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The higher the price the lower the demand, the lower the price the higher the demind. This fluctuates this is called Inelastic Demand. Supply is opposite the higher the price the higher the quantity the lower the price the lower the quantity. Distortion of markets can occur taxes/levies , interest rates, nature of products, nature of market, global/ national developments. Rasing taxes for the government the idea is to be spent to benefit everyone causing a strong political issue. There are different uk taxes and duties naming a few: income tax, national tax, VAT, IHT, car tax , stamp duty, import/export duty, tobacco duty, alcohol duty. Government use tax/ duty to raise money to spend on what is need like police, NHS Education etc.
Tax up-less disposable income - reduction in some demand (deflation pressure)
- change in purchasing habits - increase demand for some items
- demand for pay increase (inflationary pressure) -cost of employment
-loss of employment
-extra venue needed
-Increase in benefit cost
Effects are not immediate, there is always some slack in the system and it depends where and which taxes are raised
Interest rate are also important to the management of an economy, the interest rate is the cost of borrowing money.
Finances
Finances are the control of money and the flow of money, every one does finances. Businesses do finance too. A long time ago people made things and traded with each other to get things they wanted this is referred too as barter.
Money is a simple medium for smoothing trade, a measurement method of value.
What is the definition as money?
The cash you have-
The cash you have + the cash you can get
The cash you have + the cash you can get + loan credit
Loan credit - short term/long term
Costs are what you have too give too get something you want. Price is what an item is actually sold for. If you are buying you want the cost to be close to the price
Profit is the positive between difference between cost and price
Loss is the negative difference between cost and price
Income is money coming in
Expenditure money going out
Debt is how much is owed too you or what you owe out
Credit is how much money beyond that which you have, you may use.
If you sell an item you need too know the cost, this means all its costs.
Direct costs are directly attribute to the overall cost of the item
Indirect costs are not a direct attribute
Variable cost that varies with output
Fixed costs that does not vary with output
General costs that can not be directly apportioned to a client
Costs of undertaking particular projects can be allocated directly to a client
Taxations issues (2015)
Income tax bands:
£10,600 - £31,785 - 20%
£31,786 - £150,000 - 40%
£150,000 + 45%