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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
The claimant count
This is published each month and shows the number of people claiming Job seekers allowance
26
The labour force survey
Unemployed people who are actively seeking work in the past 4 weeks and are available to start work in the next 2 weeks.
27
Effect of unemployment on induviduals
Reduces living standards Reduces income while they still have major spending commitments Worker loses skills, fitness and motivation
28
Social effects of unemployment
Reduced status Increased health problems Less confidence
29
Effects of unemployment on businesses (negative)
Fall in deman - fall in sales | They lose business
30
Effect of unemployment on buisnesses (positive)
More labour available | Less pressure to pay higher wages
31
Economic costs of unemplyment
Lost output Reduced taxation revenue for government Reduced spending in economy - jobs affected
32
Social costs of unemployment
Increased crime Civil unrest Increase burden on the health care system
33
The rate of inflation
Is the percentage increases in the general rise in prices over a period of time
34
Deflation
A sustained fall in the average price level
35
Disinflation
A fall in the rate of inflation
36
Stagflation
A situation with persistent high inflation combined with low economic growth
37
RPI
A measure of the average price level of goods and services in the UK
38
CPI
Average basket of goods and services over a period of time
39
CPIH
Includes housing costs
40
Monetarist theory
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
Demand pull
When total demand increases there will be an increase in the general level of prices M&S AND Tesco Rises faster than inflation
42
Cost push
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
Imported inflation
A change in the exchange rate will cause prices to increase or decrease
44
Costs of inflation induviduals
Reduces standards of living Value of savings go down Unemplyment
45
Fiscal drag
An increase their wage which arise from inflation = paying income tax Govt increase tax Reduce interests on borrowings
46
Costs of inflation on firms
Real value of profits decrease | Reduce willingness to invest } uncetainaty future profits
47
Costs of inflation government
Exports will be more expensive } less attractive to buyers | Reduces economic growth
48
Speculation
A period of inflation creates an expectation of inflatio which creates inflation
49
Benefits of low inflation
Stability - can predict future costs | Real savings
50
Taxation
A leakage from the circular flow
51
Why do we have tax
To fund govt expedeture | To deter the purchases of some goods
52
Direct tax
Tax paid directly to authorities | E.g inheritance tax
53
Indirect tax
Paid through an intrtmediary to the tax payer | E.g VAT
54
Progressive tax
Upper income families pay more tax
55
Regressive tax
Poor-middle pay more tax than the rich
56
Proportional tax
Everyone pays the same amount of tax
57
Examples of direct tax
Income tax Cousin tax Inheritance tax
58
Examples if indirect tax
VAT Customs duties Excise duties
59
Advantage of direct tax
Reduces inflationary pressure-fall in deman/spending | Ruduces income equalities - progrssive
60
Disadvantage of direct tax
Reduces disposible income = low standards of living | Slows down demand = increase unemplyment
61
Advantage of indirect tax
Easy to collect | Can be altered quickly
62
Disadvantage of indirect tax
Unfair - regressive | Increases prices
63
Capital spending
This helps create productive capacity - hospitals
64
Current spending
Covers day-day running costs
65
Transfer payment
Payment individual to firm pays with no benefit in return
66
Public goods
Goods that benefit everyone in soceity

Economics (10 decks)

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