EXTERNAL INFLUENCES PART 2

describe taxation
the government sets the level of tax in the country
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State one of the four main types of tax
Income tax
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State one of the four main types of tax
Corporation tax
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State one of the four main types of tax
VAT
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State one of the four main types of tax
Excise duties
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What is Income tax?
workers pay income tax and national insurance contributions- both affect workers "take-home" pay
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What is Corporation tax?
businesses pay corporation tax on their profits
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What is VAT?
Is a tax placed on all the goods we buy except food and children's clothing
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What is the Standard VAT rate?
20%
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What is Excise Duties?
These are specific taxes charged on certain products
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What does Taxation directly affect?
Taxation directly affects how much money we have and therefore it affects how we spend that money
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State one thing that will happen if Taxation rises for Businesses
Increases costs and it may lead to unemployment
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State one thing that will happen if Taxation rises for Businesses
Businesses have less money to spend on their aims
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State one thing that will happen if Taxation rises for Businesses
Businesses have less money to invest in the business
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State one thing that will happen if Taxation rises for Businesses
Businesses increase their products selling price to cover the new level of taxation
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State one thing that will happen if Taxation rises for Consumers
Consumers have less money to spend on goods and services
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State one thing that will happen if Taxation rises for Consumers
Consumers are less motivated to work hard as they don't get paid as much
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State one thing that will happen if Taxation rises for Consumers
Consumers don't have as much money to spend
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State one thing that will happen if Taxation rises for Consumers
Consumers demand for goods falls
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State one thing that will happen if Taxation falls for Businesses
Businesses costs decrease
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State one thing that will happen if Taxation falls for Businesses
Businesses have more money to spend on their objectives
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State one thing that will happen if Taxation falls for Businesses
Businesses have more money to invest in the business
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State one thing that will happen if Taxation falls for Businesses
Businesses decrease their products selling price to cover the new level of taxation
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State one thing that will happen if Taxation falls for Consumers
Consumers have more money to spend on goods and services
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State one thing that will happen if Taxation falls for Consumers
Consumers are more motivated to work hard as they keep more of their wage
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State one thing that will happen if Taxation falls for Consumers
Consumers demand for goods rises
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Any increases to VAT will push the businesses costs up and force them to what?
to sell products at a higher price
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How does tax affect our pay?
When we get paid a percentage of the money we earn is taken in income tax therefore the higher the tax is the less money we keep
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What is Gross pay?
Gross pay is before any deductions are made
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What is Total deductions?
Deductions are what we pay to the government
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What is Net pay?
Net pay is what we actually receive after all deductions
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What is Public spending?
the government decides what to spend the money they recieve on
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What can the Government use Public spending for?
helping businesses grow and expand
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State one way the Government can help businesses grow and expand
award government contracts for construction or defence to businesses
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State one way the Government can help businesses grow and expand
offer grants to businesses to help them set up and to expand
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State one way the Government can help businesses grow and expand
offer grants to businesses to encourage them to invest in sustainable/ green products
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State one way the Government can help businesses grow and expand
fund education and training for businesses
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State one way the Government can help businesses grow and expand
by developing roads and infrastructure businesses can flourish and transport/export its goods easier,faster and cheaper
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What are Interest rates when we borrow money?
the cost of borrowing money
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What are Interest rates when we save money?
the reward for saving money
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Who sets Interest rates?
the Bank of England
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What happens when the Bank of England changes the base rate?
all other money lenders copy them
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State an effect on Businesses if Interest rates rise
Businesses postpone plans to expand as it is too expensive to borrow the money from the bank
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State an effect on Businesses if Interest rates rise
Demand for businesses goods falls as customers have less money
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State an effect on Businesses if Interest rates fall
Businesses are more likely to borrow money to expand as it is cheaper
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State an effect on Businesses if Interest rates fall
Demand for goods increases as customers have more disposable income
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State an effect on Businesses if Interest rates fall
Profit and sales rise
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State an effect on Customers if Interest rates rise
Customers begin to save their money
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State an effect on Customers if Interest rates rise
It becomes too expensive to borrow money
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State an effect on Customers if Interest rates rise
Banks and Building societies increase their interest rates to follow the Bank of England. This makes customers Mortgage payments increase
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State an effect on Customers if Interest rates rise
Customers have less disposable income
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State an effect on Customers if Interest rates fall
Consumers start to spend more
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State an effect on Customers if Interest rates fall
Customers are less likely to save and are more likely to borrow money (while it is cheap to do so)
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State an effect on Customers if Interest rates fall
Mortgage payments reduce so customers have more money to spend
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State an effect on Customers if Interest rates fall
Customers have more disposable income
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The more there is a demand for a product or service the more the business can what?
produce
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Other cards in this set

Card 2

Front

State one of the four main types of tax

Back

Income tax

Card 3

Front

State one of the four main types of tax

Back

Preview of the front of card 3

Card 4

Front

State one of the four main types of tax

Back

Preview of the front of card 4

Card 5

Front

State one of the four main types of tax

Back

Preview of the front of card 5
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