How Government Decisions on Spending Affect Al-Murad Tiles.

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Unit 38- D1

Government spending decision: The government can choose to spend on areas locally, nationally an European Level however if only one is used to spend government spending on then is still can have an effect on AL-MURAD, there can be negative and positive affects if they were spent on local areas and nationally then this can create contracts for AL-MURAD, in which unemployment rates will begin rising and people will have income to spend on luxury items and it can be beneficial for AL-MURADs due to people buying their luxury items in which product demand will rise which will then have a positive effect of their profit margin as it will begin rising.

Education spending to reach £74bn. Chancellor Gordon brown’s budget promises cash increases for the next three years of 5.3%- 2.5% in real terms- to a total £74bn for 2010-11.

Looking at the above source here I can see that the government spending will be used on education showing that in another 3 years time it is likely for AL-MURAD to receive contracts for tiles to improve education facilities such as improving school standards and building. So here AL-MURAD can receive many contracts from school which will have a positive effect on them as the profit margin will begin increasing from which they will get a chance to expand in their business. I believe that government spending is very important as it will boost up the economy of the nation as when government spends money within the different areas it will create contracts for private firms from which then rise unemployment rates and employ workers who then will have a stable income to be able to spend on luxury items. The negative affect here would be that the government would have the need to borrow money from the national saving which is the public sector net borrowing. In which they would have to make money from taxes that people are charged with which is income tax, council tax, value added tax (VAT) an etc… if such borrowed money is not repaid then it can lead the country to fall into great debt this is when recession takes place.

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Fiscal and monetary policies:                                                                                                                            Monetary- it is a policy that aims to control the money supply in the economy.                                         ...

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