Business, Government and Workers
From ZuluNotes - Free Leaving Cert Notes
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[edit] The Economy
The economy is all of the activities within society concerned with the production, distribution and consumption of goods and services.
[edit] The Free Market Economy
Is one in which the production of goods and services is left to entrepreneurs who set up businesses to produce whatever will earn them a satisfactory profit.
Problems of the free martket economy
> Takes no account for those who cannot afford to pay
> Social and moral issues
> Fairness
> Undeveloped resources
> Collusion and exploitation
[edit] Government Intervention in the Economy
> By passing laws
> Decisions and Actions of the various Government departments
> Actions taken by Local Authorities
> State Agencies
Why and how government intervenes in the economy
> To regulate nationally
> To regulate localy
> To enforce existing laws
> To protect individuals and businesses
> To provide services
> To provide infrastructure
> To achieve a fair distribution of wealth
[edit] How Government Affects Business
The Budget is the Government's annual financial plan for the country.
The budget is divided inot two parts:
The current budget - day to day spending, eg. wages and energy
The capital budget - once-off spending that will last for years, eg. roads and schools
The government is by far the biggest employer in the country.
Directly employment - in the public service
Indirectly employmetn - through spending on items, such as: construction of schools, goods, services
This level of employment is of huge importance to the economy as the weekly wages help to maintain a stable demand for goods and services wherever public service jobs exist.
> Taxes reduce people's spending power
> VAT and Excise duties will affect specific businesses and reduce the demand for certain products
> PRSI increases costs of the business
> Corporation Tax affects companies' retained profits
> Tax incentive schemes
> Business Expansion Scheme (BES)
Government plans outline what the Government intends to do in the future. Knowing what is planned reduces uncertainty for businesses, allowing them to make their own plans regarding the new plan.
