Fiscal and Monetary Policies
This report is going to be based on the impact both fiscal and monetary policies have
on McDonald’s. Fiscal and monetary policies have a vast effect on Mcdonald's as
these policies are the government spending and the monetary policy is governed by
the bank of England which controls inflation therefore these policies affect
Mcdonald's massively.
Fiscal Policy
Fiscal policy is the use of government spending and it also allows the government to
increase/decrease tax and the level of borrowing to increase the economic growth/
growth of aggregate demand, output and jobs. Fiscal policy involves distribution of
wealth, the use of micro economic government (to help reduce the effect of global
warming etc) and change of patterns in spending.
For example the government might increase/decrease the amount of spending that
is given to healthcare. This policy affects the level of borrowing which means when
the level of borrowing is high, most people/businesses find it hard as they have to
pay back a lot of money in interest rates which for people will decrease the demand
as the interest rates will discourage them and for businesses like Mcdonald's it would
discourage them as they will have to pay a lot of money due to interest rates.
Some of the money in the fiscal policy go towards the public finances such as
transport, to improve roads and build new roads and railways etc. This however
affects Mcdonald's is a good way as the transport will be improved and the condition
of the roads will not deteriorate as the government will make amends if that happens.
Fiscal policy affects businesses like Mcdonald's as changes in aggregate
demand/supply might negatively or positively affect Mcdonald's because if there is
no high demand for their products then their demand will decrease.
If there is a high demand for their products then there profit will increase so will their
demand. This policy affects Mcdonald's further as they have to pay tax and this
policy can increase/decrease tax which will then go on to affect the profit that
Mcdonald's will make. There are two types of tax in this policy. Direct and indirect
taxation.
Budget
The government keeps a balanced budget and that is used to spend on public
services. The government will either have a budget surplus or deficit. If they have a
budget surplus, this will mean that the government spending will be less than their
tax revenue. A balanced budget will impact on Mcdonald’s because the
government’s tax revenue will be equal with people's disposable income so it will not
affect it. Sales and profit will also increase for Mcdonald’s as customers will be able
to afford it. Budget surplus will impact on Mcdonald’s because customers will have
, more disposable income if the government’s tax revenue is high and sales and profit
will increase.
Budget deficit will impact on Mcdonald’s because customers will have less
disposable income if the government’s tax revenue is low and Mcdonald’s sales will
drop as they would not be able to make profit. However the pre-budget report given
to the government by the Chancellor of the Exchequer gives the government and
businesses the opportunity to look at the economy at a large scale to see its
progress.
It allows businesses and people to benefit from government spending. For example if
the government notice that there aint enough jobs then they will create jobs which
will increase the rates of employment. This will impact on Mcdonald’s because sales
will increase as a result and investment opportunities for Mcdonald’s will increase.
Direct Taxation
Direct taxation is tax which is paid directly to an organisation. It is the profit, income
and wealth of a company. One example of direct taxation is corporation tax. This tax
is cut from the earnings of a company and what profit they make. The current
corporation tax rate is 19%. This will impact Mcdonald's as money is taken out from
the company profit and sales may decrease which means Mcdonald's still has to pay
and then they would be left will less profit. Income tax is another tax that Mcdonald's
would have to pay. This tax is what the government receives from the sales of
businesses.
The income tax that businesses give get spent on public spending such as the NHS,
transport and schools etc. This impacts Mcdonald's as they lose out money on the
profit they make. By income tax being deducted, it will affect the amount of profit they
make. There is a different type of rate people get charged as it depends on how
much the individual/business earns, because Mcdonald's earns over £150,000, they
are charged at a rate of 45% tax which goes towards public spending and the
security of people. This affects Mcdonald's as cash is deducted from their earnings
which leaves them with less profit.
Capital Gains
Capital gains is a tax on the profit when you sell/dispose of an asset that’s increased
in value. This is a tax paid by businesses who sell their assets. The tax rate for
properties are 28% and the rate for other chargeable assets are 20%. This affects
Mcdonald's because if they wanted to sell one of their assets or a property that they
owned, they would have to put a tax on it and pay their tax rate, even when it is sold
which means that some money that Mcdonald's make would have to be taxed off.
However this is a good thing as well because if the property sold for a higher price
Mcdonald's bought it for then they can use that money to reinvest back into the
business and help reduce tax on it.
