taxes - method of raising money for the government, spent to the benefit of all
eg. income tax, national insurance, VAT etc import/export duty, tobacco/alcohol duty
spend it on police, NHS etc
also use it to control how we spend e.g. high tax on tobacco
higher tax mean less disposable income; change in purchasing habits, increase in demand for some items
also causes reduction in some demand (deflationary pressure)
interest rate is the cost of borrowing money
governments have to borrow aswell
higher risk, higher cost
most companies run off debt
increase in the cost of borrowing reduces expenditure which reduces demand; causes a reduction in inflation
all depends on slack in the system
don't pay tax on costs; cost of doing a job
money is a measurement method of value; no intrinsic value
if you are buying, cost is price
if you are selling, cost does not necessarily equal price
cost: monetary value
price: what it is sold for
profit: positive difference between cost and price
loss: negative difference between cost and price
income: money coming in
expenditure: money going out
debt: money owed (negative element)
credit: money you may use but don't have (positive element)
direct costs: directly attributable to overall cost of the item
indirect costs: not directly attributable to overall cost e.g. computers aren't just used for that one job
variable costs: varies with output
fixed costs: doesn't vary with output
a good working designer is worth about 25/30 pounds an hour
be aware of what the market expects to pay for goods/services
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