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Unit 6 > ch 21 Business, the Economy, the Gvt > Flashcards

ch 21 Business, the Economy, the Gvt Flashcards

(65 cards)

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1
Q

free market economy

A

factors of production owned by private sector

goods produced allocated by supply and demand
inefficient businesses will close

citizens may be deprived of products due to poverty

wealth gap is created

eg USA

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2
Q

centrally planned economy

A

totally regulated by the gvt

factors of production owned by the gvt

inefficient and lack innovation

restrictions on personal freedom and an equal distribution of wealth

eg Cuba

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3
Q

mixed economy

A

combines free market and centrally planned

public and private sector so innovation exists

taxes may be high

eg Ireland

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4
Q

economic growth

A

the increase in the value of goods and services produced in an economy from one year to the next

it’s measured by GDP

eg Celtic Tiger

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5
Q

Recession

A

occurs when there’s 2 or more consecutive quarters of negative economic growth in an economy

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6
Q

how an economy can be measured

A 
inflation
interest rates
employment
exchange rates
taxation
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7
Q

economic variable

inflation

A

sustained increase in the general level of prices over a period of time
measured by CPI

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8
Q

deflation

A

decrease in the general level of prices in two consecutive quarters

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9
Q

2 types of inflation

A

Demand-pull inflation

Cost-push inflation

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10
Q

demand-pull inflation

A

increased demand causes prices to increase

full employment can cause it

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11
Q

cost-push inflation

A

increase cost of production causes prices to increase

minimum wage increasing

VAT increases

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12
Q

potential impact of high inflation rates on the Irish economy

A

purchasing power
of money falls over time-saving is discouraged

more wage demands
from workers are likely- there may be strikes and poor morale

lower standard of living
less purchasing power as the cost of living rises

exports become less competitive
Irish selling prices rise in relation to goods from other countries

increased gvt expenditure on wages
eg teachers as the cost of living rises

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13
Q

economic variable

interest rates

A

the cost of borrowing money over a period expressed as a % of the amount borrowed
ECB sets Eurozone rates
banks charge a higher rate

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14
Q

impact of high interest rates

A

debt capital more costly
higher repayments for individuals and gvt when borrowing or repaying debt at a variable rate;if a business has borrowed, the higher repayments make it harder to expand

harder to attract investors
return for savings in deposit accounts are higher, so savings offer a more attractive, risk-free return for investors

less consumer spending
more expensive to access loans, mortgage repayments are higher, so consumers spend less

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15
Q

impact of low interest rates

A

good for borrowers
stimulate growth in the economy

businesses can borrow cheaper
investment in new projects more likely
business development will increase

gvt will borrow and invest in capital expenditure
can lead to INFLATIONARY PRESSURE in an economy

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16
Q

unemployment

A

the percentage of the work force which is unable to find work
It’s desirable to have low unemployment
measured by the live register

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17
Q

labour force

A

everyone working or looking for work between the ages of 16 and 65

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18
Q

full employment

A

when almost everyone in the country is able to find it

4%

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19
Q

employers market

A

large unemployment
labour supply>labour demand
people willing to work for less money

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20
Q

low unemployment benefits

A

gvt: tax revenue increases and social welfare decreases

less emigration and ‘brain drain’ of highly skilled workers

increased spending: incomes higher

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21
Q

low unemployment dis

A

labour shortages in some areas can cause high wage inflation

pressure on rent/ property prices in areas of high employment

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22
Q

how the gvt can affect the labour force

summarised

A

lower taxation
gvt expenditure
gvt regulation
gvt employer

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23
Q

how the gvt can affect the labour force

lower taxation

A

low corporation tax 12.5%
encourages FDI

lower paye
employees more disposable income. Encourages demand for goods

lower DIRT
encourages savings

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24
Q

how the gvt can affect the labour force

gvt expenditure

A

investment in 3rd level education
supply of highly skilled labour
helps attract FDI(high tech like microsoft)

spending infrastructural projects
increase employment during construction
encourages more businesses as a result of improved infrastructure

