Notes, summaries, assignments, exams, and exercises for Economics for University

1. Canon of Equality

The word equality here does not mean that everyone should pay the exact, equal amount of tax. What equality really means here is that rich people should pay more taxes and poor people pay less. This is because the amount of tax should be in proportion to the abilities of the taxpayer. It is one of the fundamental concepts to bring social equality to the country.

2. Canon of Certainty

Taxpayers should be well-aware of the purpose, amount, and manner of the tax payment. Everything should be made clear, simple, and absolutely certain for the benefit of the taxpayer. The canon of certainty is considered a very important guidance rule when it comes to formulating tax laws and procedures in a country.

3. Canon of Convenience

The canon

The Origins of Subprime Mortgages

Subprime loans emerged as a banking product that began to see significant growth. Mortgages of this type arose around 1996-1997, largely as a result of the Community Reinvestment Act, which required banks to lend to low-income borrowers who were potentially insolvent.

2001-2006: The Liquidity Degradation Phase

During this period, credit began to expand due to central bank stimuli. Banks started to securitize their loans, while investment banks relied on short-term debts that were renewed daily. This environment lowered interest rates dramatically, reduced the Weighted Average Cost of Capital (WACC), and made low-ROA projects appear profitable. Consequently, families began to demand housing, driving up prices and...