P4 explain how both fiscal and monetary policy decisions have affected a
selected business
Introduction
What is monetary policy?
Monetary stability means stable prices and confidence in the currency. Stable prices
are defined by the Government's inflation target, which the Bank seeks to meet
through the decisions taken by the Monetary Policy Committee (MPC).
How would monetary policy impact Balfour Beatty?
It would affect Balfour Beatty because by having a low base rate means that fewer
people are saving, this may affect the supply of money in the economy therefore
affecting the business .Having a low base rate means that people are less likely to
want to save their money and will want to spend it instead, which creates demand for
products .So if the interest rate was to decrease it would therefore lead to have a
positive impact on Balfour Beatty as they could increase their price of services and
change their suppliers.
If inflation levels are high, this may also affect Balfour Beatty people will spend less
and invest less on Balfour and Beatty. This can therefore lead to low income into the
business and increase unemployment levels as Balfour Beatty will have too many
worker but less projects to spare,leading them to make employees redundant.
What is fiscal policy?
Fiscal policy is the means by which a government adjusts its spending levels and tax
rates to monitor and influence a nation's economy. It is the sister strategy to
monetary policy through which a central bank influences a nation's money supply.
These two policies are used in various combinations to direct a country's economic
goals.
How would fiscal policy impact Balfour Beatty?
If the government wants to stimulate growth in the economy, it will increase spending
for goods and services. This will increase demand for goods and services. Since
demand goes up, production must go up. If production goes up, Balfour Beatty may
need to hire more people. People that were once unemployed may now have jobs
and money to spend on goods and services.This will further increase the demand
and require more production and, hopefully, the cycle of growth will continue.This will
be a positive impact for Balfour Beatty as they will have more money to spend on
equipment,projects and expanding their business.
If the government wants to slow down an overheating economy, it may decide to
raise taxes. This means people have less money to spend. Fewer people will be
hired because there is less demand. Unemployed people don't have extra money to
spend towards Balfour Beatty .Balfour Beatty may not make as much money, which
means they will have less money to invest in his business and less money to spend
on staff, therefore making staff redundant. As Well as that it will affect them in a
negative way as they will have to be pay out more in tax.
selected business
Introduction
What is monetary policy?
Monetary stability means stable prices and confidence in the currency. Stable prices
are defined by the Government's inflation target, which the Bank seeks to meet
through the decisions taken by the Monetary Policy Committee (MPC).
How would monetary policy impact Balfour Beatty?
It would affect Balfour Beatty because by having a low base rate means that fewer
people are saving, this may affect the supply of money in the economy therefore
affecting the business .Having a low base rate means that people are less likely to
want to save their money and will want to spend it instead, which creates demand for
products .So if the interest rate was to decrease it would therefore lead to have a
positive impact on Balfour Beatty as they could increase their price of services and
change their suppliers.
If inflation levels are high, this may also affect Balfour Beatty people will spend less
and invest less on Balfour and Beatty. This can therefore lead to low income into the
business and increase unemployment levels as Balfour Beatty will have too many
worker but less projects to spare,leading them to make employees redundant.
What is fiscal policy?
Fiscal policy is the means by which a government adjusts its spending levels and tax
rates to monitor and influence a nation's economy. It is the sister strategy to
monetary policy through which a central bank influences a nation's money supply.
These two policies are used in various combinations to direct a country's economic
goals.
How would fiscal policy impact Balfour Beatty?
If the government wants to stimulate growth in the economy, it will increase spending
for goods and services. This will increase demand for goods and services. Since
demand goes up, production must go up. If production goes up, Balfour Beatty may
need to hire more people. People that were once unemployed may now have jobs
and money to spend on goods and services.This will further increase the demand
and require more production and, hopefully, the cycle of growth will continue.This will
be a positive impact for Balfour Beatty as they will have more money to spend on
equipment,projects and expanding their business.
If the government wants to slow down an overheating economy, it may decide to
raise taxes. This means people have less money to spend. Fewer people will be
hired because there is less demand. Unemployed people don't have extra money to
spend towards Balfour Beatty .Balfour Beatty may not make as much money, which
means they will have less money to invest in his business and less money to spend
on staff, therefore making staff redundant. As Well as that it will affect them in a
negative way as they will have to be pay out more in tax.
