A Laffer curve shows the relationship between tax rates and the tax revenue that the state collects. Beyond a certain tax rate level the economy grows more slowly as taxpayers are discouraged to spend, so the increased tax rate generates a decreased tax revenue.

Economists use these indicators for forecasting. Leading indicators show where the economy is going in the future; lagging indicators show what has been happening in the economy; and coincident indicators move at the same time as the business cycle.

Business cycle refers to the changes in the economy that produces a cyclical pattern that repeats itself every three to five years. It is also known as the economic cycle.

Depreciation is the decrease in value of an asset or currency.

Exogenous causes are factors that influence the business cycle from outside of the system, e.g. climate (drought and other natural disasters) and the political situation of a country. Endogenous causes are factors that influence the business cycle from inside the system, e.g. total expenditure. investment and government fiscal and monetary policy.

Macroeconomics is the study of the entire functioning of the economy.

GDP at factor cost = C + I + G + X - Z - taxes on goods and production + subsidies on goods and production (where C stands for expenditure by households; I for investment; G for government expenditure; X for exports; and Z for imports).

GDP stands for Gross Domestic Product. The GDP is the value of all the goods produced and services offered within the boundaries of a country.

In a monopoly, a price-maker is one or a few sellers that control the supply and therefore have the power to set the prices.

The multiplier is the ratio between the eventual change in income and the initial investment.

Merit goods refer to goods and services that the state provides to people even if they cannot pay for them, in order to improve social welfare.

MTEF stands for Medium Term Expenditure Framework. It refers to the way in which the government budget is set up over a three-year period.

State property is the income from mining and state diggings and the income from forests and rental of government properties.

Subsidies are amounts that the government pays to producers so that they can sell their goods and services at lower prices to consumers.

The fiscal policy is a policy of the state that concentrates on the level and composition of government spending, taxation and borrowing. Fiscal policy is also called the state financial policy.

The trade balance is a record of the values of merchandise (visible goods) that are exported and imported. The trade balance is negative when the value of imports is greater than exports and positive when the value of exports is greater than imports.

A factor cost is a cost of production excluding taxes on production and including subsidies. (GDP at basic prices - taxes on production + subsidies on production.)