3 external_environment_economic_government

3 external_environment_economic_government - tutor2u GCSE...

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tutor2u GCSE Business Studies Economy – Government Spending and Taxation The government’s main economic aims are: f Economic growth – more goods and services produced in the economy. f Low inflation – prices that are not rising too fast. f Low unemployment – as many people employed as possible. f Fair distribution of income The main policies used by government to achieve these aims are: f Fiscal policy – government spending and taxation. Government spending is also known as public expenditure. f Monetary policy – interest rates (the cost of borrowing money and rewards for saving). f Legislation – laws that affect the way that a person or business can act. The UK Government spends over £400bn a year and takes about the same in taxes. It also passes legislation. These affect the way business can act, e.g. what it can produce, how much it costs and who it can employ. It also affects the way that consumers spend their money.
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