Category: Economics

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➤ How do you calculate excise tax when it is ad valorem versus specific?
For a specific excise, multiply the fixed tax per unit by the number of units sold. For an ad valorem excise, multiply the statutory percentage by the good’s sale price. If both apply, add the specific amount to the percentage-based tax on the price. Show calculations on invoices for transparency.

➤ How can a country finance a balance of payments deficit?
Governments fund deficits by using foreign exchange reserves, borrowing from external lenders, arranging IMF support, or encouraging direct investment and portfolio inflows. They can also implement capital controls or sell state assets. Short-term fixes differ from long-term adjustments to restore competitiveness and reduce reliance on external financing.

Some economists argue that an inflation rate, if positive, is optimal.

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➤ Why would a sportswriter conclude ticket demand is inelastic?
Visible signs like consistent sellouts, long waitlists, high resale values, and scarce alternatives make inelasticity a reasonable inference. Emotional attachment, stadium capacity limits, and unique live-game experience reduce price sensitivity, so attendance often changes little when management adjusts ticket prices.