Economic Factors Flashcards
What are the key economic indicators?
GDP, inflation, interest rates …..
What is indirect tax?
- Taxes on expenditure/spending
- (HMRC) Her Magisty Revenue Customers
What is direct tax?
Taxes on income and profits.
What is income tax?
- a tax taken out a persons income
- (Those earning more, pay a higher proportion of their incomenin tax)
- direct tax
What is national insurance?
- This is taken as a contribution towards the state pension and treatment under the NHS
- (employer also contributes)
- direct tax
What are the main types of government expenditure?
- health
- welfare
- eductation
- state pension
- environment
- transport
- defence
What is meant by a subsidy?
Payments by the government to suppliers that reduce their costs.
Also known as grants
What are the benefits of subsidies?
- helps business survival
- boost demand during a rececssion
- decreases prices
- helps declining industries
What is the monetary policy?
Manipulation of the level of demand in the economy using the rate of interest.
Controlled by the Monetary Policy Committee (The Bank of England)
What is the fiscal policy?
Economic policy used to influence the level of spending in an economy. It is conducted by the government through taxation and public spending.
Controlled by the government and led by hte chancellor of the Exchequer.
What is supply-side policies?
Supply-side policies aim to improve the economy’s overall productive capacity.
What are interest rates?
The reward for saving and the cost of borrowing expressed as a percentage of the money saved or borrowed.
What are exchange rates?
The value of one currency in terms of another.
Strenghtening exchange rate
If the pound increases in value it is said to strenghten. This means that a pound will buy more of a foreign currency.
Strong Pound Imports Cheap Exports Dear
Weakening exchange rates
If the pound decreases in value it is said to weaken. This means that a pound will buy less of a foreign currency.
Weak Pound Exports Dear Imports Cheap
