Economics Questions and Answers

Most developing countries are not politically stable e.g frequent changes in government, commnual crises, etc. These generally lead to low economic growth and development. Theferore, political instability, through its adverse influence on investment, accounts for substantial reduction in the economic growth.

Economic development planning is the process government formulate economic policies for the allocation of resources to all sectors of the economy over a period of time. This brings about sustained growth in the economy.

The incidence of tax when demand is perfectly inelastic is borne by the consumer.

Fiscal policy is the use of government income and expenditure instrument to regulate or control the economy. It is used to control inflation, deflation, balance of payments deficits, economic recession, unemployment, price level, GNP etc. The two most important fiscal policy tools of government are: Government expenditure and Taxation. 

Commercial bank is the bank organized to perform public utility banking services such as accepting deposits, lending of money etc. On the other hand, development bank refers to a multi-purpose financial undertaking set up to provide financial aid to the industrial and agricultural sector, to encourage development.

The difference is that raise funds from accepting deposit from the public while development banks borrow, grants and sells securities.