How Government Spending Could Affect A Tile Business
How Government Spending Could Affect A Tile Business

How Government Spending Could Affect A Tile Business

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  • Pages: 3 (1542 words)
  • Published: November 6, 2018
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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. http://news. bbc. co. uk/hi/eduaction/6474789. stm 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 wi

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thin 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.

Fiscal and monetary policies: Monetary- it is a policy that aims to control the money supply in the economy. Fiscal- it is a policy that aims to control government spending using taxation to control the demand in the economy. Both monetary and fiscal policies are used to control the level of demand in the economy which can also be used to increase and decrease the demand for products and services. They both have impacts on decisions about investment. As does the speculation about what the media reports on what it thinks will happen to the UK.

The policies use the taxation so that they know how the money are spent and what the money is being spent on do therefore the taxation are split into two indirect taxation and direct taxation.If the government decided to increase tax rates then AL-MURAD would be affected a lot if there has been an increase in taxes as the

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will be leading the customers not to have enough money to be able to afford luxury items, so the demand for the products will fall and AL-MURAD will not be able to make profits leading them sacking their workers and not be able to improve on their business. But it can have a positive affect also as the government will receive more money to be able to spend on public services, education, hospitals etc…. so it could be possible for AL-MURAD to receive contracts from such services and buy the tiles which can have a great impact on AL-MURADs business leading them to improve on their business.

But if there was a decrease in taxes then AL-MURAD would have positive effects from this change in taxation as it would affect the economy as, the people and AL-MURAD the business itself would have more money to spend and have demand from the customers as the overall aggregate demand in the economy would increase. The government often try to get a balance in between the taxation in order for them to balance out the employment rate in the economy. Monetarists are based on the statement that the economy can be keeping up by measuring and manipulating the levels of money supply within the economy. So the money supply is the actual total amount of money available to be able to spend within the country.

So monetary policy is the best tool for the government for controlling inflation within the UK. But it is seemed that inflation is created by overload aggregate demand in the economy.Looking at this there can be both negative effect on the overall economy as it according to the overall demand in products and services so if there is no demand then inflation will rise and people would have no job this will have a negative effect on AL-MURAD as there would be no demand on their products and it will be difficult to pay wages as no one is buying their products and here employees would lose their jobs and won’t have any money to buy luxury items this will become difficult for the overall products and services demand in the economy to get back in a flow(recession here is taking place) so then there would be demand in products and services in the economy again.“This year’s increase in the income tax personal allowance of  120 a year for basic rate taxpayers will be made permanent increased to ? 145 in April, helping 22 million basic rate taxpayers- another 500,000 households not just this year but for good”.

http://news. bbc. co. uk/2/hi/uk/politics/7745340. stm looking at the above source here we can see that there has been an increase income tax free allowance from ? 120 a year to 145, this may have a positive impact on AL-MURAD as the customers can be able to afford to buy luxury items due to the high amount of tax free allowance received in which then AL-MURAD can have an increase in their profit margin.

UK Interest rates lowered to 0. 5%- The bank of England has cut interest rates to 0. 5%- a

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