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Macro1.2 - Essay Example

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Spillover benefits refer to both costs and/or benefits that individuals or groups of people reap through the production or consumption of goods and serves, although they are these person(s) do not take part in decisions that aid the process of production or consumption. These…
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Macro1.2
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Macro1.2

Download file to see previous pages... That is, if it is taking place on the production side or the consumption side. Where there spillover benefits occur as a result of production, there is either overproduction or underproduction. In case of underproduction, there is need to boost production and this can be achieved through provision of subsidies in order to encourage firms to produce more. In case of overproduction, the firms’ potential is high and resources available for production meet an output that exceeds the actual demand. To correct this, the firms would have to be taxed more in order to make the production process expensive, bringing down the level of produced output in the firms.
Access to public television is not prohibited to any individual. All those who consume the benefits that come with the good have not necessarily paid for it. On the same note, if there are costs needed for upgrading or improved the premises form where the television is watched from, not every person will take part in that initiative. In this case, where there are costs or benefits attached to that good, there are consumers who do not take part in any activity that pertains to the provision of that good, whether they enjoy it or not.
Government expenditure for goods and services is defined by the level of government spending on public goods and services. The government provides to the society goods and services that cannot be provided through the market mechanism sue to problems of externalities. Goods and services bought by the government for to benefit the society as well as government investments in the various sectors of the economy constitute government expenditure. Government expenditure is financed by taxes, returns on government investments, revenues from state owned enterprises, donations and borrowing from individuals, groups of people, financial institutions, Central Bank and from other countries (Gupta, Mandal & Gupta, 2008). Examples of government ...Download file to see next pagesRead More
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