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25
how the gvt can affect the labour force | gvt regulation
laws the gvt passes controls activities of the business and protects employees national minimum wage €10.20 workers may not be employed due to rising costs labour supply should increase as more are willing to work for a higher wage
26
how the gvt can affect the labour force | gvt employer
biggest employer in Ireland civil service-gvt depts public service- teachers state owned enterprises
27
PPP
Public Private Partnerships contract agreement between the gvt and the business usually for a number of years Private firm will design, build, and operate an infrastructural project on behalf of the state eg schools eg Creagh
28
PPP adv
contractors suffer financial penalties if late no upfront payment needed- pay over the life of the policy infrastructure is built up quicker
29
which currency is strong €1 = $2
euro
30
exchange rates
price of one currency in terms of another currency
31
strong Euro against sterling
lower demand for Irish goods or holidays by UK consumers increase demand for UK imports vs buying domestically eg more holidays in uk
32
direct tax
tax on earnings/income | eg PAYE, USC
33
indirect tax
tax on spending and consumption | eg VAT excise duties
34
taxation can…
be used as an economic tool to regulate the level of spending in an economy
35
low tax
more disposable income increases sales and growth stimulates investment and enterprise low corp attracts Tncs
36
uses of taxation summarised
regulates the level of spending use tax incentives to target certain industries discourage some activities can control inflation
37
uses of taxation | regulate the level of spending
low tax more disposable income increases sales stimulates investment and enterprise
38
uses of taxation | use tax incentives to target certain industries
R&D in Shannon | IFSC reduced rate for locating there
39
uses of taxation | discourage some activities
smoking sugar plastic bags
40
uses of taxation | can control inflation
increase in tax lower disposable income lower demand for goods encourages the black market to avoid taxation
41
what are the impacts on Irish Business if the gvt changes tax rates
corporation tax increased profit decreases increase price or reduce staff reduction in PAYE consumers disposable income increases increase in demand for goods import duties introduced or increased business importing costs of rm rises lower profits or higher prices VAT decreased profit increases or sp decreases more competitive prices could stimulate the economy
42
how the gvt creates a climate for business in Ireland | summarised
``` gvt expenditure gvt agencies gvt taxation gvt grants gvt regulations ```
43
how the gvt creates a climate for business in Ireland | gvt expenditure
Increase or decrease capital: one-off expenditure (e.g. build a school) and current/day-to-day expenditure (e.g. wages), This will create jobs and consumer demand.
44
how the gvt creates a climate for business in Ireland | gvt agencies
Enterprise Ireland, Industrial Development Agency, LEOs
45
how the gvt creates a climate for business in Ireland | gvt taxation
Can change tax rates to encourage or discourage certain behaviours; can introduce new taxes
46
how the gvt creates a climate for business in Ireland | gvt grants
Issue financial grants to aid expansion in certain industries or lines of work through Govt Agencies
47
how the gvt creates a climate for business in Ireland | gvt regulations
Adjust or introduce new laws Environmental, GDPR
48
enterprise ireland provides… | summarised
``` funding information networking advice productivity ```
49
enterprise ireland provides | funding
Grants to develop & grow in export market grants for new and existing businesses 1-10 employees
50
enterprise ireland provides | information
get export ready with team for advice step by step exporting approach gives info about new country eg market trends and competition
51
enterprise ireland provides | networking
international office in 30 countries helps with distribution partners introductions to potential customers overseas
52
enterprise ireland provides | advice
Enterprise Ireland Advisor Mentor Business Expertise in Export Sales Market Research Raising Finance Human Resources Experience International Sales Strategy
53
enterprise ireland provides | productivity
helps improve competitiveness teaches best practice helps develop employees experience and knowledge
54
evaluation of enterprise Ireland
``` good for the Irish economy helps irish expand abroad increases sales and BOP increases taxes for gvt increases employer ```
55
IDA
Industrial Development Authority
56
IDA Ireland
a state body that attracts mncs into ireland through grant aid etc creates large employment
57
IDA Ireland provides data
market size sales trends irish taxes Irish law
58
IDA Ireland provides research
locations
59
IDA Ireland provides networks
local industry gvt service providers research
60
IDA Ireland provides third level links
skills | R&D
61
IDA Ireland provides grants
capital costs training workers R&D grants
62
evaluation of IDA
``` good for the Irish economy helps attract FDI info available on website- labour, location discussed our taxes examples of other successful mncs ```
63
business and the economy | adv
tax revenue paye vat corp employment direct supplies of rm spin off industries standard of living better quality goods highly skilled labour higher wages community development prevents depopulation community pride local businesses
64
business and the economy | dis
inflation shortage labour- higher wages increase in prices higher demand environment pollution smog carbon emissions social costs Pressure on infrastructure Traffic Congestion Shortage Houses ``` More Competition Foreign competition Aldi & Lidl Close of Indigenous 58 ```
65
why encourage entrepreneurship
* community development * economic growth * imcreased employment * increased gvt revenue * BOP * positive spin off * reduced reliance on FDI * reduced social welfare

Unit 6 (5 decks)

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