Running The British Economy Essay

1342 words - 5 pages

Running The British Economy


A study of economics in terms of whole systems especially with
reference to general levels of output and income and to the
interrelations among sectors of the economy is called macroeconomics.
Macroeconomics is concerned with the behavior of the economy as a
whole—with booms and recessions, the economy’s total output of goods
and services and the growth of output, the rates of inflation and
unemployment, the balance of payments, and exchange rates.
Macroeconomics deals with the increase in output and employment over
long period of time—that is economic growth—and with the short-run
fluctuations that constitutes the business cycle. Macroeconomics
focuses on the economic behavior and policies that effect consumption
and investment, trade balance, the determinants of changes in wages
and prices, monetary and fiscal policies, the money stock, the federal
budget, interest rates, and national debt. In brief, macroeconomics
deals with the major economic issues and problems of the day.

In this software of running the British economy we will observe
different outcomes in the British Economy by changing these four
variables. They are

1. Government Expenditure

2. Tax Rate

3. Value Added Tax (VAT)

4. Monetary Cash Flow

Through this assignment I have given a chance to run the British
Economy for five years. In order to understand this assignment we
first have to understand what these above four variables are?


Government Expenditure

It covers what so ever government spends in purchasing goods and
services in order to perform their factions properly. This includes
spending on such items such as defense expenditure, road paving by
state and local government, and salaries of the government employees.
And G represents it in this study.

Tax Rate

“A compulsory contribution to state revenue, levied by the government
on personal income and business profits or added to the cost of some
goods, services, and transactions.” Oxford Dictionary

This includes just income tax. Which is a tax levied directly on
personal income.

Value added Tax

A tax on the amount by which the value of an article has been
increased at each stage of its production or distribution.

For example if we go out in market and buy some thing we pay some
amount of tax on our purchase that is called value added tax.

The Money Supply

It means that how much government is floating cash in the economy from
its stock. Governments usually increase the cash flow in order to
attain the high economic growth. Because when government float cash in
the market, it means that people can get the cash at low interest
rates, so they can borrow in order to achieve their financial goal and
this all activity results in a boast in economy.

In order to understand the results we must know what all the...

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