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Economics 2.6.2 - Coggle Diagram
Economics 2.6.2
direct taxation
progressive taxes increase the more you spend
regressive taxes decrease the more you spend
proportional taxes stay the same no matter what you spend
taxation on wealth and income
income tax
inheritance tax
indirect taxation
taxation on spending
VAT
progressive taxes increase the more you spend
regressive taxes decrease the more you spend
proportional taxes stay the same no matter what you spend
stamp duty
fiscal
instruments
government spending and taxation can be changed
deficit
government spending > taxation
surplus
government spending < taxation
uses government spending and taxation to manipulate economic behaviour
Bank of England
MPC sets interest rates
set the overnight rate of interest for commercial banks as BOE is lender of last resort
if commercial banks need loans to balance books they have to borrow off of the BOE
monetary
instruments
interest rates
lower interest rates stimulate borrowing and investment
QE
increased availability of credit
exchange rates
depreciation means imports become more expensive
appreciation means imports become less expensive
strengths of demand side policies
2008 Financial crash
weaknesses of demand side policies