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
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
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 (corporate, national or private investors). A country's credit rating dictates how much debt they can accumulate and how much interest their debt will accrue. A country's Credit Rating can be changed by National Focuses and Events but also dynamically, via Downgrade/Upgrade Progress.
Credit Rating Progress goes from 0 to 100, if it hits 0 it will Downgrade and if it hits 100 it will Upgrade. There are three factors that affect credit rating progress, Deficit-to-GDP, Debt-to-GDP and whether the country is at peace or not. The Progress is updated at the end of each month.
Credit Rating Progress Factors:
Should Deficit-to-GDP be below real GDP growth, +2 will be added to the progress each month.
Should Deficit-to-GDP be above real GDP growth, -2 will be removed to the progress each month.
Should Debt-to-GDP be below 75% under the country's debt ceiling, +2 will be added to the progress each month.
Should Debt-to-GDP be above 75% under the country's debt ceiling, -2 will be removed to the progress each month.
Should the country be at peace, +1 will be added to the progress each month.
Should the country be at war, -1 will be removed to the progress each month.
Economy Types
A country's Economy Type provide economic benefits but is largely a flavor mechanic, comprising three main Economy Types, with many different Subtypes. Economy Type can not be changed by the player and may only change through National Focuses and Events.