BS3- External Influences - Steeple (economic 3) Flashcards
Explain the difference between direct and indirect taxation
Direct taxation- taxes taken directly from a persons income when they work or a company when they make profit.
Indirect taxation- they are taken when a person spends, VAT
State two examples of direct taxation and two examples of indirect taxation
Direct- national insurance, income tax
Indirect- VAT, duty tax
Outline how raising tax revenue to spend on the education system benefits the uk economy.
Money is inverted into young education and the more that is invested the smarter they should come out, therefore when they then work they will be able to do greater things boosting the uk economy
Describe two reasons that the government might raise taxation on alcohol
It costs the nhs money as it damages people’s body’s
They will get more tax as people are still likely to buy it even at a higher price
Distinguish between monetary and fiscal policies
Monetary policy- manipulation of the level of demand in the economy using the interest rate.
Fiscal policy- economic policy conducted by the government through taxation and public spending
Explain what is meant by supply side policy
They aim to improve the economy’s overall productive capability
Identify three examples of supply side policies
Income tax cuts
Encouraging business start ups and expansions
Cuts in corporation tax
What is meant by subsidy
A payment from the government to encourage a business to increase supply
Identify two benefits to a business of receiving a subsidy
It allows them to increase the annual income
Will help them if in a failing but necessary industrie
Identify two types of government expenditure
discretionary and mandatory
For both types of expenditure sate the purpose of thatexpenditure
discretionary-costs that a business can survive without
mandatory- necessary costs to a business
