Using the internet, research recent fiscal and monetary policy decisions made by the UK government.
Use these websites:www.bankofengland.co.uk/monetarypolicy/decisions.htm http://news.bbc.co.uk
(budget 2015)
P4
Economical policies
Fiscal policy- is the means by which a government adjusts its spending levels and tax rates to monitor
and influence a nation's economy.This means that they would reduce taxes on private sector companies
in order for them to grow and increase their employment so that the unemployment rate reduces which
helps them to build the economy as stores will have customers with more disposable money than
before. Or the government can increase its taxes in order to provide jobs like construction on damaged
roads, bridges and other government property.
● Effects of fiscal policy- if the government spends a lot on projects such as schools, hospitals or
even roadworks it will increase jobs and there will be more demand for incentives which is a
scheme from the government. However, if the government spend less on the public then there
will be fewer jobs and less demand for incentives as the government would give out small
amounts of cash.
● Effects from taxation- when there is high taxation from the government there will be less
spending as people have less disposable money after paying tax which will lead to less demand
for products from companies. Oppositely if the government provides people with low taxation
then there will be more disposable money to spend and more demand for products from
companies.
Monetary policy- Monetary policy is the process by which the monetary authority such as a bank of a
country controls the supply of money, often targeting an inflation rate or interest rate to ensure the
price stability and general trust in the currency.
● Effects of interest rates- if the interest rates goes up from banks there will be less borrowing as
people would have to pay back more than what they received which will cause less demand, on
the other hand if the interest rates goes down there will be more people borrowing money from
the bank as there is less to pay back on top of the loan which will lead to more demand.
● Effects of money supply- if there is an increase in money supply from the banks there will be
more spending and more demand, but if there is a decrease there will be less spending and less
demand. For example, if people are able to receive high amount loans there will be more
demand and more people spending into the economy. However, if the amount drops then less
people would demand for it which will lead to less money being spent into the economy.
Use these websites:www.bankofengland.co.uk/monetarypolicy/decisions.htm http://news.bbc.co.uk
(budget 2015)
P4
Economical policies
Fiscal policy- is the means by which a government adjusts its spending levels and tax rates to monitor
and influence a nation's economy.This means that they would reduce taxes on private sector companies
in order for them to grow and increase their employment so that the unemployment rate reduces which
helps them to build the economy as stores will have customers with more disposable money than
before. Or the government can increase its taxes in order to provide jobs like construction on damaged
roads, bridges and other government property.
● Effects of fiscal policy- if the government spends a lot on projects such as schools, hospitals or
even roadworks it will increase jobs and there will be more demand for incentives which is a
scheme from the government. However, if the government spend less on the public then there
will be fewer jobs and less demand for incentives as the government would give out small
amounts of cash.
● Effects from taxation- when there is high taxation from the government there will be less
spending as people have less disposable money after paying tax which will lead to less demand
for products from companies. Oppositely if the government provides people with low taxation
then there will be more disposable money to spend and more demand for products from
companies.
Monetary policy- Monetary policy is the process by which the monetary authority such as a bank of a
country controls the supply of money, often targeting an inflation rate or interest rate to ensure the
price stability and general trust in the currency.
● Effects of interest rates- if the interest rates goes up from banks there will be less borrowing as
people would have to pay back more than what they received which will cause less demand, on
the other hand if the interest rates goes down there will be more people borrowing money from
the bank as there is less to pay back on top of the loan which will lead to more demand.
● Effects of money supply- if there is an increase in money supply from the banks there will be
more spending and more demand, but if there is a decrease there will be less spending and less
demand. For example, if people are able to receive high amount loans there will be more
demand and more people spending into the economy. However, if the amount drops then less
people would demand for it which will lead to less money being spent into the economy.
