A2 - Business - The relationship between business and the political and legal environment

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Government intervention
Aims to achieve the government's objectives by controlling and supporting business, passing legislation and taking action to control the economy.
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Laissez-faire
A policy towards the economy in which governments intervene as little as possible, minimise support for and control over industry and keep taxes and government spending to a minimum.
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Balance of payments (current account)
The account that records the UK's value of imports of goods and services ad the value of its exports - a deficit exists when import values exceed export values and a surplus exists when export values exceed import values.
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Fiscal policy
The use by the government of charges in tax rates or government spending to manage the economy.
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Monetary policy
The use of interest rates by the Bank of England (before 1997, the government was directly responsible for this) to keep inflation to a target of 2% (CPI).
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Supply side policy
Measures taken by the government to improve the efficiency of the economy (e.g. the labour market) to allow for an increase in the total supply of goods and services.
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Expanisonary fiscal policy
Increases in government spending greater than increases in taxes, e.g. budget deficit. This increases total demand in the economy.
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Contractionary fiscal policy
Increases in taxes greater than increases in government spending, e.g. budget surplus. This reduces total demand in the economy.
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Protectionism
Policies used by governments, such as tariffs and quotas, to limit imports and restrict free trade.
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Other cards in this set

Card 2

Front

A policy towards the economy in which governments intervene as little as possible, minimise support for and control over industry and keep taxes and government spending to a minimum.

Back

Laissez-faire

Card 3

Front

The account that records the UK's value of imports of goods and services ad the value of its exports - a deficit exists when import values exceed export values and a surplus exists when export values exceed import values.

Back

Preview of the back of card 3

Card 4

Front

The use by the government of charges in tax rates or government spending to manage the economy.

Back

Preview of the back of card 4

Card 5

Front

The use of interest rates by the Bank of England (before 1997, the government was directly responsible for this) to keep inflation to a target of 2% (CPI).

Back

Preview of the back of card 5
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