Instrument of Government

Examples of Instrument of Government in the following topics:

• Fiscal Policy and Policy Making

  • Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
  • The two main instruments of fiscal policy are government taxation and expenditure.
  • Changes in the level and composition of taxation and government spending can impact the following variables in the economy: (1) aggregate demand and the level of economic activity; (2) the pattern of resource allocation; and (3) the distribution of income.
  • Even with no changes in spending or tax laws at all, cyclic fluctuations of the economy cause cyclic fluctuations of tax revenues and of some types of government spending, which alters the deficit situation; these are not considered to be policy changes.
  • Therefore, for purposes of the above definitions, "government spending" and "tax revenue" are normally replaced by "cyclically adjusted government spending" and "cyclically adjusted tax revenue".

• Financing the US Government

  • Taxation is the central part of modern public finance.
  • The importance of taxation arises from the fact that it is by far the most significant source of government revenue and is therefore the primary means of financing government expenditures .
  • Due to the pervasive nature of taxation, taxes can be used as an instrument of attaining certain social objectives.
  • It is important to note that when the government spends more than the tax revenue it collects, the government is operating at a deficit and will have to borrow funds to finance operations until taxes can be increased to return the government spending to a balanced budget.
  • The US government imposes a number of different types of taxes in order to finance its operations.

• Types of Cash

  • Types of cash include currency, funds in bank accounts, and non-risky financial instruments that are readily convertible to cash.
  • Cash and cash equivalents are not just the amount of currency that a business has in its cash registers and bank accounts; they also include several different types of financial instruments.
  • Cash equivalents include all undeposited negotiable instruments (such as checks), bank drafts, money orders and certain certificates of deposit.
  • Cash equivalents can also include government and corporate bonds, marketable securities and commercial paper.
  • However, these types of instruments are only included in cash if they mature within three months from when the the financial statements are prepared and there is a minimal risk of these investments losing their value.

• Financial Intermediation

  • Furthermore, we examine the impact of financial innovation and government regulation of the financial markets.
  • Finally, we define the common financial instruments at the end of the chapter that we will use for the rest of the book.
  • Second financial instrument is a bond.
  • Furthermore, secondary markets are important because these markets increase the liquidity of financial instruments.
  • Buyer and seller of a financial instrument can negotiate a price and quantity today, but they exchange money for the financial instrument on a future specific date.

• The Nature of Bonds

  • A bond is an instrument of indebtedness of the bond issuer to the holders.
  • A bond is an instrument of indebtedness of the bond issuer to the holders, as such it is often referred to as a debt instrument.
  • Bond maturities range from a 90-day Treasury bill to a 30-year government bond.
  • Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.
  • Certificates of deposits (CDs), or short term commercial papers, are considered to be money market instruments and not bonds: the main difference is in the instruments length of term.

• Chapter Questions

  • Why would people deposit their savings into financial intermediaries, instead of directly investing in the financial markets?
  • Explain the role of the Federal Deposits Insurance Corporation (FDIC).
  • Identify methods a bank holding company uses to circumvent government regulations.

• Standing Waves in Wind Instruments

  • This type of instrument is called an aerophone, and the most well-known of this type of instrument are often called wind instruments because, although the instrument itself does vibrate a little, most of the sound is produced by standing waves in the column of air inside the instrument.
  • But, when you put the mouthpiece on an instrument shaped like a tube, only some of the sounds the mouthpiece makes are the right length for the tube.
  • The harmonics of wind instruments are also a little more complicated, since there are two basic shapes (cylindrical and conical) that are useful for wind instruments, and they have different properties.
  • The standing-wave tube of a wind instrument also may be open at both ends, or it may be closed at one end (for a mouthpiece, for example), and this also affects the instrument.
  • (Actually, for reasons explained in Standing Waves in Wind Instruments, some harmonics are "missing" in some wind instruments, but this mainly affects the timbre and some aspects of playing the instrument.

• Expectancy Theory

  • In 1964, Vroom defined motivation as a process controlled by the individual that governed choices among alternative forms of voluntary activities.
  • Vroom introduces three variables within his expectancy theory: valence (V), expectancy (E), and instrumentality (I).
  • These three components of expectancy theory (expectancy, instrumentality, and valence) fit together in this fashion:
  • Instrumentality is low when the outcome is the same for all possible levels of performance.
  • Analyze Vroom's expectancy theory to assess the accuracy and effectiveness of motivating based upon expectancy, instrumentality, and valence

• Instrument Ranges

  • The note name is the name of the fundamental harmonic of the instrument.
  • The ranges of some instruments are definite and absolute.
  • But the ranges of many instruments are, like vocal ranges, not so definite.
  • Other instruments may be a mix of absolute and indefinite ranges.
  • Some sources even list the power range of an instrument or voice.

• Standing Waves in Other Objects

  • So far we have looked at two of the four main groups of musical instruments: chordophones and aerophones.
  • Idiophones are instruments in which the body of the instrument itself, or a part of it, produces the original vibration.
  • Some of these instruments (cymbals, for example) produce simple noise-like sounds when struck.
  • But in some, the shape of the instrument - usually a tube, block, circle, or bell shape - allows the instrument to ring with a standing-wave vibration when you strike it.
  • Can you think of some other percussion instruments that get particular pitches?