of the world. However, the concept of "international trade" is also used in a narrower sense, for example, the total trade turnover of industrialized countries, the total trade turnover of developing countries, the total trade turnover of the countries of a continent, region, for example, the countries of Eastern Europe, etc. Types of world trade: - wholesale trade; - trading on commodity exchanges; - trading on stock exchanges; - international fairs; - trading in the foreign exchange markets. Basic organizational form in the wholesale trade of countries with developed market economies - independent firms engaged in the actual trade. But with the penetration of industrial firms into the wholesale trade, they created their own trading apparatus. Such are the wholesale branches of industrial firms in the USA: wholesale offices engaged in information services for various customers, and wholesale depots. Large German firms have their own supply departments, special bureaus or sales departments, wholesale warehouses. Industrial companies create subsidiaries to sell their products to firms and may have their own wholesale network. Direct links between production and retail trade are used, bypassing specialized wholesale firms. A special place in the wholesale trade is occupied by commodity exchanges. They look like trading houses where they sell anything, both wholesale and retail. Basically, commodity exchanges have their own specialization: coal, oil, timber, grain, etc. Securities are traded on international money markets, that is, on the stock exchanges of such large financial centers as New York, London, Paris, Frankfurt am Main, Tokyo, Zurich. Securities are traded during business hours on the stock exchange, or the so-called "stock time". Only brokers (brokers), who fulfill the orders of their customers and for this they receive a certain percentage of the turnover. For trading securities - stocks and bonds - there are so-called "brokerage firms" or brokerage houses. Annual turnover of world trade is almost 20 billion dollars, and the daily turnover of currency exchanges is approximately 500 billion dollars. This means that 90% of all foreign exchange transactions are not directly related to trading operations, but are carried out by international banks. Under foreign exchange trading understand transactions of purchase and sale of one currency for another or for the national currency at a rate previously set by partners. 80. TRADE BALANCE Historically international trade acts as the original form of international economic relations, linking national economies in the world economy. Thanks to foreign trade, an international division of labor is formed, which deepens and improves with the development of foreign trade and other international economic transactions. Foreign trade indicators traditionally occupy an important place in the balance of payments. The ratio of the value of exports and imports of goods forms the balance of trade. Since a significant part of foreign trade is carried out on credit, there are differences between the indicators of trade, payments and receipts actually made during the corresponding period. The economic significance of an asset or trade deficit in relation to a particular country depends on its position in the world economy, the nature of its relations with partners and general economic policy. For countries lagging behind the leaders in terms of economic development, an active trade balance is necessary as a source of foreign exchange to pay for international obligations on other items of the balance of payments. For a number of industrialized countries, trade surpluses are being used to create a second economy abroad. A passive trade balance is considered undesirable and is usually seen as a sign of a country's weak external position. This is correct for developing countries experiencing a shortage of foreign exchange earnings. For the industrial development of countries, this may have a different meaning. Of course, if exports are reduced due to a drop in demand for the goods of this country in other countries, this is a bad sign. But if a negative balance occurs, say, in the case of an increase in imports of investment goods and growth as a result of this domestic production, then in this case the negative balance cannot serve as a basis for negative assessments of the state of the economy. In other words, asset or trade deficit can only be assessed on the basis of an analysis of the circumstances leading to them. Thus, Russia's trade surplus cannot serve as a basis for an optimistic assessment of the situation. Most of Russia's exports are Natural resources. Consequently, raw materials are exported from the country, not goods. This means that production in the country is at a low level and the country's economy is not in its best condition. If the trade balance worsens (the negative balance increases), then this is an indicator that the country spends more money abroad than it receives, i.e., in the foreign exchange market, the supply of the national currency increases and the demand for foreign currency grows, which creates conditions for the formation of trends towards depreciation of the national currency. On the contrary, with a positive trade balance, there is a tendency for the national currency to appreciate. However, it is obvious that fall in the exchange rate of the national currency (devaluation) stimulates exporters and makes imports less profitable. As a result, such a change in the exchange rate creates a tendency to increase exports and reduce imports, i.e., to reduce the negative and create a positive trade balance. 