Treasury

Question 1

Roles of Chancellor of the Exchequer

Answer 1

formulates + implements gov. financial policy
raises revenue through tax
borrows
Set spending targets for gov depts.
Presents annual budget
sets inflation target
organises treasury
decided role of ministers in treasury
announces the budget to parliament. It is then voted on (the finance bill)

Question 2

The OBR (Office for Budget Responsibility)

Answer 2

independent
examines the sustainability of UK public finances
2 x annual forecasts on economic performance
assesses if gov has achieved own targets
estd 2010 by George Osbourne

Question 3

What is the Budget?

Answer 3

annual financial and economic report made by chancellor

Question 4

What is the purpose of the Budget?

Answer 4

To manage and control economy. 
updates parliament and nation on state of economy and public finances. 
control inflation
reduce unemployment
stimulate econ growth
encourage exports
encourage investment

Question 5

How does chancellor use the budget?

Answer 5

review and change tax rates

announce how taxpayer’s money will be spent

Question 6

The Spring Statement

Answer 6

A lesser budget. An economic update. Chancellor updates on progress since Autumn budget and reviews economic forecasts.

Question 7

Recession

Answer 7

negative economic growth (GDP) for two successive quarters
may be less consumer spending and high unemployment
often countered by cutting tax and increasing spending

Question 8

Inflation

Answer 8

Increase in price of goods and services.
cost of living.
Currently 1.5%

Indicated by the CPI- consumer price index-
a basket of 700 goods i.e. mortgage repayments and council tax to show family daily expenditure.
CPI used to set benefits/pension increases

Question 9

GDP

Answer 9

gross domestic product- measure of national economic activity
annual value of goods and services
Compiled by ONS through survey of businesses and govt depts.
Includes profits made in UK by foreign companies.
But not vice versa.

Question 10

Interest rates

Answer 10

The cost of borrowing
set monthly by monetary policy committee
Current rate 0.1%
Set with inflation target in mind (2%)

Question 11

Direct taxes

Answer 11

taxes on gains. i.e. income tax, inheritance tax, corporation tax

Question 12

Indirect (hidden) taxes

Answer 12

Taxes on goods and services, included in the price i.e. VAT, fuel and alcohol duty

Question 13

budget deficit

Answer 13

difference between tax income and government spending