User:DeficitSpender/Sandbox5

The Economy in TNO is a mostly unique and very in depth in-game mechanic which allows players to manage their nation's inflation, trade, expenditures, tax rates, and debt and much more. TNO's economy mechanic has existed within its current state since the Toolbox Theory update. All of the economy in TNO is calculated in measures of 1960 USD, even if, of course, the world doesn't only use this currency.

GDP

The GDP mechanic includes two functions, the main GDP mechanic, and the GDP growth.

Three sub-notions are included in this. The first one, Surplus, happens when the nation's revenue is higher than its expenditures. Its effects are that it makes Inflation go up and GDP growth go down. The second one, Deficit, happens when the nation spends more than what it has. This greatly affects a nation's economy by weakening Inflation and investing in GDP growth, however, it also fills it's debt and, in the long term, could put it in Financial Crisis. Finally, the third one, Reserves, which fills up after some focuses or when the national budget is in Surplus.

The GDP Growth mechanic is determined by subtracting Inflation to the Nominal GDP Growth. It greatly affects a nation's economy by expanding your states GDP.

Inflation is one of the most annoying economy feature in TNO, since there is not many ways to relieve the effect of inflation without damaging your economy in the process. Another option in the inflation subsection is the "Money Creation" slide bar, which, if you activate it, will give you money but at the expense of making Inflation go up and cause GDP growth to worsen.

Debt is another mechanic of the Economy in TNO. It has a ceiling determined by one's credit rating. It reduces when the budget is in surplus but worsens if the budget is in deficit.

Budget

United States Budget at the start of 1962

Spending

Spending is divised into 4 sub-spendings:

• Military spending, the cost to maintain soldiers, ships, an airforce, nukes and more
• Civilian spending, all the costs that go into healthcare, welfare, education. and social systems
• Debt servicing, the money that goes into repaying the interests on debt owed
• Other costs, all things that are miscellaneous

Revenues

Revenue is also divised into 4 sub-revenues:

• Income tax, mostly known as tax on the working populace.
• Business tax, taxes on the industries, small medium enterprises and big businesses
• Excise revenue, the money that comes from exports and tariffs.
• Other revenue, all money that comes from other sources.

Economic Warnings

The Different Economic Warnings

There exists a total of five economic warnings to warn the player about their bad handling of a country's economy that could potentially lead to a fiscal crisis, these are:

• Negative real growth, where the national GDP growth is in the negative.
• Inflation critical, when the national inflation goes above the line of 30% inflation.
• Extremely high deficit, after the nation attains a deficit of more than 10% of your GDP each year.
• Critical debt, when the national debt becomes too high and too difficult to handle.
• Bloated reserves, when the national reserves cross the line of around 10% of the nation's GDP.
• Fiscal crisis, when almost all of these warnings are combined, and gives the player a debuff named "Fiscal Crisis".

Credit Rating

Credit Rating shows the reliability of a nation to repay its debtors (coporate, national or private investors). A country's credit rating dictates how much debt they can accumulate and how much interest their debt will accrue.