81. FORMS AND TRENDS OF INTERNATIONAL ECONOMIC RELATIONS International Economic Relations (IER) - a system of economic relations between the national economies of individual countries, the relevant business entities. International economic relations is a special field of activity based on international division of labor. International economic relations find practical expression in the exchange between countries representing their enterprises, firms and organizations with products (goods and services) of international trade, scientific, technical, industrial, investment, monetary and credit, information international relations, the movement of labor resources between them . International economic relations objectively follow from the process of division of labor, the international specialization of production and science, and the internationalization of economic life. Formation and development of international economic relations are determined by the strengthening of the interconnection of the interdependence of the economies of individual countries. The deepening and development of the international labor market, and hence international economic relations, depend on natural (natural, geographical, demographic, etc.) and acquired (production, technological) factors, as well as social, national, ethnic, political and moral factors. legal conditions. The above practical component directions and forms of international economic relations cover a number of areas of world economic activity: - international trade; - international specialization of production and scientific and technical work; - exchange of scientific and technical results; - information, monetary and financial and credit relations between countries; - the movement of capital and labor; - activities of international economic organizations, economic cooperation in solving global problems. international economic relations, which are the field and result of the application of labor, capital, natural and other resources, represent one of the areas of the market economy with its main features. In this area, market relations involve: - the multiplicity of their objects and subjects; - determining the impact of supply and demand; - their relationship with prices with the necessary flexibility and mobility of the latter; - competition. This is complemented by the freedom of enterprise. The main forms of international economic relations: - foreign and world trade; - credit relations; - currency and payment and settlement relations; - migration and export of capital; - international labor migration; - international integration processes; - Creation and development of transnational corporations and financial institutions; - interstate regulation of international economic relations (regulation of monetary, financial, trade relations); - activities of international credit and financial institutions (International Monetary Fund, International Bank for Reconstruction and Development) in the field of international economic relations; - scientific, technical and industrial cooperation. 82. FREE ECONOMIC ZONES, THEIR TYPES In recent decades, a new form of foreign economic relations has become widespread in the form of the creation on the territory of the country free economic zones. SEZ is a limited area, a part of the country's territory within which there is a preferential regime for managing and foreign economic activity, enterprises are given a wider freedom of economic activity. The governments of various countries, creating SEZs, pursue a variety of goals. These include: revitalization of the activities of enterprises located on their territory; industrial modernization; saturation of the domestic market with high-quality goods; development of foreign economic relations; expanding exports and imports; attraction of foreign investments; development of new technologies; development of economically backward areas; advanced training of the workforce, etc. Special, facilitated customs and trade regimes are established for the FEZ, wide freedom of movement of capital, goods and specialists is provided, and a preferential taxation regime for enterprises is applied. SEZs can be located both on a small area and cover the territory of entire regions. Depending on the profile of activity, the goals of creating zones and the nature of the provision of freedom, there are the following zones: - free customs territories (exempted from customs duties on import and export of goods); - export industrial zones (created for the development of an industry in them that produces products for export); - free trade zones (characterized by the removal of restrictions on trade); - joint venture zones (intended for doing business with the participation of entrepreneurs from different countries); - free "open" zones (characterized by a high degree of access to them for citizens of other countries to conduct economic activities); - technological zones (set as their goal the development of advanced technologies); - complex zones (combine the properties of the others). Small export production zones and customs zones, which have favorable economic and geographical conditions, are highly effective in developing the economy. In such zones, benefits are provided for the management of the economy to foreign and domestic entrepreneurs, the necessary production and social infrastructure is being created that meets international standards. Zones of this type are created, as a rule, in the immediate vicinity of major international seaports, airports, and railway junctions. Such zones do not require large financial and material resources. They contribute to increasing the efficiency of foreign economic relations. Large SEZs, due to the significance of their territories, require the concentration of a large amount of funds, needed to create the appropriate infrastructure there. Therefore, the real return on investment in such zones can take place over a long time. _ In the early 70s. SEZs already existed in 10 countries. In the early 90s. SEZs existed in approximately 70 countries, and their total number was approximately 600. The trade turnover of SEZs is very significant and covered about 8% of world trade. 