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AIFE:Unit 1 - Coggle Diagram
AIFE:Unit 1
Topic 2
Personal finance is the money individuals receive and how they use it - spending, investing, giving to charity, saving and borrowing
Govt policies affect the economy and therefore how people receive and use their money - eg interest rates
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People's Values affect their decisions and actions. They are not fixed but may change as personal circumstances change or as they get older
Social justice is the taxes we pay as working citizens are used to ensure a functioning a fair society.
The four largest areas of public spending are welfare, health, education and defence
The govt may run a surplus or deficit budget depending on its beliefs and what it thinks the country needs.
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There are four main areas the govt has an impact on the personal financial decisions that we make; policies, public spending, the bank of England and interest rates, economic climate.
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Govt borrows money to fund public spending as well as raising money from income tax, borrowed money comes from bonds and gifts.
A bond is... a certificate that shows you have bought debt from a company or the govt, in return for which the company pays a fixed amount of money in interest each year.
A gilt is a high-interest, very secure govt bond.
In order to repay national debt, govts reduce public spending and raise tax rates. When public spending is reduced, this can mean cuts in the public sector pay
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Characteristics of a boom - govt collects more tax when debt is low, consumer confidence
Recession - GDP might be flat, inflation less likely.
Govt policy in boom - Managing inflation, influencing the amount of private borrowing and spending
Topic 5
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Citizens pay tax on income, businesses pay tax on profits
Direct Tax: Money taken directly from income (income tax, NICs), individuals can earn £12,570 without being taxed
Indirect tax: Tax that people pay within the price of goods and service, rather than as a separate payment to the govt - VAT 20%
Variable taxation - income tax, where the more you earn the more you pay
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Council tax part-funds local govt services, depends on the value /location of your home
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IHT - inheritance tax is an indirect tax charged on money you receive as a result of someone dying and transferring their wealth to you.
Threshold - £325,000, 40% taxed of anything over that
Capital Gains tax - the value of assets such as houses, land, paintings and shares. You pay this on any gain you make when you sell assets
2021-22 is £12,300, amount of profit that can be made from an asset this tax year before any tax is payable.
Excise duties are taxes placed on: Alcohol, tobacco, sugary soft drinks, fuel
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Topic 1
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Most popular countries for Brits to emigrate to: Australia, France, China, Poland, Spain
British citizen, being born in Britain, moving to live in Britain and being given citizenship by the government
Political Rights: Having a say in how the country is run, Voting for politicians we want to represent us
Legal: Obeying the law (Responsibility), being defended by a lawyer if we are accused of a crime, a fair trial, tell the truth in court.
Economic: free education, paying taxes on the money we earn (responsibility), free healthcare, to be paid no less than the national minimum wage, To ask for financial help from the government
You have the right to: a fair trial, protection from crime, be treated with respect, be employed, equal opportunities
You have the responsibility to tell the truth in a court of law, report crimes, treat others with respect, pay taxes, not discriminate.
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Cabinet roles:
Home secretary - responsible for the internal affairs of England and Wales, and for immigration and citizenship for the UK
Chancellor of the Exchequer - govts chief financial minister and as such is responsible for raising revenue through taxation or borrowing and for controlling public spending.
Foreign Secretary is the political head of the Foreign and Commonwealth Office and responsible for Britain's relations with foreign govts and states.
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Topic 6
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Communist economy - govt makes all decisions about what to produce, distribute and who can consume them.
Free-market economy - private companies make the production and distribution decisions , motivated by profit. govt doesn't interfere
Mixed economy - the UK is an example, falls in between the two.
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Topic 3
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Bank comes from old Norse bakki, meaning bench
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Unit of account, allowing us to keep track of how much things are worth
It is the store of value: it can be held, and then reliably used to pay for goods and services when needed.
Features: portable, durable, divisible, easily recognised, hard to forge
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Topic 4
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net income - the income that you receive after all deductions have been made from your gross income.
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Children cannot work during school hours, no work before 7 am or after 7 pm, not work in dangerous jobs or those harmful to their health in any way, and have at least one hour's break for every four hours of working.
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Topic 7
Good financial choices: less 'bad debt' in the economy, less borrowing overall, incr4eased spending and increased saving bc when ppl borrow less, they repay less from their earnings
Poor financial choices: Increased amounts of personal debts that cannot be repaid, more high-risk borrowing, less saving and less spending bc people use more of their earnings to repay expensive debt
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