3.7.5 economic change Flashcards
analysing the external environment to assess opportunities and threats : economic change
What is the economy?
a circular flow of income via the production and consumption of goods and services
What are Indirect taxes?
Indirect taxes are taxes on expenditure (e.g. VAT). They are paid to the tax authorities, not by the consumer, but indirectly by the suppliers of the goods or services
What are direct taxes?
Direct taxes are taxes on income, profits and wealth, paid directly by the bearer to the tax authorities.
What is GDP?
Gross Domestic Product is the value of the goods and services produced in the economy
How many months does GDP measure to?
the three previous months
What qualifies the economy for a recession
two consecutive months of economic downturn
what does an increase in tax mean for a business?
costs will increase which reduced profiability
is the % of VAT goes up, what can a business do?
pass this cost onto the customer (will make product more expensive) or absorb the cost (will reduce profit margins)
what is VAT now?
20%
What taxes do sole traders have to pay?
Income tax
VAT (if earning above £82,000)
Business rates (if in offices)
National Insurance (if got employees)
What are the types of business tax?
corporation tax
capital gains tax
VAT
What are excise duties?
paid by customers on products which are considered to have negative effects on society. e.g tobacco and beer
What are exchange rates?
the price of one currency in exchange for another
What does appreciation mean?
a rise in the pound against other countries. the pound can buy MORE of a foreign currency
SPICED
strong
pound
=
imports
cheap
exports
dear
