1. Business, Government & Workers Mr Poole Business

2. What is a Market Economy? Entrepreneurs produce & sell for profit. If a good or service is making a loss then it is discontinued. The role of gevernment is to encourage and regulate business. Mr Poole Business

3. Market Economy Failures and Government Remedies EntrepreneursGovernment Will not produce unprofitable goods.Will provide unprofitable essential services. Do not provide public utilities. Eg. museums, libraries, parks….. Will provide public utilities. Worry more about profits & expansion & not about environment. Set up the Environmental Protection Agency. Merge & takeover regardless of effects on choice and prices. Set up the Competition Authority to monitor business growth. Only employ people so long as they make money fir the business. Set up agencies such as FAS to encourage employment. Mr Poole Business

4. Local Government Operates through elected:  County Councils  City Corporations  Urban District Councils. Mr Poole Business

5. Helps business by: Planning permission for suitable land for industrial developmant. Provide affordable housing in an area. Waste & sewage disposal for h/h & bus. Provision and maintenance of good infrastructure. County Enterprise Boards help new enterprise. Mr Poole Business

6. Central Government Comprises of the Dail & Seanad. Dail is the place where all revenue & spending decisions are made and new legislation (bill) is introduced. Budgets & bills must be approved by the Senate. When the bill has been passed by the senate it must be signed by the president. Mr Poole Business

7. Role of the Government in Business 1. Protection of consumers & employees. 2. Regulation of business. 3. Encouraging business & employment. Mr Poole Business

8. 1. Protection Protects the citizens in a variety of ways. Consumers protectd by the CIA 1978, SOGSOS Act 1980 & the Data Protection Act 1988. Employees protected by the Unfair Dismissals Act 77/93, Employment Equality Act 1998, and Industrial Relation Act 1990. Mr Poole Business

9. 2. Regulation  Means ensuring that businesses operate properly through laws & agencies: Companies Act 1990  Regulates the formation & operation of private & public limited co.’s. Competition Authority Regulates mergers & takeovers. Mr Poole Business

10. Environmental Protection Agency Regulates the impact of business on the environment. Planning Authority Regulates the building of factories……. Financial Regulator Regulates the Banks, Building Societies, Credit Union, Insurance co.’s………. Mr Poole Business

11. 3. Encouraging Supporting business Grants Are given to TNC’s to locate in Ireland & to help new indigenous enterprise set up. Agencies Support & advise businesses. IDA: Attract TNC’s to Ireland. Enterprise Ireland: Helps indigenous firms set up. FAS: Retrian job seekers. County Enterprise Boards: Support & advise local businesses. Mr Poole Business

12. Tax: Raises revenue for the government Low corporation tax encourages TNC’s to set up in Ireland, increases profits reinvested. Low PRSI reduces business costs and encourages employment as it is cheaper to employ. Low PAYE means employees have a higher disposable income and can spend more. Low VAT increases demand so higher profits are made and more jobs created. Low stamp Duty will increase demand & jobs in the construction industry. Mr Poole Business

13. Fiscal Policy Is how the government generate revenue & spends it. Current spending on public service wages creates demand and jobs. Capital spending on infrastructure, roads, hospitals & schools, creates employment in the secondary sector. National wage agreements and a stable economic climate makes Ireland an attractive investment opportunity. Mr Poole Business

14. Government Revenue & Spending (Fiscal Policy) CURRENT REVENUE/INCOME (day-to-day) CURRENT EXPENDITURE (day-to-day) PAYE, PRSI, VAT, CGT, CAT, Customs Duties, Excise Duties, Stamp Duty, Corporation Tax….. Health, Education, Security,Social Welfare, Debt Servicing…….. CAPITAL INCOME (once off) CAPITAL EXPENDITURE (once off) Privatising SSB, EU Grants, Loans Schools, Hospitals, Roads, Loan Capital Repayments. Mr Poole Business

