The Economy, Tax & Globalisation Flashcards
What is economic growth?
Period of rising consumer incomes, demand and output.
What is demand?
Total amount of products customers want to buy.
What is a recession?
Period of falling consumer incomes, demand and output.
What is unemployment?
Number of capable workers out of work.
What is an interest rate?
- Charge made to people lending money.
- Reward for saving money.
What is the Bank of England?
The central bank which is responsible for setting interest rates.
What is government spending?
Money spent buy the government to provide services.
What is the multiplier effect?
Amount by which an increase in spending on a specific item is multiplied in its effect on total spending in the economy.
What is taxation?
Charges made by the government to people and businesses.
What is take-home pay?
Amount of income a person receives after deductions.
How does the Bank of England change interest rates to control inflation?
- If inflation is too high, interest rates are increased.
- If inflation is too low, interest rates are decreased.
What is income tax?
Tax on income.
What are national insurance contributions?
Tax on wages/salary.
What is corporation tax?
Tax on profits for limited companies.
What is VAT?
Tax on spending.
What are excise duties?
Special rates on goods such as alcohol and cigarettes.
What are business rates?
Tax paid by businesses on property they use.
What is globalisation?
Business activities in different countries becoming more connected.
What is outsourcing?
A business pays another to do part of its work.
What are multi-national companies?
Companies that operate in different countries.
What is global branding?
Product becomes a brand name known and sold worldwide.
Give six benefits of globalisation for the UK.
- Consumer choice
- Lower prices
- Cheaper labour abroad
- Larger market
- Economies of scale
- More jobs
Give three problems of globalisation for the UK.
- Lower profits
- Lower sales
- Business closures
What happens when the exchange rate falls?
- Exporters benefit increased profits.
- Importers suffer from an increase in the price of imported goods.
What are developed countries?
Countries with strong economies.
What are developed economies?
Poorer countries that are starting to grow.
What are exports?
Goods and services a country sells to other countries.
What are imports?
Goods and services a country buys from other countries.
What is innovation?
Developing new products and new ways of making products.
What is productivity?
The amount each person produces in a given time period.
What is value added?
Difference between cost of raw materials and value of finished product.
What is inward investment?
Investment in UK by foreign firms.
What is infrastructure?
Provision of roads, railways and services.
Give three advantages of using the Euro.
- No exchange costs.
- Reduced uncertainty.
- Comparing prices.
Give five ways the government can help businesses.
- Cut taxes on business profits.
- Grants for businesses.
- Cuts in income tax to increase productivity.
- Education and training.
- Improving infrastructure.
What is the EU?
Collection of 27 countries in Europe that trade together.
What are tariffs?
Taxes on imports making it harder for foreign firms to compete.
What are quotas?
Limits on amount of goods that can be imported.
What is the social charter?
Measures to protect workers in the EU from unfair working practices.
What is the minimum wage?
Guarantees certain wage levels.
What is the eurozone?
Countries in the EU that use the Euro.
What is the euro?
Currency used by 15 EU countries.
Give five benefits of the EU to business.
- Common standards.
- Free trade
- Freedom of workers
- Freedom of movement of services
- Grants and subsidies
Give three disadvantages of the EU?
- Social charter leads to extra costs.
- Minimum wage leads to extra costs.
- Environmental standards have to be upheld.
Give two advantages of the eurozone.
- Costs savings from currency exchange.
- Most trade occurs in Europe.
Give three disadvantages of the eurozone.
- Equipment has to be changed to the Euro.
- Re-education has to be undertaken.
- Currency can’t be changed back.
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