KNEC| KASNEB| KISM| Study notes and Revision materials for schools in Kenya. KNEC certificate courses, Diplomas, Higher Diplomas, KISM courses cpsp-k and aps-k, KASNEB cpa, atd, cs, cifa, ccp, dcm, cict and cict, Ksce and Kcpe
A Monopoly is a market structure in which there is either only one producer or seller in the market. The one firm produces the goods for a particular sector/industry. Entry is typically restricted due to high costs or other barriers, which may be economic, social or political. Since the firm is the sole supplier there
Economic Growth can be defined as the steady increase in Gross Domestic Product (GDP) of a country as a result of an increase in the economy’s productive capacity and activity. It is concerned with improving living standards and this is a result of growth in physical output of physical goods and services. In general there
An “economic system” is the set of institutions within which a community decides what, how and for whom to produce goods and services. At one extreme there is the centrally planned or command economy and at the other the free market economy. In between is the mixed economy that is some combination of the two
Central Banks generally have a degree of autonomy, but ultimately they are answerable to and act on behalf of the government. Typically, the following functions are performed by the Central Bank. • Sole Issues of legal tender • Banker to the clearing banks – the clearing banks keep their operation l deposits at the Bank.
The Accelerator (or Acceleration Principle) is based on the observation that an increase in the demand for final goods results in a more than proportionate increase in the demand for capital goods. In the following example it is necessary for the firm to replace one machine a year as machines sequentially come to the end
The incidence of a tax refers to the manner in which the burden of the tax is borne. A distinction can be drawn between the impact or formal incidence of the tax which means the person or commodity on which the tax was imposed, and the effective incidence of the tax, which means who actually
The roles which money plays in an economy are: • A medium of exchange. This is the most important function of money. Suppliers of factors of production receive money and then use this money to purchase the goods and services which they require. It obviates the need for a barter system. • A store of
Capital as a factor of production is defined as man-made wealth which is used in the production of goods and services. Money, in itself, is not capital. It merely permits the purchase of capital goods (money may also be used for the purchase of consumption goods). An increase of money in an economy will not
The paradox of thrift relates to the possibility of households intending to save more (or less) but actually ending up saving less (or more). Suppose people decide to become more thrifty; that is, they decide to save more at each level of income. One might expect that this would increase the total amount of savings,
The Law of Diminishing Marginal Returns states that as increasing quantities of a variable factor of production are combined with a fixed factor of production, a stage will eventually be reached when marginal returns will begin to decline. The short run is defined as a period during which at least one factor of production is
