3rd (give name with topics) Flashcards
What is Hot Money
this is foreign investors putting their money in a country’s with high inflation because they will get a greater reward, they will have to turn their money into pounds then there will be a greater demand for the pound
unemployment
where people who are willing to get work however not able to find employment
Economically incactive
not working nor looking for work
Balance of trade / payments
The difference in the value of exports and imports
if exports exceed imports there is a surplus, if Imports exceed exports, there is deficit
Tax
a payment to the government
Direct tax
taxes on income and profits, paid directly by the bearer to the tax collector
indirect taxes
Taxes on expenditure/spending. they are paid to the tax authorities not by the consumer, indirectly by the suppliers
e.g of taxes
income tax inheritance VAT national insurance Duties Stamp duty
Income tax
Tax taken out of persons income (tax brackets)
national insurance
Tax as a contribution to the state pension and treatment under the NHS
VAT
Value after Tax
Added to the price of most goods and services, included in the price.
How do businesses benefit from being VAT registered
Can reclaim VAT on pay on some purchases
corporation Tax
Tax on the profits made by companies
Indirect Tax e.g
VAT
Tobacco/Alcohol/petrol
Stamp duty
Direct Tax e.g.
National insurance
Corporation
Income
Government rasing taxes result
Increasing tax will increase the tax revenue; this should be reinvested into: improving infrastructure, improving public services and reinvesting it into the general public.
Increasing tax on Alcohol result
People will be less likely to Purchase certain types of alcohol e.g. white strong ciders.
Reasons for taxation
Expenditure on public services e.g. education, transport and healthcare
to control economic activity e.g. stamp duty for house prices
to influence expenditure i.e. Alcohol
types of government expenditure
Benefits Debt interests education defence pensions
reasons for government spending money on education
Helps people to get good jobs, earn money to then be taxed to be reinvested
Subsidy
Sum of money given to a business by the government as an incentive to help the government policy e.g. farmers, apprentices, wind farms, rail roads etc.
Monetary policy
Manipulation of the level of demand in the economy using the rate of interest
who controls monetary policy
the MPC monetary policy committee (bank of England)
Reasons for MPC change
- an increase in the rate of interests slows down spending
- a decreases in the rate of interest encourages spending
- a change in the rate of interest usually takes 18 months to take effect
- there is a relationship between the rates of interest and the strength of the pound
