Government objectives and policies Flashcards
what is fiscal policy
changes in taxation and government spending to manage the economy
how will the economy react due to lower income tax
more spending, business produce more
how will businesses react to higher/lower corporation tax
businesses wil cut investment, maybe cut production costs lowering prodction, countries usually cut corp tax as an incentive for new businesses to locate there, improving employment and living standards aswel as exports
how does cutting funding for the public sector affect the economy
lose funding = lay offs from jobs, high unemployment, reduced income, less demand, less production, less output from a nation
how does stopped projects affect the economy
private sector businesses with public sector contracts may lose out
what are social security payments
money taken from peoples wages to pay for the unemployed or ill
what can the gov do to affect businesses activity (4)
taxation and gov expenditure (fiscal policity)
change the law
exchange rates
policies and legislation
explain the multiplier effect from countries having a large scale infastructure project
large project, mostly private construction businesses get the work, multiplier effect that the money earned from construction goes to employees, so more spending, gets put into other businesses, production rises
what are types of legislation that govs can put on businesses
consumer protection policies
competition policies
environmental legislation
what are some consumer protection policies (4)
policies against anti competitive practices
such as price fixing, raising barriers for entry like spending huge amounts on advertising and which smaller companies could not match
increasing high prices which arent in competitive markets
restricting consumer choice by market sharing
what is market sharing
when companies divide the market between each other to avoid competition and low prices, restricting consumer choice