This report is going to be based on the impact both fiscal and monetary policies have
on McDonald’s. Fiscal and monetary policies have a vast effect on Mcdonald's as
these policies are the government spending and the monetary policy is governed by
the bank of England which controls inflation therefore these policies affect
Mcdonald's massively.
Fiscal Policy
Fiscal policy is the use of government spending and it also allows the government to
increase/decrease tax and the level of borrowing to increase the economic growth/
growth of aggregate demand, output and jobs. Fiscal policy involves distribution of
wealth, the use of micro economic government (to help reduce the effect of global
warming etc) and change of patterns in spending.
For example the government might increase/decrease the amount of spending that
is given to healthcare. This policy affects the level of borrowing which means when
the level of borrowing is high, most people/businesses find it hard as they have to
pay back a lot of money in interest rates which for people will decrease the demand
as the interest rates will discourage them and for businesses like Mcdonald's it would
discourage them as they will have to pay a lot of money due to interest rates.
Some of the money in the fiscal policy go towards the public finances such as
transport, to improve roads and build new roads and railways etc. This however
affects Mcdonald's is a good way as the transport will be improved and the condition
of the roads will not deteriorate as the government will make amends if that happens.
Fiscal policy affects businesses like Mcdonald's as changes in aggregate
demand/supply might negatively or positively affect Mcdonald's because if there is
no high demand for their products then their demand will decrease.
If there is a high demand for their products then there profit will increase so will their
demand. This policy affects Mcdonald's further as they have to pay tax and this
policy can increase/decrease tax which will then go on to affect the profit that
Mcdonald's will make. There are two types of tax in this policy. Direct and indirect
taxation.
Budget
The government keeps a balanced budget and that is used to spend on public
services. The government will either have a budget surplus or deficit. If they have a
budget surplus, this will mean that the government spending will be less than their
tax revenue. A balanced budget will impact on Mcdonald’s because the
government’s tax revenue will be equal with people's disposable income so it will not
affect it. Sales and profit will also increase for Mcdonald’s as customers will be able
to afford it. Budget surplus will impact on Mcdonald’s because customers will have
, more disposable income if the government’s tax revenue is high and sales and profit
will increase.
Budget deficit will impact on Mcdonald’s because customers will have less
disposable income if the government’s tax revenue is low and Mcdonald’s sales will
drop as they would not be able to make profit. However the pre-budget report given
to the government by the Chancellor of the Exchequer gives the government and
businesses the opportunity to look at the economy at a large scale to see its
progress.
It allows businesses and people to benefit from government spending. For example if
the government notice that there aint enough jobs then they will create jobs which
will increase the rates of employment. This will impact on Mcdonald’s because sales
will increase as a result and investment opportunities for Mcdonald’s will increase.
Direct Taxation
Direct taxation is tax which is paid directly to an organisation. It is the profit, income
and wealth of a company. One example of direct taxation is corporation tax. This tax
is cut from the earnings of a company and what profit they make. The current
corporation tax rate is 19%. This will impact Mcdonald's as money is taken out from
the company profit and sales may decrease which means Mcdonald's still has to pay
and then they would be left will less profit. Income tax is another tax that Mcdonald's
would have to pay. This tax is what the government receives from the sales of
businesses.
The income tax that businesses give get spent on public spending such as the NHS,
transport and schools etc. This impacts Mcdonald's as they lose out money on the
profit they make. By income tax being deducted, it will affect the amount of profit they
make. There is a different type of rate people get charged as it depends on how
much the individual/business earns, because Mcdonald's earns over £150,000, they
are charged at a rate of 45% tax which goes towards public spending and the
security of people. This affects Mcdonald's as cash is deducted from their earnings
which leaves them with less profit.
Capital Gains
Capital gains is a tax on the profit when you sell/dispose of an asset that’s increased
in value. This is a tax paid by businesses who sell their assets. The tax rate for
properties are 28% and the rate for other chargeable assets are 20%. This affects
Mcdonald's because if they wanted to sell one of their assets or a property that they
owned, they would have to put a tax on it and pay their tax rate, even when it is sold
which means that some money that Mcdonald's make would have to be taxed off.
However this is a good thing as well because if the property sold for a higher price
Mcdonald's bought it for then they can use that money to reinvest back into the
business and help reduce tax on it.