83. THE ESSENCE OF CURRENCY RELATIONS Relationship between the economies of different countries carried out through trade in goods and services and financial transactions. Money acts as an intermediary. As a result, currency relations are formed that are associated with the functioning of money in the world economy. They reflect the exchange of the results of the activities of national economies and international institutions. Fundamentals of currency relations Commodity production, trade, provision of services, the movement of capital between countries act. Currency relations have been known since the times of Ancient Greece and Ancient Rome in the form of a bill of exchange and exchange business. In the Middle Ages, the development of currency relations was associated with "bill fairs" in the major trading cities of Western Europe. Bills of exchange were used for settlements with merchants from various countries. The state of currency relations is determined by the state of affairs in the economy, the ratio of competition and cooperation between countries, international relations. The objective basis of currency relations is social production. It generates an international exchange of results of activity and factors of production. Currency relations, being secondary in relation to the production process, have the opposite effect on it. They are regulated by the state represented by the Central Bank, the Ministry of Finance and other authorities. A specific form of organization and regulation of foreign exchange relations is currency system. In the process of development of society, national, regional and international monetary systems are formed. The monetary system can be considered from two points of view: economic and organizational and legal. From the economic point of view, it is a set of production relations that reflect the functioning of money in an open economy. Organizationally, it is represented state and international institutions, legal norms, etc. One of the main elements of the monetary system is the currency. Term "currency" can be used in two ways. First, how country's currency - one of the elements of its national monetary system. Second, how banknotes of foreign states and credit and means of payment expressed in them. In a stricter definition, currency is understood as a special way of using national money in international payment and settlement turnover. Almost all countries in the world use their national currency as legal tender. To pay for foreign goods and services, it is necessary to exchange the national currency for a foreign one. International trade and exchange of foreign currencies are carried out in foreign exchange markets. They represent the largest part of the world's financial market. The foreign exchange market, like other markets, is divided into spot and futures. For many calculations, only the exchange rate for cash transactions is used. It is used for trading transactions within the next XNUMX hours. In Russia, as a result of daily trading on the Moscow Interbank Currency Exchange, the official exchange rate of the ruble against major currencies is established. 84. SUBJECTS OF CURRENCY RELATIONS To the main subjects of the international currency market include the Central Bank, large commercial banks, non-bank dealers and brokers. Among them, the largest participants in transactions for the purchase and sale of currencies are transnational commercial banks. They are able to transfer billions of dollars from one country to another, conduct multi-currency settlements. As dealers, they "maintain the position" of several currencies, that is, they have deposits of national money in the correspondent banks. It is a gives banks the opportunity to make a profit, selling the currency at a price that is higher than the buyer's price. The gap in prices is determined by the degree of regulation and the level of competition in the foreign exchange market. For developed countries, it is usually 1-2%. Commercial banks can also act as brokers, fulfilling the orders of individual firms for the purchase and sale of foreign currency. Since the foreign exchange market is huge, non-bank dealer and brokerage firms also find a niche in it. The specificity of countries with a weak economy and an undeveloped democratic system is the presence of many unregistered intermediaries and participants in transactions, operating on the "black" foreign exchange market. The legal foreign exchange market in Russia began to form in early 1992, after the Decree of the President of the Russian Federation "On the liberalization of foreign economic activity." Settlements in the foreign exchange market are carried out in cash and non-cash. In the first case, currency, traveler's checks and multi-currency plastic cards are used. It should be noted that cash turnover is an insignificant part of foreign exchange relations and usually occurs in tourism. Traveler's checks are a type of foreign exchange letter of credit. Thus, the widely used American Express traveler's checks can be exchanged abroad at a commercial bank for cash with a certain discount or paid off at a large hotel, restaurant, department store, shopping center. Another important subject of currency relations is the state. During periods of strong economic shocks, the state intervenes in the sphere of international settlements, applying currency clearing. They represent agreements between the governments of two or more countries on the mandatory offsetting of claims and obligations between the participants. The balance of clearing settlements is covered by freely convertible currency or commodity deliveries. The foreign exchange market is divided into spot and futures. For many calculations, only the exchange rate for cash transactions is used. It is used for trading transactions within the next XNUMX hours. A specific form of organization and regulation of foreign exchange relations is currency system. In the process of development of society, national, regional and international monetary systems are formed. currency system can be viewed from two points of view: economic и organizational and legal. From the economic point of view, it is a set of production relations that reflect the functioning of money in an open economy. Organizationally it is represented by state and international institutions, legal norms, etc. 85. INTERNATIONAL CAPITAL MOVEMENT International capital movement - is the placement and functioning of capital abroad, primarily for the purpose of its self-growth. Movement of capital abroad (export of capital) is a process during which a part of the capital is withdrawn from the national circulation of one country and placed in various forms (commodity, money) into the production process and circulation of another, host country. The international movement of capital means migration of capital between countries, which brings income to their owners. Among reasons for the movement of capital abroad relative redundancy in one's own country, the donor country. This makes it possible to allocate capital abroad in search of comparatively greater profitability and receive income in the form of both dividend and interest. The objective basis of international capital migration is the uneven economic development of the countries of the world economy. Two groups of factors influence the development of the process of international capital migration. 