15. Economic Variables Impact of the economy on business 1. Interest Rates 2. Inflation 3. Taxation 4. Grants 5. Unemployment 6. Exchange Rates 7. Environmental Policy Mr Poole Business

16. 1. Interest Rate Is the price that has to be paid for the use of money by the borrower. It is set by the European Central Bank. Low interest rate is good for business as it: Reduces the cost of building so more businesses will expand. Mr Poole Business

17. Encourages consumerism, increases profits & creates jobs. However low rates may fuel inflation and eventually lead to higher rates. Mr Poole Business

18. High interest rates:……………….. Mr Poole Business

19. 2. Inflation  Is the sustained increase in the level of prices in the economy as measured by the Consumer Price Index (CPI). Low inflation is good for business as: The cost of raw materials & wages are lower. The gov as the largest employer does not have to spend huge amounts in wage increases. Our exports will be more competitive if our rate of inflation is lower than other countries. Mr Poole Business

20. 3. Taxation (2009) Low taxation means that workers have a higher disposable income and more spending power. Increase in demand for products will lead to more revenue from VAT, PAYE, PRSI etc. Lower PRSI means it is cheaper to employ so more people will be employed. Mr Poole Business

21. Low corporation tax encourages TNC’s to set up in Ireland, increased profits may be reinvested in Ireland. Low stamp Duty will increase demand & jobs in the construction industry. However the gov must ensure it has enough tax to cover it’s spending. Mr Poole Business

22. 4. Grants Are non-repayable funds given by the government to businesses to set-up & grow. The IDA give grants to TNC’s. Enterprise Ireland gives grants to indigenous enterprise. Grants are funded by tax revenue or borrowing. A booming economy will generate tax revenue which in turn will allow more grant aid for business start-up. Mr Poole Business

23. 5. Unemployment High unemployment will lead to fall in consumer spending. Less tax revenue is generated and more social welfare is needed so there will be an increase in the tax rate. Raised tax rates further dampen consumer demand and slows down business development. Mr Poole Business

24. 6. Exchange Rates Is the price at which one currency can be exchanged for another. Eg €1.00 = st£1.10 or €1.00 = st£0.90 Which one has the euro more valuable? €1.00 = st£1.10 You get more for your euro in England. Mr Poole Business

25. Continued… When the value of the euro increases: Exports to non EU countries become dearer. Imports from non EU countries become cheaper. The Balance of Payments will be less favourable, more imports and less exports means that jobs will be lost & business will close. Mr Poole Business

26. Do this one yourselves When the value of the euro decreases Mr Poole Business

27. 7. Environmental Issues Green taxes imposed on goods such as petrol causes the price of raw materials to increase. Higher standards in production & energy consumption increases production costs for some businesses. However green alternatives is a source of business opportunity. Eg. Wind power. Mr Poole Business

28. Impact of business on the development of the local economy Generates Employment: Directly and indirectly. Eg: factories, houses, ships, pubs, schools, hospitals……… Creates Wealth: People with a higher disposable income will spend more & businesses may reinvest its profits locally. Sponsorship: Local business may sponsor events and improve the social environment. Mr Poole Business

29. Impact of Business Nationally 2002 Positive impact of business on the economy: Generates employment: Jobs are created in all sectors of the economy both directly & indirectly. Generates tax revenue: Corporation Tax, PAYE, PRSI, VAT all increase when businesses prosper and this in turn provides money for the government. Mr Poole Business

30. More government services: Government can spend more on health, education & utilities due to extra revenue generated. Future development: Reinvesting of businesses surpluses in new business & expansion ensures a continued cycle of economic activity. Mr Poole Business

31. Negative impact of business on the economy: Pollution: Eg. Noise, air, water ….. Redundancies: Increased competition may lead to closures and job losses. Inflation: Profiteering by large businesses may lead to higher prices & wage increases which may result in inflation. Mr Poole Business

32. How the government affects the labour force. These are the red headings. Write a few sentences about each yourself!!! National Agreements Lower taxes Government expenditure Government regulation Government as employer Mr Poole Business