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Summary P4 Unit 38
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Neil Patel 40068068 Unit 38 P4P4: explain how both fiscal and monetary policy decisions have affected a selected business
In this assignment I will explain how They can increase the number of indirect
both fiscal and monetary policy taxes that could specific business activities
decisions have affected Balfour Beatty. to thus creating an ongoing effect for the
rest of the economy. Governments also
The first policy that I will be talking about regulate the direct taxes that they ask from
is the fiscal policy. Fiscal policy is when people as they can increase the amount of
the government spend and use taxation to tax that an individual receives on their
influence the economy. When the income. Monetary policy is the policy laid down by
government decides on the goods and If the government thinks the economy is the central bank. It involves management
overheating - or growing too fast - the of money supply and interest rate and is
services it purchases, the transfer
government may decrease spending. A the demand side economic policy used by
payments it distributes, or the taxes it decrease in government spending will
collect, it is engaging in fiscal policy. There the government of a country to achieve
decrease overall demand in the economy.
are two types of fiscal policy, discretionary Businesses will such as Balfour Beatty will objectives like inflation, consumption,
and automatic the first one is discretionary slow production, which means profits will growth and liquidity.
policy: which refers to policies which are decline, resulting in less hiring and
decided, and implemented, by one-off business investments. A cut in government
spending may
policy changes. Discretionary Fiscal policy
hurt Balfour
and the second one is automatic Beatty,
stabilisation, where the economy can be because
stabilised by process called fiscal drag there will be
and fiscal boost. If direct tax rates are less money in
progressive, this means that the people's
percentage of pockets to
spend
the income,
towards
then a rapid them.
increase in
income will
be slowed
down
automatically.
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