1. Economic factors: - development of production and maintenance of economic growth rates; - profound structural shifts both in the world economy and in the economies of individual countries (especially with the impact of scientific and technological revolution and the development of the global service market); - deepening of international specialization and cooperation of production; - growth of transnationalization of the world economy; - growth of internationalization of production and integration processes; - active development of all forms of international economic relations. 2. Political factors: - liberalization of export (import) of capital; - the policy of industrialization in the countries of the "third world"; - carrying out economic reforms (privatization of state-owned enterprises, support for the private sector, small businesses); - employment support policy. Along with this, there is an economic expediency that directly stimulates the subjects of capital, export and import of capital, which consists in: - receiving additional profits; - establishing control over other subjects; - bypassing protectionist barriers put forward in the way of the movement of commodity flows; - bringing the production of capital closer to new sales markets (for example, about 200 joint ventures with Italian capital for the production of pasta should be created in the CIS); - gaining capital access to the latest technologies; - preservation of production sectors through the creation of foreign branches; - savings on tax payments, especially when creating and registering industry in offshore zones and free economic zones; - reducing the cost of environmental protection. The classification of forms of international capital movement reflects various aspects of this process and is carried out according to various indicators. According to the sources of origin, private and public investments are distinguished. By timing foreign investments are divided into short-term, medium-term and long-term. By the nature of use foreign investments are loan and entrepreneurial. 86. BALANCE OF PAYMENTS Payment balance is one of the main tools for macroeconomic analysis and forecasting. The balance of payments is the ratio of the actual payments made by a given country abroad to the receipts received by it from abroad over a certain period of time. Balance of payments data reflect how trade with other countries developed during the reporting period, which directly affects the level of production, employment and consumption, how much income was received from non-residents and how much was paid to them. These data allow us to trace the form in which foreign investment was attracted, whether the country's external debt was repaid on time or there were delays and its restructuring, as well as how the Central Bank eliminated payment imbalances by increasing or decreasing the size of its reserves in foreign currency. The division of the balance of payments into specific accounts, or components, should be based on a number of principles among which the following should be highlighted: - each article of the balance of payments must have its own characteristics, i.e., the factor or their combination, influencing the volume of one article, must differ from the factors affecting other articles; - the presence of a particular item in the balance of payments should be important for a group of countries, expressed both in the dynamics of this item and in its absolute value. In other words, if any indicator of the balance of payments system is subject to strong fluctuations over a certain period of time for a group of countries, or it occupies a large share in the balance of payments of a group of countries, then it should be singled out as a separate item; - the collection of information for itemized accounting should not present any particular difficulties for balance of payments compilers (however, this principle is secondary to the first two); - the structure of the balance of payments should be such that the indicators of the balance of payments are compatible with other statistical systems, such as the system of national accounts; at the same time, the number of items should not be too numerous, and the items themselves should be consolidated into higher-level components (so that countries that have not reached a high level of statistical information processing are able to present the balance of payments with less detail). Standard balance sheet components can be divided into two main groups. 1. "Balance of payments on current operations": a) payments and receipts on foreign trade operations, or trade balance; b) the balance of services (international transportation, freight, insurance, etc.) and non-commercial operations (calculations on technical assistance patents), income and payments on investments. 2. "Balance of movement of capital (short-term and long-term operations) and credits". The balance of capital and credit flows is followed by the item "Errors and omissions", which shows the unrecorded movement of short-term capital. The change in foreign exchange reserves reflects the international foreign exchange operations of central banks associated with the equalization of the balance of payments and maintaining the exchange rate of the national currency. 