South african tourist destinations

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Rates. A direct tax paid by firms or individuals to local government authorities in the U.K. proportional to the rateable value of their premises. The rateable value is determined in relation to the annual rent the premises would attract if let on the open market. In other countries local government is also financed by taxation on incomes or profits (cj> ALLEN REPORT; LAYFIELD COMMITTEE).

Rational expectations. A decision-taker is said to form rational expectations when he uses available knowledge and information so as not to make systematic errors. As an example of expectations which are not rational, take the case of the market involved in the cobweb theorem. Here suppliers expect that this period’s price will continue to prevail in the next period, despite the fact that in every period they are proved wrong. An economist who knew the cobweb theorem could make an impressive profit as a speculator in such a market. Such false expectations cannot persist if there is a profit to be made out of forming correct expectations. The usual assumption of rationality in economics therefore suggests that expectations which are systematically wrong will be revised, so that in the end expectations will be formed which are on average correct. That is, errors will be randomly distributed about the correct value.

Real capital capital.

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