Fiscal Policy, Inflation And Intrest Rates Flashcards
Fiscal policy
Inflation
Interest rates
Monetary policy
Fiscal policy - governments decisions about taxes and public sector spending
Examples of taxes-
Income taxes - deducted from employees wages
NIC - same as income taxes
Corporation taxes - based on profits of LTD companies
VAT (Value Added Tax) - included in or added to the selling price of most good and services
Excise and duties - included in it added to the selling prices of Alcohol, cigarettes and petrol
Monetary policy - the bank of England’s decisions about interest rates in order to support the economy and control inflation
Inflation - The rate at which prices in the uk increase each year, shown as a percentage
A high rate of interest is bad for businesses because: it increases the costs of business with a bank overdraft or loan
It decreases the demand for products
