Unit 38 - Business and the Economic Environment P4

Unit: 38
Task:P4 and M2



Business And The Economic Environment

In this assignment I will be explaining hot both fiscal and monetary policy decisions have
affected a selected business. I will also analyse the effects of fiscal and monetary policies for a
selected business in terms of the market it operates in.

Fiscal policy

Fiscal policy is based on the approach that changing the levels of taxation and government
spending, the government could influence productivity levels. As you are already aware,
government spending influences government borrowing and debt.

Direct and Indirect taxation

Direct and indirect taxation are two different methods the government uses to gain income.
Direct taxes are those that are paid by individuals and business on their income or profit and
include the following. Indirect taxation Include VAT and a range of excise duties on oil, tobacco,
alcohol. The supplier can pass on the burden of an indirect tax to the final consumer – depending on
the price elasticity of demand and supply for the product.

Examples of direct taxation

Income tax:

Corporation tax:

National Insurance:

Examples of indirect taxation:

V.A.T:

Excise duty:

Air passenger duty:

Capital allowance:

Businesses