Explain the difference between progressive tax rate and regressive tax rate

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. An example is the federal income tax, where there are six marginal tax brackets ranging from 10% (lowest-income taxpayers) to 39.6% (highest-income taxpayers). Most state income taxes have a similar progressive structure.

A regressive tax is the exact opposite. Higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on ability to pay. An example is state sales tax, where everyone pays the same tax rate regardless of their income.

What does show the difference between export and import?

International trade is a steady sea of import and export which involves countries all over the world, and people sometimes confuse the difference between exports and imports. Put simply, an import is something which is brought into a country over an international boundary, while an export is something which is shipped out of a country over an international boundary. If an American grocery store chain buys bananas from Mexico, it is said to be importing the bananas, while the Mexican produce company which grows the bananas is exporting them.

Most countries attempt to achieve a trade balance, in which the flow of imports and exports is relatively equal. If a country exports too much, it may not be able to support its domestic needs, while a country which imports excessive amounts of products may not have enough money to support the high volume of imports. In a country with a trade balance, import and export rates are about equal, with nations exporting excess items for sale, and importing the goods that it needs.

The confusion between the two terms can be alleviated by looking at the prefixes and comparing them to other known words. The prefix “ex-” means “out” or “away,” as in “exit.” Exporting can be thought of as shipping goods away from a domestic producer to a foreign buyer. “Im-” comes from the Latin “in-” which means “into,” so an import is literally taken “into” a domestic “port.” The important thing to remember about the difference between import and export is that it has to do with the direction in which the goods are traveling.

Many companies perform both import and export services. They handle goods for domestic producers who want to sell abroad without having to deal with the details of exporting, which can include passing inspections, paying fees and tariffs, and organizing transport, as well as finding buyers. Import-export companies also liaise with foreign companies which would like to export their products, providing support to ensure that shipments go smoothly.

In some regions, there is controversy over importing and exporting. Some domestic producers argue that imports of inexpensive products manufactured overseas can cut into their bottom line, with foreign producers providing goods at lower cost because they have cheaper raw materials, less stringent labor laws, or favorable trade agreements. Domestic consumers sometimes actively seek out goods which are produced domestically to support their national economy, and they may protest the widespread export of domestic goods, arguing that it makes it challenging to find domestically-produced products in various areas.

What is nominal exchange rate and revaluation?

The nominal exchange rate E is defined as the number of units of the domestic currency that can purchase a unit of a given foreign currency. A decrease in this variable is termed nominal appreciation of the currency. (Under the fixed exchange rate regime, a downward adjustment of the rate E is termed revaluation.) An increase in this variable is termed nominal depreciation of the currency. (Under the fixed exchange rate regime, an upward adjustment of the rate E is called devaluation.)

Revaluation is a change in a price of a good or product, or especially of a currency, in which case it is specifically an official rise of the value of the currency in relation to a foreign currency in a fixed exchange rate system. Under floating exchange rates, by contrast, a rise in a currency's value is an appreciation. Altering the face value of a currency without changing its purchasing power is a redenomination, not a revaluation (this is typically accomplished by issuing a new currency with a different, usually lower, face value and a different, usually higher, exchange rate while leaving the old currency unchanged; then the new replaces the old).

In a fixed exchange rate system, the central bank maintains an officially announced exchange rate by standing ready to buy or sell foreign currency at that rate. In general terms, revaluation of a currency is a calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline could in principle be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (specifically, its central bank) can alter the official value of the currency. In contrast, a devaluation is an official reduction in the value of the currency.

For example, suppose a government has set 10 units of its currency equal to one US dollar. To revalue, the government might change the rate to 9.9 units per dollar. This would result in that currency being slightly more expensive to people buying that currency with U.S. dollars than previously and the US dollar costing slightly less to those buying it with foreign currency.