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Finance - Essay Example

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Download file to see previous pages Note: The category ‘Economic inactivity’ includes all people who are not in paid employment or actively looking for a job, while ‘Unemployed’ only includes people actively looking for a job and available to work in the next two weeks (the standard definition of unemployment). ‘Total population’ refers to people living in private households (i.e. not in residential care homes, community centres or prisons).
The government decisions that can affect the flow of cash from both households and corporate is Fiscal and Monetary Policies which includes, the taxation which is interest rates and the government spending(Riley 2012)
The money that flow to the government includes, savings, payments made to the government, and the taxes. The types of taxes that are paid to the government include, council tax1, taxes on income , National Savings & Investments savings, and government bonds, while payments to government includes, rents paid for living in buildings own by the government(Vivienne Brown and Alan Shipman).
If government decides to increase taxes, it means that the money flowing to the households will go done while money flowing to the government will go up. Furthermore, if the government reduces the money which is going towards the citizen then it means that the money flowing towards the households will go down.
The amount of money that flows from households to corporate includes payments to financial institutions, and spending on services and goods. Spending on services and goods include, money used on foods, leisure, rent, purchase of financial product, clothing and repayment of debts among others. Money that flows from corporations includes loans and incomes, for example salary and dividends.
The government can affect this flow of money from households to corporations and vice versa by coming up with monetary policy, and depending where its leaning to then money would flow towards that direction. For ...Download file to see next pagesRead More
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