External environment - Government policy
Worksheet 1 - Fiscal policy - what, where and when?
The aim of this worksheet is to investigate the different types of policy that are available to a government to manage the economy and the impact they may have on business.
1. Do a search in the In The News section to find recent examples of changes in fiscal policy that the government has implemented.
N.B. You may like to try search terms like:
- Fiscal policy
- Taxation
- Tax
- Government expenditure
- Income tax
- Budget
You may get the best results when searching using more than one word if you check the 'Match your phrase exactly?' box under the search button.
Note down the examples below:
a)
b)
c)
d)
e)
(10 marks)
2. What may have been the objectives of the government in making the changes you have identified?
(5 Marks)
3. Delete the words in bold in the paragraph below as necessary so that it describes fiscal policy accurately.
Fiscal policy is the manipulation of government expenditure and taxation / interest rates to manage the level of demand in the economy. If the government feel that demand is too low, then they might choose to put in place a reflationary / deflationary fiscal policy. This might mean increasing / decreasing the level of income tax or perhaps increasing / decreasing the level of spending taxes like VAT / council tax. They might also choose to increase / decrease the level of government expenditure. These policies would have the effect of raising the level of spending and therefore demand in the economy, which should boost economic growth.
(6 Marks)
4. Evaluate how changes in the following taxes might affect businesses. Justify your answer.
Income tax
Corporation tax
VAT
Business rates
(12 Marks)
5. Use the Treasury Budget site to find out the five largest areas that the government spends money on and how much they spend. Fill the results in the table below:
| Government spending on: | Amount (£bn) | |
|---|---|---|
| 1. | ||
| 2. | ||
| 3. | ||
| 4. | ||
| 5. |
(10 Marks)
Total Marks = 43