87. EXCHANGE RATE Exchange rate is an objective economic category. Its appearance is due to the following processes in the economy. Firstly, in the export-import of goods and services, the movement of capital and the repatriation of income, a mutual exchange of currencies is necessary, since the currencies of other countries cannot circulate as legal means of purchase and payment on the territory of most states. Secondly, it is used when comparing cost indicators in different countries, expressed in national currencies. Thirdly, it is used for revaluation of foreign currency accounts of economic entities. It is generally accepted that The exchange rate is the price of the national currency expressed in foreign currency. It is presented in different ways: as the number of rubles required to purchase a unit of foreign currency (exchange rate), and as the number of units of foreign currency required to purchase one ruble (motto rate). Such a presentation is called bilateral nominal exchange rate. One currency can be converted into another directly or through a third currency. In the latter case the cross-rate of two currencies is established. Since the value of the ruble changes against all currencies, a multilateral, or effective, exchange rate index is calculated. It is the price of a representative basket of foreign currencies, the share of each of which corresponds to the value of trade with Russia. The effective exchange rate reflects the change in the average nominal exchange rate. To assess the change in the ratio of prices for domestic and foreign goods, the real exchange rate indicator is used. It shows the competitiveness of national goods in world trade. Real exchange rate shows the relative price level. The growth of the real exchange rate means that the prices for foreign goods in rubles exceed the prices for similar goods of domestic production. There is a depreciation of the real exchange rate. Ceteris paribus, this will lead to an increase in the competitiveness of Russian products, since goods produced in Russia become cheaper than foreign ones. A decrease in the real exchange rate means an increase in the cost of domestic goods and leads to a loss of their competitiveness. Changes in the economy, reflected in the balance of payments, ultimately affect the exchange rate. The foreign exchange market is also not passive, but actively influences the processes taking place in the economy. State policy in the field of foreign exchange market regulation is characterized by varying degrees of participation. In this regard, there are two opposite systems for organizing the exchange rate: a system of rigidly fixed exchange rates and a free float regime. Under fixed exchange rates, changes in supply and demand in the foreign exchange market do not lead to fluctuations in the exchange rate. This is achieved through strong government intervention in the functioning of the foreign exchange market. With a system of freely floating (flexible) exchange rates, the state, central banks do not interfere at all in the functioning of the foreign exchange market. The exchange rate is determined by supply and demand. 88. EXCHANGE RATE MAINTENANCE METHODS The main method is foreign exchange intervention. Currency intervention is the purchase or sale of foreign currency by the Central Bank. Its volume is determined by the size of the balance of payments and the accumulated gold and foreign exchange reserves. With a long-term deficit in the balance of payments caused by the country's loss of competitiveness in the world market, reserve assets are reduced to a critical point. It becomes impossible to adjust the exchange rate with the help of foreign exchange interventions. In this case, the Central Bank decides to devalue its currency. Its essence lies in the official depreciation of the national currency in relation to foreign currencies or international means of payment. The objective basis of the devaluation is the overvaluation of the official exchange rate compared to the real purchasing power of money. If the country's balance of payments for a long time is reduced to a positive balance, then the Central Bank may decide on a revaluation - an increase in the exchange rate of the national currency against foreign ones. A certain set of goals and methods of regulating the exchange rate forms the monetary policy. Monetary policy includes currency regulation and control, the nature of participation in the international monetary system. Distinguish structural and current monetary policy. The first is aimed at achieving long-term structural changes in the existing monetary system. The second is used for daily operational regulation of the exchange rate. Operational monetary policy carried out in two forms: discount and motto. The instrument of the discount (accounting) current monetary policy is change in the discount rate of the Central Bank. An increase in the discount rate should contribute (ceteris paribus) to the inflow of capital into the country, to reduce the deficit in the balance of payments. The motto policy includes the following instruments: foreign exchange interventions, diversification of foreign exchange reserves, regulation of the exchange rate regime and the degree of convertibility, foreign exchange restrictions. Change in foreign exchange reserves leads to a change in the volume of purchase and sale of foreign currency. Through this, the central bank influences the exchange rate in a given direction. Regulation of the exchange rate regime can be carried out in the form of organizing a dual currency market. Essence it consists in establishing two exchange rates - official and commercial (market). Currency control (rationing). It regulates international payments and the movement of capital, the circulation of foreign currency in the country, and futures transactions with currency. In order to increase the supply of foreign currency, the state may introduce a mandatory 100% sale of all proceeds received by exporters. To reduce demand, you can introduce administrative restrictions on consumers of the currency. Rigid use of currency restrictions can help maintain the official exchange rate. However, such a policy is essentially non-market and leads to many negative consequences. 