4.5 Role of the State in the Macroeconomy

Question 1

application point: uk budget deficit in 2024/25 + what % of GDP

Answer 1

£137.3 billion = 5.3% of GDP.

Question 2

application point: uk national debt 2024 + % of GDP

Answer 2

2.8 trillion £ + 96% of GDP

Question 3

example of a country that has no income tax system

Answer 3

Saudi Arabia but relies on regressive taxes like VAT

Question 4

example of a country cutting taxes

Answer 4

USA -> TCJA (tax cuts and jobs act) - 2017 during the Donald Trump administration
- income tax -> high -income earners 39%->37%
- corporate tax -> 27%-21%

Question 5

changes in income tax rates in recent years

Answer 5

50% in 2010 -> 45% in 2013 (has stayed like that)
- reduced the threshold from around 150K-> 121K so more people pay higher tax rates -> redistributes income

Question 6

changes in corporation tax rates in recent years

Answer 6

19% in 2017 -> 25% in 2023

Question 7

changes in interest rates in recent years

Answer 7

5.25% in 2023 to 4.25% in 2025

Question 8

changes in exchange rates in the UK over recent years and why

Answer 8

fell to $1.15 around 2020 due to COVID and post-Brexit uncertainty
regained value to $1.33 in 2023 but not as strong as before