1. GOVERNMENT ECONOMIC POLICIES

2. DEFINITIONS TO LEARN
Fiscal policy is an change by the government in tax rates or public sector spending
Direct taxes are paid directly from incomes e.g. income tax
Indirect taxes are added to the price of goods or services and taxpayers pay the tax as they purchase the goods e.g. VAT
Disposable income is the level of income a taxpayer has after paying income tax
Import tariff is a tax on imported products
Import quota is a limit to the quantity of a product imported
Monetary policy is a change in interest rates by government or central bank
Exchange rate appreciation is the rise in value of currency compared to other currencies

3. WHAT ARE THE 4 COMMON TAXES?
Income tax
Profits tax or corporation tax
Indirect taxes e.g.VAT
Import tariffs

4. WHICH SALES WILL FALL FOLLOWING AN INCREASE IN INCOME TAX?
Bread
Petrol
TV’s
Foreign holidays
Cooking oil
Jewellery
Salt
Home computers

5. TASK
Combine the 3 revision summaries from the textbook into one mind map

6. HOW BUSINESS MIGHT REACT TO CHANGES IN ECONOMIC POLICY?
Increase income tax - this reduces the amount consumers have to spend
Increase tariffs on imports
Increase interest rates
What would be one possible business decision and one problem for each of the above?