Chapter1- Definitions

Question 1

Fiscal policy

Answer 1

How governments generate income through taxation and spend it on public projects and the public sector

Question 2

Monetary policy

Answer 2

The Bank of England’s about interest rates , in order to support the economy and control inflation.

Question 3

Inflation

Answer 3

The rate at which prices in the uk increase each year, shown as a percentage.

Question 4

Interest rates

Answer 4

The cost of borrowing money , expressed as a percentage of the amount borrowed.

A high rate of interest is bad for businesses because it increases the costs of business with a bank overdraft or a bank loan.

It decreases demand for their products because consumers have less disposable income

A low rate of interest is good for business because , it decreases the costs of business with a bank overdraft or bank loan .

Also it should increases demand for their products because consumers have more disposable income

Question 5

Exchange rates

Answer 5

The value of one currency expressed in terms of another currency

Question 6

VAT

Answer 6

Value added tax - is a tax added to the price of a product .

Question 7

Corporation tax

Answer 7

Tax put on companies profits

Question 8

Income

Answer 8

Tax put directly on personal income

Question 9

Property tax

Answer 9

Tax put directly on a property

Question 10

Import / export tax

Answer 10

Import tax is tax put on products coming into a country ( imports )

Question 11

Disposable income

Answer 11

Money that one has remaining after bills and taxes.

Question 12

Import and export meaning and acronym

Answer 12

Import - the buying of good from another country (cheaper)

Exports - the sale of goods to another country (more expensive)

SPICED - Strong
                    Pound
                    Imports 
                    Cheaper 
                    Exports 
                    Dearer