89. CURRENCY CONVERTIBILITY The convertibility of a currency, or its convertibility, is an important parameter for the integration of an economy into the world economy. Under convertibility understand the guaranteed possibility of exchanging the national currency for foreign ones at the actual exchange rate on the market. The defining principle in assessing the nature of the convertibility of currencies is the degree of currency restrictions or their complete absence. According to the definition of the IMF, currency restrictions are any actions of official authorities that lead directly to the narrowing of opportunities, increase costs or the appearance of unjustified delays in the implementation of foreign exchange and payments for international transactions. The most common forms of currency restrictions include the following. 1. Multiple exchange rates when the government sets several different exchange rates of the national currency depending on the types of foreign economic transactions. For example, trade in goods is carried out at one rate, most often fixed, and the export of capital - at another, market rate. The purpose such a policy is to prevent the growth of domestic prices for imported important consumer goods, to isolate its economy from destabilizing external factors, and to maintain foreign exchange reserves. 2. Use of clearing settlements - bilateral payment agreements. The restrictive role of this factor lies in the fact that payments received from a foreign partner cannot be used to purchase goods in another country. 3. Rationing of foreign currency. 4. Licensing and restriction of export and import. For example, some countries prohibit the import of expensive cars. 5. Special rules and regulations in the field of movement of capital and credit - regulation of foreign investments, export of profits by foreign capital investors, etc. Domestic residents are legally prohibited from acquiring foreign financial assets, real estate, and opening accounts in foreign banks. Thus, in Russia, the export of capital by residents requires the consent of the Central Bank. For IMF member countries, the Fund's Charter prohibits imposing restrictions on the current account without the consent of the fund. In practice, however, many countries apply limits on current account convertibility with the consent or tacit disapproval of the fund. According to the Charter, countries do not need to comply with capital account convertibility. They can impose restrictions on their own. In a market economy, currency convertibility is needed to increase the efficiency and flexibility of the national economy, enhance its openness, and interconnection with the world market. At the same time, economic agents get free access to foreign currency. Facilitates access to foreign financial assistance and loans. In turn, foreign firms, having the opportunity to exchange their currency for rubles, can buy goods and services, financial assets on our market. The presence of a number of restrictions on the movement of foreign exchange funds means that the currency is not convertible. There are freely (fully) convertible and partially convertible currencies. 90. INTERNATIONAL MONETARY SYSTEM International currency system is a form of organization of international monetary relations associated with the development of the world economy. It is understood as a set of monetary relations mediating a system of institutions, rules and methods of international settlements that has spontaneously developed and / or is enshrined in international agreements. The world monetary system is in constant development. The discrepancy between the elements of the world monetary system and the objective conditions of the world economy leads to a crisis of the old and the creation of a new order that ensures relative monetary stabilization. International currency system closely related to national, but not identical to them. It includes the following elements: - determination of the main international payment and settlement means; - regimes of currency parities and exchange rates; - conditions of currency convertibility; - interstate regulation of currency relations; - international financial and credit institutions that regulate this area. In the process of historical development, the world monetary system takes on specific historical forms. The first historical form of the world monetary system was the gold standard system. The gold standard system is based on the following conditions: - in circulation are gold coins, which are the main form of money, all other forms were exchanged for gold at face value. The country establishes a certain gold content of its monetary unit; - the money supply in the country is directly related to the volume of the official gold reserve, which is the main reserve of world money, international means of payment; - free export and import of gold. Benefits of the gold standard were the stability of exchange rates, which facilitates trade, reduces risk. The next system to appear after World War II is dollar standard system (Bretton Woods system). The use of the US dollar as international currency reserves reflected the fact that the United States had the strongest economy and the largest gold reserves after the war. The dollar's role as a reserve currency brought huge economic benefits to the US. They could issue dollars to pay off their balance of payments deficit. After the crisis of the dollar standard system, the Bretton Woods monetary system ceased to exist. Currently operating Jamaican currency system. For currencies, their gold content or firm rates against other currencies are no longer officially fixed. The country can choose any mode of functioning of the exchange rate. Exchange rates have the ability to "float", change adequately to the transformation of international economic relations. Exchange rate fluctuations are influenced by supply and demand and are allowed to avoid sustained positive or negative balance of payments in the long run. Author: Prikhodko A.V.
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