2.5.1 Economic influences (GOVT SPEND AND TAX)

Question 1

what is a direct tax

Answer 1

type of tax that is levied directly on an individual’s or organisation’s income or wealth

Question 2

what is an indirect tax

Answer 2

type of tax that is levied on goods and services (consumption)

Question 3

examples of direct tax

Answer 3

income tax
national insurance
corporation tax
capital gains tax
inheritance tax

Question 4

examples of indirect tax

Answer 4

VAT
excise duties
customs duties
council tax
business rates

Question 5

effects of increased taxation on businesses

Answer 5

higher operational costs
reduced profitability
decreased investment
cash flow strains
pricing adjustments
competitive disadvantage
potential job cuts

Question 6

effects of decreased taxation on businesses

Answer 6

lower operational costs
increased investment
higher consumer spending
improved cash flow
job creation
pricing flexibility
reduced compliance costs

Question 7

effects of increased government spending on businesses

Answer 7

boost in demand
infrastructure development
job creation
support for industries
increased competition

Question 8

effects of decreased government spending on businesses

Answer 8

reduced demand
budget cuts
slower economic growth
fewer contracts
impact on public services