Rating	American	German	Japanese	Effects
Prime	AAA	Keine Besorgnis (10)	Seijyo-saki S-1	Debt Ceiling: Unlimited Interest Rates: +1.50% Effect of debt on Interest Rates: -90.00% Stability: 5.00% Effect of debt on GDP Growth: +25.00%
	Countries with a Prime credit rating enjoy significant economic power and influence, and can issue effectively unlimited debt (although they are not immune to the side effects of very high debt such as lower Nominal GDP growth and high inflation!)
Exceptional	AA	Keine Besorgnis (9)	Seijyo-saki S-2	Debt Ceiling: +250.00% Interest Rates: +1.70% Effect of debt on Interest Rates: -80.00% Stability: 5.00% Effect of debt on GDP Growth: +15.00%
	Countries with a Exceptional credit rating can issue large amounts of debt while paying low interest rates. They are usually major powers with stable politics and developed economics.
Good	A	Keine Besorgnis (8)	Seijyo-saki S-3	Debt Ceiling: +200.00% Interest Rates: +2.30% Effect of debt on Interest Rates: -60.00% Stability: 5.00% Effect of debt on GDP Growth: +10.00%
	Countries with a Good credit rating can issue large amounts of debt while paying low interest rates.
Intermediate	BBB	Keine Besorgnis (7)	Seijyo-saki S-4	Debt Ceiling: +175.00% Interest Rates: +3.30% Effect of debt on Interest Rates: -40.00% Stability: 5.00% Effect of debt on GDP Growth: +5.00%
	Countries with a Intermediate credit rating are often somewhat unstable, yet have large or efficient economies, enableing them to issue debt without much trouble.
Acceptable	BB	Vorsicht (6)	Yo-Chui Saki YC-1	Debt Ceiling: +150.00% Interest Rates: +4.70% Effect of debt on Interest Rates: -20.00% Stability: 5.00% Effect of debt on GDP Growth: 0.00%
	Countries with a Acceptable credit rating enjoy some confidence, but are on a shorter leash than other countries.
Fair	B	Vorsicht (5)	Yo-Chui Saki YC-2	Debt Ceiling: +140.00% Interest Rates: +6.50% Effect of debt on Interest Rates: 0.00% Stability: 0.00% Effect of debt on GDP Growth: -10.00%
	Countries with a Fair credit rating are the last countries that are considered viable investments. Nevertheless, they are able to find some buyers for their debt.
Mediocre	CCC	Große Vorsicht (4)	Yo-Kanri Saki YK	Debt Ceiling: +130.00% Interest Rates: +8.70% Effect of debt on Interest Rates: 20.00% Stability: -5.00% Effect of debt on GDP Growth: -20.00%
	Countries with a Mediocre credit rating have made some strides towards fiscal responsibility, but are still not considered to be viable in the long-term.
Poor	CC	Gefährdet (3)	Hatan Kenen Saki HK	Debt Ceiling: +120.00% Interest Rates: +11.30% Effect of debt on Interest Rates: 35.00% Stability: -7.50% Effect of debt on GDP Growth: -30.00%
	Countries with a Poor credit rating are considered to be highly risky investments, and are limited iin the amount of debt they can issue.
Terrible	C	Drohende Insolvenz (2)	Jisshitsu-Hatan Saki JH	Debt Ceiling: +110.00% Interest Rates: +14.30% Effect of debt on Interest Rates: 50.00% Stability: -10.00% Effect of debt on GDP Growth: -40.00%
	Countries with a Terrible credit rating are one step above default and have severe difficulty finding buyers for their debt.
Junk	D (DEFAULT)	Insolvenz (1) (DEFAULT)	Hatan-saki D (DEFAULT)	Debt Ceiling: +100.00% Interest Rates: +25.00% Effect of debt on Interest Rates: 100.00% Stability: -20.00% Effect of debt on GDP Growth: -50.00%
	Countries with a Junk credit rating are in DEFAULT and must negotiate with their creditors, mend their finances, and control their spending before they can exit sovereign default.

Economy Types

A country's economy type can give bonuses but is currently largely a flavor mechanic. It can only be changed through events/focuses and not manually by the player.

Corporatism

Type	Description	Effects
Corporatism	Corporatism is an economic system which aims to organize the state and society as a whole into corporate groups, believing that it is the best way to achieve an efficient and strong economy. Deriving from the ideas of syndicalist thinkers such as Sorel, it also seeks to promote class cooperation between capital and labor instead of class struggle, and posits that a good relationship between the boss and the worker is the key to the machine of the state being well-oiled. Asking for total devotion toward the state, corporatism is commonly found in fascist and dictatorial regimes. Important to note, however, is that such a system is distinct from a corporatocracy, in which the lines between the state and the corporations are blurred.	+10.00% Consumer Goods Production Factor +0.05 GDP Growth Multiplier
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Capitalism

Type	Description	Effects
Free Market Capitalism	Free market capitalism is an economic system where private enterprises and businesses are free to operate with few or no restrictions from the government. To elaborate, it means that things such as prices, costs, and wages are regulated by participants in the market, such as the buyers and the sellers: as such, government oversight and regulation are minimized. Popular among market liberals of all stripes, it has become one of the most in-use systems around the world.	+5.00% Factory Output +5.00% Dockyard Output +5.00% Construction Speed +10.00% Consumer Goods Production Factor +0.10 GDP Growth Multiplier
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Planned

Type	Description	Effects
Planned Economy	A planned economy, or command economy, is an economic system in which the entirety of economic output and growth is planned in advance to account for the needs of the population and of the country as a whole. Such a planification can be either centralized or decentralized, and can be decided either by a dedicated council of experts, or by the people in a participatory manner.	+10.00% Factory Output +10.00% Dockyard Output +10.00% Construction Speed
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Other

Type	Description	Effects
Anarchic	In an anarchic territory, the state either doesn't exist, or is mainly influenced by small, local communities or villages. Large-scale monetary transactions are sparse, and there is no central authority or formal central bank to speak of. Such states of anarchy are generally attained after large-scale catastrophes, like wars or natural disasters.	+10.00% Factory Output +10.00% Dockyard Output +10.00% Construction Speed
Banditry	In a system of Banditry, the economy is centered around theft and extortion of the common people by one or more groups of bandits and pillagers. Relying on the stolen wealth of others, those bandits see theft and extortion as the best way to enrich themselves off the backs of nearby countries, or in the most extreme cases, of people inside their very own. Such a system can be found in war-torn and unstable countries, as those conditions are often necessary for the bandits to take power in the first place.	+10.00% Factory Output +10.00% Dockyard Output +10.00% Construction Speed