economy

what is an economy

the system through which a society produces, distributes and uses goods and services

economic growth

an increase in the production of goods and services in an economy over time

taxation

money collected by government from individuals and organisations to help fund public spending

what is income tax

a tax charged on people’s income

what is corporation tax

a tax paid by companies on their taxable profits

what is indirect taxation

a tax on what people buy or spend rather than directly on what they earn

why does government collect taxes

to increase it’s tax revenue/ raise money for public spending and fund public services and other government activities

what is public spending

government spending on public services, welfare, infrastructure and other government activities. it is not money spent by consumers in shops

give three examples of public services

healthcare, education, policing

what is welfare spending

government spending on financial support and benefits for people who meet particular conditions e.g. unemployed, elderly, disabled

what areas of public spending increase with an ageing population

an ageing population can increase spending on pensions, healthcare, social care

why might a government cut income tax

to leave people with more money to spend (disposable income) and businesses with more money to invest and potentially stimulate economic growth

what is one possible disadvantage of cutting taxation

government may have less money available for public spending

what is one possible advantage of increasing taxation

it can provide more money to fund public services and government spending

what is a trade union

an organisation representing workers and seeking to improve their pay, conditions and rights

what is a strike/ industrial action

workers refusing to work, usually during a dispute with an employer

why can public sector strikes cause problems for citizens

they can reduce or delay important services, cause inconvenience, create health and safety risks, and lead to extra costs or loss of income

why can public sector strikes cause problems for government

they can cause bad publicity, pressure to increase wages, and additional costs for maintaining services while workers are striking

why does an ageing population create pressure on government

more people may require pensions, healthcare and social care, increasing demand for public services and spending

give three ways a government could try to improve the economy

encourage investment, support businesses, improve education and skills, use taxation and spending policies to encourage growth