40. What does the term currency refer to?

The different forms of money are in use in different countries today. The most familiar are coin and currency. The term coin refers to metallic forms of money. The term currency refers to paper money issued by government.

Paper money is one of the most liquidity forms of money. At the same time it has no value itself. A bank-note costs only the production costs of it. But people accept this bank-note as medium of exchange – something generally accepted as payment for goods and services. The main disadvantage of currency as paper money is impossibility to act out of the society.

Coins and paper money are called cash. A share of cash in gross money turnover isn’t more than 10-30 per cent in highly-developed countries because dominant position is occupied by electronic money. Electronic money is the higher form of progressive development of finance.

41. What are the most important characteristics of modern money?

Modern money has the same characteristics that primitive money had. The first, it is very durable. Metallic coins last a long time under normal use and generally do not go out of circulation unless they are lost. Paper currency also is reasonably durable. The second, modern money also rates high in divisibility. The penny which is the smallest denomination of coin, is more than small enough, for almost any purchase. In addition, checks almost always can be written for the exact amount. The third, it is not as stable in value. The fact, that the money supply often grew at a rate 10 to 12 per cent a year was considered as major cause of inflation.

At present there is a tendency of gradual forcing out cash by electronic money.

42. What is a progressive tax?

There are three types of taxes: proportional, progressive and regressive.

A progressive tax is one that imposes a higher percentage rate of taxation of people with high incomes than on those with low incomes.

For example, individuals with yearly income from $1,000 to $9,999 ought to pay 40 per cent of it; the taxpayer with income from $10,000 to $49,999 – 50 per cent; and others - income is more than $50,000 – should pay 60 per cent. Thus progressive tax system discourages a lot of producers to increase their level of output and to get the bigger earnings. Progressive taxes are used as often as in highly-developed countries with relatively high rate of development but it isn’t used in such economies as Ukrainian’s: it can cause a high level of shadow sector.

43. What is the main source of government revenue?

A major source of revenue is the property tax — a tax on real property and tangible or intangible personal property. Real property includes land, buildings, fixtures and anything else permanently attached to them. Tangible property is all tangible items of wealth not permanently attached to land or buildings, such as furniture, automobiles, tools, equipment, the stock of goods in retail stores and clothing. Intangible personal property includes stocks, bonds, mortgages, copyright, trademarks, patents and bank accounts.

The main problem with personal property as a source of revenue is that many things that should be taxed never are. Another problem is that some property is very hard to evaluate fairly.

A sales tax is a general tax levied on consumer purchases of nearly all products. It is added to the final price paid by the consumer. The sales tax is a very effective means of getting revenue for states and cities.