Lower inflation can help both consumer + businesses – neither of them has to pay as much for the goods or services they want eg. Customer can buy products cheaply, Businesses can buy cheaper raw material and make their product cheaply which means big profit for the business. However the point above is a ‘can’ not a ‘is’, the demand for the product is low and their loans and repayment is high meaning the business might go bust ☹
Fiscal Policy
If the government lowers the taxes, people will have more money to spend on, meaning more demand, meaning more people employed. Increase taxes→clearly opposite to above. There are lots of taxes→direct or indirect
Direct
Corporation taxes - paid by companies on their profits (sole trader + partnership are not counted)
Income tax – private individuals on the amount of money they get (sole trader + partnership)
National Insurance - These are payments made by both the employee and the employer which pay for the cost of a state pension and the National Health Service.
Indirect
VAT - VAT is added to goods and services
Custom taxes – added to imported good
Increase indirect taxes → fall in sales
Increase direct taxes → less money, less demand
Spending
Increase spending by the government → reduces in unemployment → more demand
Local Authorities
Local authorise are layers of local government such as a district council. They are elected by the local people to represent them and their interest. Local authorities provide services such as schools + housing. They are funded by central government + council + business tax
Influences to businesses
- maintaining the area
- offering grants + loans to local business
- enforce business laws such as consumer protection
They try to assist a business as much as possible.
Planning Permission
It is one of the biggest influences on business by the local authorities. A Planning Permission is a formal approval by the Local Authorities, often with conditions, allowing a proposed development to proceed. Full permissions are usually valid for five years; outline permissions, where details are reserved for subsequent approval, are valid for three years.
Legal Environment
Government + EU created laws to protect the workers, consumer and the environment. The Purpose
- Protect consumers from unfair practices
- Protect workers in workplaces
- To make sure that there is free competition between businesses
- Protect the environment
To stop businesses form providing misleading information there are lots of law created
Trade Description Act – it is a criminal offence to describe a product wrongly
Sales of Goods Act – It is the seller, not the manufactures who must deal with the complaints and problems
Supply of goods + Services Act – same purpose as Sales of Good Act
Weight + Measure Act – It is illegal to sell short measures or goods which are underweight
Consumer Protection Act – Goods must be safe to use
Food and Drugs Act – Criminal offence to sell food + drink unfit for humans
Consumer Credit Acts
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Unsolicited Good + Services Act – businesses are prevented demanding for payment from an unordered product
Fair Trade Act – This act main aim is to – Inform consumer their rights
- Prosecute businesses which break the law
- Report to the monopolies + Mergers Commission of any businesses need to be investigated
Employment + Law
To ensure workers are treated respectfully the government created laws.
Health + Safety at work Act – employers are responsible for the safety and health of the worker at their workplace. The employer has to make sure that the employees know how to use a machine or how to use the equipment they use properly. They also have to make sure the equipment is safe to handle.
Factories Act – businesses must provide their employees with minimum safety requirement such as toilets and fire escape.
Sex Discrimination Act – it is illegal to discriminate someone because of their gender
Race Relation Act - it is illegal to discriminate someone because of their race
Redundancy Payment Act – People have worked in a business for 5 years part time or have worked 3 year full time have a right to get a week’s pay for every year they have worked. (After they quit)
Equal Pay Act – men + women should get a equal pay for the same job
