Paper One Flashcards
what is the national budget?
the national budget which is set annually allows the government to see where money is needed the most
what does public spending do?
public spending ensures that all people have a good standard of living
who sets the national interest rates?
Bank of England
what changes in economic activity during a recession?
people spend and save less because they have a lower income as jobs and benefits are lost
what happens is there is less income in a country?
less income = less tax = less public spending
what happens to the economy during boom periods?
there is much more money in the system and there are higher employment rates and increased levels of spending
during and economic boom what happens to inflation and interest rates?
however this may mean that interest rates and inflation will rise which may lead to a recession
why does increased inflation and interest rates lead to a recession?
once again there are high levels of debt and many will be unable to pay them
do personal values have an impact on financial management ?
personal values have a HUGE impact on how individuals manage their finances because people make decisions on what they think or believe
what is a period of austerity?
this is when people cannot spend much money
what is austerity?
a government measure to reduce the amount of money it spends, usually reduced wages and benefits - this leads to financial hardship for the whole population
what is fiscal policy?
the decisions a government makes about taxes and what to spend public money on
what is a surplus?
more money coming in than being paid out
what is a deficit?
more money paid out than in
what is net income?
money that is left over from your income after the government tax and charges have been taken
how is giving to charity viewed as?
this is seen as a positive contribution to society and is rewarder through tax schemes and incentives
what does the government spend the most money on? (sector)
pensions
during an economic boom what is employment and debt rates like?
both debt rates and unemployment is low
what does the government do during recessions to stimulate the economy?
raise public expenditure
what is disposable income?
money left over after paying bills and putting money in savings
why can’t the government print more money when there isn’t enough?
this will cause hyperinflation which is a very high rate of inflation
what was the first country to use polymer banknotes?
Australia
where is majority of money in the UK economy held
Bank Accounts
what was the system called before people used money
bartering
