The Economy Flashcards
(28 cards)
Who is the most senior minister in the Treasury and what is their title?
The most senior minister in the Treasury is the Chancellor of the Exchequer (currently Rachel Reeves).
What type of policy does the Chancellor of the Exchequer control?
The Chancellor of the Exchequer controls fiscal policy, which is tax and spending.
What else is the Chancellor of the Exchequer responsible for managing?
The Chancellor of the Exchequer is also responsible for managing the national debt, unemployment, and inflation.
Give examples of direct taxes.
Direct taxes include taxes taken directly from salaries such as income tax and national insurance, plus company taxes such as corporation tax and capital gains tax.
What does it mean for direct taxes to be progressive?
Direct taxes are progressive, meaning they are based on the ability to pay, so the rich pay more than the poor.
Give examples of indirect taxes.
Indirect taxes are based on consumption and include sales tax (VAT), alcohol, fuel and tobacco duty, and green taxes on energy bills.
What does it mean for indirect taxes to be regressive?
Indirect taxes are regressive, meaning they are not based on the ability to pay, so the poor pay the same as the rich.
Define annual deficit.
If a government spends more than it takes in revenue, the difference between the two figures is the annual deficit.
Define annual surplus.
If the government takes in revenue more than it spends, the difference between the two is the annual surplus
Define national debt.
The debt is the accumulation of all the annual deficits.
Approximately how much are the UK government revenues in 2024-25?
The UK government has revenues of about £1.49 billion in 2024-25.
What is the annual deficit the UK government needs to borrow in 2024-25?
The annual deficit the UK government needs to borrow is around £127 billion.
Approximately what is the UK’s total debt?
The UK’s total debt is around £3.4 trillion
What does the Chancellor do each year?
Each year the Chancellor makes a Budget Speech to the House of Commons, reporting on the economy, giving the outlook, and setting out plans for taxes and spending.
What is the Autumn Statement?
The Autumn Statement precedes the Budget Speech.
What is the Comprehensive Spending Review?
Every three years the Chancellor also publishes a Comprehensive Spending Review, giving plans over a longer period.
What is the Finance Act?
The Budget Speech is accompanied by a Finance Act to implement the Chancellor’s plans.
What is the role of the Office of Budget Responsibility (OBR)?
The OBR is responsible for economic forecasts and is politically neutral and independent of government.
What is the Bank of England responsible for?
The Bank of England is responsible for monetary policy, which is setting interest rates.
What is the Monetary Policy Committee?
The Monetary Policy Committee of the Bank of England is a group of nine economists that sets interest rates.
What is the current base rate?
The base rate is currently 4.5%.
Define Gross Domestic Product (GDP).
Gross Domestic Product (GDP) is the market value of all the goods and services produced by a country.
Define recession.
Recession is two successive quarters when the economy (GDP) shrinks.
Define growth
Growth is when GDP rises, increasing employment and prosperity
