Fiscal policy, Inflation and Interest rates Flashcards
What is the Fiscal policy?
The Fiscal policy is Government decisions about taxes and public sector spending.
What is Income tax?
Income tax is deducted from the employees’ wages, based on the profits of solder traders and partnerships.
What is National Insurance Contribution?
National Insurance Contribution is the same as income tax.
What is Corporation tax?
Corporation tax is based on the profits of limited companies (Ltd and plc).
What is VAT?
Value Added Tax is included in or added to the selling price of most goods and services.
What is Excise and duties?
Excise and duties is included in or added to the selling prices of alcohol, cigarettes and petrol.
What is the Monetary policy?
The Monetary policy is the Bank of England’s decision about interest rates, in order to support the economy and control inflation.
What is Inflation?
Inflation is the rate at which prices in the UK increase each year, shown as a percentage.
What is Interest rate?
Interest rate is the cost of borrowing money, expressed as percentage of the amount borrowed?
Why is a high rate of interest bad for a business?
It increases the costs of business with a bank overdraft. It also decreases demand for their products because consumers have less disposable income.
Why is a low rate of interest good for a business?
It decreases the cost of business with a bank overdraft. It also increases demand for their products because consumers have more disposable income.
