1f-Gov objectives Flashcards
Q: What are the main economic objectives of governments?
A:
-Economic Growth: Increasing the production of goods/services (GDP growth).
-Low Inflation: Keeping price increases stable (target ~2%).
-Low Unemployment: Ensuring more people have jobs.
-Healthy Balance of Payments: Maintaining a balance between imports and exports.
How do these objectives impact businesses?
A:
Economic Growth: Higher demand for goods/services, leading to business expansion.
Low Inflation: Stable costs, encouraging investment.
Low Unemployment: More consumer spending power.
Healthy Balance of Payments: Encourages domestic businesses.
Q: How does government spending affect businesses?
Investment in infrastructure (roads, schools, hospitals) boosts business opportunities.
Spending on welfare and public services increases disposable income.
Cuts in government spending reduce demand for business services.
What are the types of taxes affecting businesses?
Corporation Tax: Charged on company profits.
Income Tax: Deducted from employees’ wages.
Sales Tax (VAT/GST): Applied to consumer purchases.
Import Tax (Tariffs): Increases the cost of foreign goods.
Excise Tax: Charged on specific goods (e.g., tobacco, fuel).
How does taxation affect businesses?High Taxes:
High Taxes: Reduce business profits and consumer spending.
How does taxation affect businesses?
Low Taxes: Increase business investment and economic growth.
What are common trade barriers?
Tariffs: Taxes on imported goods to protect domestic industries.
Quotas: Limits on the number of imports allowed.
Subsidies: Government payments to support local industries.
Regulations: Safety and environmental standards applied to imports.
Q: How do trade blocs influence businesses?
Trade blocs (EU, ASEAN, USMCA) remove barriers between member countries.
Encourage businesses to expand internationally.
Protect industries from external competition.
Q: What is an interest rate?
A: The cost of borrowing money or the return on savings.
Q: How do interest rates impact businesses?
Higher Interest Rates:
Higher Interest Rates:
Increases loan repayment costs, reducing investment.
Lowers consumer spending on credit-based purchases.
Q: How do interest rates impact businesses?
Lower Interest Rates:
Lower Interest Rates:
Encourages business borrowing and investment.
Increases consumer spending, boosting demand.
How does inflation affect businesses?
High Inflation
High Inflation:
Increases business costs (wages, materials).
Reduces consumer purchasing power.
How does inflation affect businesses?
Low inflation
Low Inflation:
Keeps costs stable.
Encourages business growth and investment.
Q: What key laws affect businesses?
Consumer Protection Laws: Prevents false advertising and defective products.
Employment Laws: Ensures fair wages and working conditions.
Health & Safety Laws: Protects employees in the workplace.
Competition Laws: Prevents monopolies and unfair pricing.
Environmental Laws: Reduces pollution and waste.
Q: How do regulations impact businesses?
Increase operating costs (compliance, staff training, fines for violations).
Encourage fair competition and protect consumers.
Some industries face stricter controls (e.g., food, pharmaceuticals).
Q: How do governments support businesses?
Grants & Subsidies: Financial help for startups, research, and eco-friendly initiatives.
Training Programs: Improves workforce skills.
Tax Incentives: Encourages investment in certain industries.
Export Assistance: Supports businesses selling goods internationally.
Why do governments support businesses?
Encourages job creation.
Boosts economic growth.
Increases tax revenue.
