Social welfare payments and student grants are examples of transfer payments - Leaving Cert Economics - Question 5 - 2012

Transfer payments are not included in National Income as they do not represent the production of goods or services. If included, they would lead to double counting since this money is often derived from taxes already included in the calculation of national income.

1. Changes in the level of economic growth: These statistics inform us about yearly changes in economic performance.
2. International comparisons: They allow comparisons to evaluate economic performance against other countries, helping to understand relative living standards and economic health.

The Multiplier measures the extent to which an increase in national income results from an initial injection into the economy. An open economy is one that engages in international trade, allowing for imports and exports.

Given MPM = 0.2 and MPS = 0.3, we can calculate the Multiplier as follows:

$ext{Multiplier} = \frac{1}{MPS + MPM} = \frac{1}{0.3 + 0.2} = \frac{1}{0.5} = 2$

The black economy refers to economic activities that are not recorded in official accounts, often because they are illegal or unregulated.

1. A teacher giving private tutoring without declaring income for tax purposes.
2. A plumber working under the table to avoid tax liabilities.

1. Reduce direct taxation: By making tax rates more favorable, individuals may be encouraged to declare their income honestly.
2. Enhance enforcement of tax regulations: Strengthening the monitoring and penalties for tax evasion will deter individuals from engaging in unreported activities.