monetarism Flashcards
monetarism was an economic theory associated with? what was taught as root cause of inflation?
Friedman + ‘chicago school’ of economics
Friedman taught root cause of inflation=gov spending
monetarism argued the best way for gov to control inflation was by?
restraint of government spending + borrowing and, above all, by strict curbs on the money supply and reduce public expenditure
the belief that people rather than governments spent money more efficiently led to?
shift away from direct taxation e.g income tax to indirect taxation such as VAT
what did the shift away from direct taxation to indirect taxation mean?
a move away from taxes on people’s incomes or property and towards taxes on the goods + services they chose to spend their money on
top rate of income tax fell from what by 1988? what did this mean for those in high paying jobs?
top rate income text fell from 83% to 40% by 1988
- those in high paying jobs were taking more money home, more disposable income
standard rate income tax fell to what over the same period?
Standard rate income tax fell to 25% from 33% over the same period
in 1979 VAT went up from?
8% to 15%
what went up in almost every single budget 1979-1987?
taxes on petrol, cigarettes and alcohol
impact of monetarism, how did critics argue this was less progressive?
Critics argued transferring burden onto an indirect taxation system less progressive + hit poorer people harder e.g those seeking employment could no longer afford goods as much since the prices rose
what was introduced in order to control overspending of Labour local authorities?
Rate capping was introduced
what was rate capping?
local taxation charged by local councils on all privately owned business + houses
what happened in 1985? (rebel)
number of authorities e.g Sheffield + liverpool tried to rebel against cap + refused to set budgets but eventually threatened by bankruptcy and backed down
