Studied by 6 people
- Interest Rates, Saving, Borrowing, Spending and Investment - Government Income and Expenditure
Interest rates:
The percentage of an amount of money being charged for use, for example, if you borrow $100 and you have an interest rate of 6% you will owe $106 at the end of the year.
Saving
Setting aside money for the future instead of using it as soon as received, this can be done by putting the money in a savings account.
Borrowing
Getting money from another group with an agreement to repay it.
Spending
Using your money to obtain goods or services
Investing
Putting money into stocks property or businesses to expect a profit.
Factors
Factors that influence the different interest rates can include inflation of the economy, economic growth or decline, bank policies, and foreign exchange rates.
Consumers
Interest rates affect consumer's decisions because higher interest rates provide greater Returns on savings, and make borrowing more expensive, while lower interest rates reduce the cost of borrowing making it more easy for people to spend their money.
Producers
Interest rates affect producers' decisions because higher interest rates increase the return on savings which results in businesses saving their profits, increasing the cost of borrowing which discourages companies from taking on loans, and lower interest rates lessen the cost of Investments making it more appealing to invest in new technology or equipment.
Revenue
The UK government mainly receives its money from taxes from the public which is spent on public facilities.
Spending
The UK government mainly spends on goods and services.
Public Goods
These are goods that are available to everyone.
Budget Defect
When the government spends more than it receives
Budget Surplus
When the government earns more money than it spends.
Direct Taxation
Direct taxation is when taxes are paid directly by individuals to the government based on income
Indirect Taxation
Taxes that are paid on goods and services bought rather than income.
Progressive Taxes
Taxes where the tax rate increases as the taxable amount increases.
Regressive Taxes
Taxes when the tax rate decreases as the taxable amount increases which makes it harder for lower-income individuals.
Supply
How much of a good or service a producer wants to own at a time.
Demand
The number of a good or service that a consumer is able to buy.
Main Idea
As prices increase, supply increases, this is because producers are more lenient to make more of the product to capitalize on higher prices.
Equilibrium
When quantity supply equals quantity demand, no surplus or shortage of goods.
Stock
An ownership of a company, being the shareholder means you are a partial owner of a company and may have benefited from profits.
Stock Market
Where stocks are traded and exchanged, this can be the NASDAQ or NYSE.
Exchange
Where buyers and sellers meet to trade.
Ticker Symbol
Unique letters that represent a stock.
Bull Market
When stock prices rise, people are optimistic about the stock market.
Bear Market
When stock prices decrease, people are pessimistic during this time.
Supply and Demand
This influences stock prices because when more investors want to buy compared to sell, the prices are usually higher.
Company Performance
When a company is doing well based on earning reports, company news, and financial health, the prices usually go up.
Inflation:
An increase in the price level of goods and services in an economy over time.
Deflation
A decrease in the price of goods and services, often caused by less supply of money or credit.
Consumer Price Index (CPI)
A measure of the weighted average of prices of a basket of consumer goods and services.
Hyperinflation
Out-of-control inflation.
Stagflation
When the inflation rate is high, the economic growth rate slows, and unemployment is steadily high.
Cost-Push Inflation
When prices rise because of the increase in the cost of production.
Demand-pull inflation
Prices rise because the demand in an economy outpaces supply.
Core Inflation
Change in the costs of goods and services does not include those from the food and energy sectors
Monetary Policy
When the monetary authority of a country controls the supply of money, targeting an inflation rate or interest rate for stability and growth
Phillips Curve
The inverse relationship between the unemployment rate and the rate of inflation.
Globalization
When organizations start operating on an international scale
Free Trade
International trade is without tariffs, quotas, or other restrictions.
Tariff
A tax to be paid on imports or exports.
Quota
A limited quantity of a product that is under official control can be produced, exported, or imported.
Trade Balance
Difference between a country’s exports and imports of goods.
Protectionism
The theory of protecting a country’s domestic industries from international competition by taxing imports.
Exchange Rate
Value of one currency for conversion to another
Trade Deficit
Measure of international trade where a country’s imports exceed its exports.
Trade Surplus
Measure of a positive balance of trade, where a country’s exports exceed its imports.
World Trade Organization (WTO)
A supranational organization that regulates international trade.
Note 
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