External Influence Flashcards
Explain the determinants of demand and supply
Taste/preference
Income
Price of substitute
Price of complementary goods
Factors that effect demand and supply in the market
Trends, commercial advertising, seasonal variation, income
Examples of indirect tax
Value added tax, sales tax, service tax, custom duty
Examples of direct tax
Income tax, corporate tax, capital gains tax, securities transaction tax
What is the definition of GDP
Gross Domestic Product is the total monetary value of all finished goods and services in a countries economy
Main types of UK government expenditure
Public services, defence, economic affairs, public order and safety
What is a subsidy
A sum of money given by the government to businesses in order to keep them in business
What is monetary policy
Set by the Bank of England to control of the quantity of money available and the new channels in which it flows into the economy, this effects factors such as inflation.
What is fiscal policy
Controls the government spending and sets tax policies, this is set by the chancellor of the exchequer.
What are supply side policies
Controls policies in order to increase the productive output of an economy and its ability to produce, these are set by the government
What is the relationship of exchange rates and interest rates
Higher interest rates attract foreign investment which increases the exchange rate of the country vise versa
What is the business cycle
The periodic growth and decline of the economy measured in GDP in order to see the overall trend
What are the 4 phases of the business cycle
Expansion, peak, contraction and trough
Disadvantages of free trade
Domestic producers can make knock-offs without fear of legal repercussions, economic exploitation, lower standards of living
What is a trading bloc
A group of countries in similar geographical location that protects it self from non-members with tariffs and quotas in order to promote trading WITHIN the bloc
