Government controls the amount of money in economy by controlling the banks. Main reason of using the policy is that it reduces inflation. To do this they – Increase Interest rate which should reduce the amount of money people will borrow which will reduce demand of a product.
Lower inflation can help both consumer + businesses – neither of them has to pay as much for the goods or services they want eg. Customer can buy products cheaply, Businesses can buy cheaper raw material and make their product cheaply which means big profit for the business.
However the point above is a ‘can’ not a ‘is’, the demand for the product is low and their loans and repayment is high meaning the business might go bust 🙁 Fiscal Policy If the government lowers the taxes, people will have more money to spend on, meaning more demand, meaning more people employed. Increase taxes–>clearly opposite to above. There are lots of taxes–>direct or indirect Direct Corporation taxes – paid by companies on their profits (sole trader + partnership are not counted)
Income tax – private individuals on the amount of money they get (sole trader + partnership) National Insurance – These are payments made by both the employee and the employer which pay for the cost of a state pension and the National Health Service. Local authorise are layers of local government such as a district council. They are elected by the local people to represent them and their interest. Local authorities provide services such as schools + housing.
They are funded by central government + council + business tax. It is one of the biggest influences on business by the local authorities. A Planning Permission is a formal approval by the Local Authorities, often with conditions, allowing a proposed development to proceed. Full permissions are usually valid for five years; outline permissions, where details are reserved for subsequent approval, are valid for three years.
