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Economics > Taxation > Flashcards

Taxation Flashcards

1
Q

Consumer spending

A

This is how much consumers demand in goods and services over a period of time

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2
Q

When does consumer spending increase

A

When consumers income increase

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3
Q

Injections

A

Any spending which is not consumer spending

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4
Q

Type of injections

A

Investment
Exports
Government spending

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5
Q

Investment

A

The spending of firms on capital goods

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6
Q

Exports

A

The money spent by over sea firms and induviduals on British goods

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7
Q

Government spending

A

The spending in the economy of the public sector

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8
Q

Leakages

A

Taking money out of the circular flow of income

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9
Q

Types of leakages

A

Savings
Imports
Taxation

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10
Q

Savings

A

Money that consumers save from there income

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11
Q

Imports

A

The amount spent by UK firms and induviduals on foreign goods and services

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12
Q

Taxes

A

The amount of revenue collected from central and local government

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13
Q

Open economy

A

When there is government activity and. International trade

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14
Q

Economic growth

A

This occurs when there is an increase in total output of goods and services over a one year period

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15
Q

National income

A

The value of all goods and services produced in the economy in a year

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16
Q

GDP

A

This measures the goods and services that are produced in the UK no matter who owns the resources

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17
Q

Inflation

A

Rise in the general level of prices over a period of time

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18
Q

Way to achieve economic growth

A

Increase worker - productivity increase - higher output

Replace labour for capital

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19
Q

Fiscal policy

A

Increase government spending

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20
Q

Monetary theory

A

Reduce interest rates

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21
Q

Supply side policies

A

Improve training

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22
Q

How can the government attemp to create economic growth

A

Improve education
Building new infrastructure
Investing in new technology
Improving quality and quantity of resources

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23
Q

Factors that effect living standards

A 
Employment
Inflation
Taxation
Income
Education
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24
Q

Unemployment

A

People who are able, available and actively looking for employment but cannot find a job

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25
Q

The claimant count

A

This is published each month and shows the number of people claiming Job seekers allowance

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26
Q

The labour force survey

A

Unemployed people who are actively seeking work in the past 4 weeks and are available to start work in the next 2 weeks.

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27
Q

Effect of unemployment on induviduals

A

Reduces living standards
Reduces income while they still have major spending commitments
Worker loses skills, fitness and motivation

28
Q

Social effects of unemployment

A

Reduced status
Increased health problems
Less confidence

29
Q

Effects of unemployment on businesses (negative)

A

Fall in deman - fall in sales

They lose business

30
Q

Effect of unemployment on buisnesses (positive)

A

More labour available

Less pressure to pay higher wages

31
Q

Economic costs of unemplyment

A

Lost output
Reduced taxation revenue for government
Reduced spending in economy - jobs affected

32
Q

Social costs of unemployment

A

Increased crime
Civil unrest
Increase burden on the health care system

33
Q

The rate of inflation

A

Is the percentage increases in the general rise in prices over a period of time

34
Q

Deflation

A

A sustained fall in the average price level

35
Q

Disinflation

A

A fall in the rate of inflation

36
Q

Stagflation

A

A situation with persistent high inflation combined with low economic growth

37
Q

RPI

A

A measure of the average price level of goods and services in the UK

38
Q

CPI

A

Average basket of goods and services over a period of time

39
Q

CPIH

A

Includes housing costs

40
Q

Monetarist theory

A

This means people are increasing their spending on good and services at a faster rate than producers can expand the supply of goods and services
(Market prices are forced to rise)

41
Q

Demand pull

A

When total demand increases there will be an increase in the general level of prices
M&S AND Tesco
Rises faster than inflation

42
Q

Cost push

A

Increase in the costs faced by firms, so they increase price

Prtorol price increases - farmer selling tomatoes - cost of production increases - tomato price increases

43
Q

Imported inflation

A

A change in the exchange rate will cause prices to increase or decrease

44
Q

Costs of inflation induviduals

A

Reduces standards of living
Value of savings go down
Unemplyment

45
Q

Fiscal drag

A

An increase their wage which arise from inflation
= paying income tax
Govt increase tax
Reduce interests on borrowings

46
Q

Costs of inflation on firms

A

Real value of profits decrease

Reduce willingness to invest } uncetainaty future profits

47
Q

Costs of inflation government

A

Exports will be more expensive } less attractive to buyers

Reduces economic growth

48
Q

Speculation

A

A period of inflation creates an expectation of inflatio which creates inflation

49
Q

Benefits of low inflation

A

Stability - can predict future costs

Real savings

50
Q

Taxation

A

A leakage from the circular flow

51
Q

Why do we have tax

A

To fund govt expedeture

To deter the purchases of some goods

52
Q

Direct tax

A

Tax paid directly to authorities

E.g inheritance tax

53
Q

Indirect tax

A

Paid through an intrtmediary to the tax payer

E.g VAT

54
Q

Progressive tax

A

Upper income families pay more tax

55
Q

Regressive tax

A

Poor-middle pay more tax than the rich

56
Q

Proportional tax

A

Everyone pays the same amount of tax

57
Q

Examples of direct tax

A

Income tax
Cousin tax
Inheritance tax

58
Q

Examples if indirect tax

A

VAT
Customs duties
Excise duties

59
Q

Advantage of direct tax

A

Reduces inflationary pressure-fall in deman/spending

Ruduces income equalities - progrssive

60
Q

Disadvantage of direct tax

A

Reduces disposible income = low standards of living

Slows down demand = increase unemplyment

61
Q

Advantage of indirect tax

A

Easy to collect

Can be altered quickly

62
Q

Disadvantage of indirect tax

A

Unfair - regressive

Increases prices

63
Q

Capital spending

A

This helps create productive capacity - hospitals

64
Q

Current spending

A

Covers day-day running costs

65
Q

Transfer payment

A

Payment individual to firm pays with no benefit in return

66
Q

Public goods

A

Goods that benefit everyone in soceity

Economics (10 decks)

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