The document discusses the role of government in the economy and how it can influence businesses. It states that governments aim to achieve low unemployment, low inflation, and economic growth. The government can pass laws and alter taxes and spending to impact demand and the economy. Taxes like income tax, VAT, and corporation tax affect businesses and consumer spending. The government provides support to entrepreneurs to boost jobs and tax revenue in both the short and long term.

1. 1.4 Role of the
government
Unit 1 – The purpose and nature of business

2. Power of 3
• LAST LESSON
• What are the 4 main functions of a business called?
• LAST MONTH
• State 2 examples of businesses who would operate in
the tertiary sector?
• What is the purpose of the business?

3. Role of government
• In the UK voters elect a national government at Westminster
and local government in town halls. Voters expect the
government to manage the economy well. Government
economic objectives include:
• Low unemployment, that is, as many workers in jobs as
possible.
• Lower prices. Continually rising prices is called inflation. Low
inflation is an aim of government.
• Economic growth. The aim is to produce more goods and
services each year so that individuals have a higher standard of
living.

4. Government

5. Government can change way businesses
work
• The government can change the way businesses work and
influence the economy either by passing laws, or by changing
its own spending or taxes. For example:
• extra government spending or lower taxes can result in more
demand in the economy and lead to higher output and
employment
• governments can pass legislation protecting consumers and
workers or restricting where businesses can build new premises

6. The main types of tax include:
• Income tax taken off an employee's salary. This results in less money to
spend in the shops.
• Value added tax (VAT) added to goods and services. A rise in VAT
increases prices.
• Corporation tax is a tax on company profits. A rise in this tax means
companies keep less of their profits leading to less company investment
and the possible loss of jobs.
• National Insurance contributions are payments made by both the
employee and the employer. They pay for the cost of a state pension and
the National Health Service. An increase in this tax raises a company's
costs and could result in inflation.
• Local government collects rates from firms and can use the law to block
planning permission for new premises.

7. Evaluate the reasons why a government
should help entrepreneurs set up in business
(12 marks)
• P – Point
• E – Evidence (use examples from the case study/your own
examples)
• E – Explain (use BLT (Because….Leads to…..Therefore)
• P – Point
• E – Evidence (use examples from the case study/your own
examples)
• E – Explain (use BLT (Because….Leads to…..Therefore)

8. Evaluate the reasons why a government
should help entrepreneurs set up in business
(12 marks)
• P – One of the reasons why a government should help
entrepreneurs is that extra government spending or
lower taxes can result in more demand in the economy and lead to
higher output and employment
• E – For example, if Jeff Bezos from Amazon gets lower taxes
charged, or when the government released the ‘Eat out to help out’
scheme this encouraged people to go to restaurants to help the
hospitality industry survive.
• E – this can help businesses, because their costs will be reduced,
this will lead to increased profits for the business and therefore
businesses like Amazon will be able to open up more job
opportunities for new staff and therefore be able to improve the
economy by offering more jobs and improving peoples level of
spending.

9. Evaluate the reasons why a government
should help entrepreneurs set up in business
(12 marks)
• P – Another one of the reasons why a government should help
entrepreneurs is that by giving grants to new businesses can help
them set up in areas of deprivation
• E – For example, in an area of high unemployment a new restaurant
e.g. Nando's may be able to receive a grant to help them set up
• E – this can help businesses, because they have the funds needed
to set up the business in that area, this will lead to an increase in
revenue and profits, therefore businesses will pay increased levels
of tax to the government which in turn will lead to increased
government spending on public services (e.g. NHS)

10. Evaluate the reasons why a government
should help entrepreneurs set up in business
(12 marks)
• A – Answer the Question that is being asked
• J – justify the reasons why you have answered the way you
have
• I – It depends on points – (think of 2-3) and explain how it can
depend on each of these
• M – most importantly (which of the ‘it depends on’ points is the
most important that could change your mind)
• S – short term and long term effects

11. Evaluate the reasons why a government
should help entrepreneurs set up in business
(12 marks)
• A – I believe it is really important for a government to help entrepreneurs
• J – this is because businesses contribute to tax revenue which is crucial to help
pay for government spending e.g. on the NHS, schools, defence
• I – It can depend on how much is given by the government to businesses, if tax
reductions are given to businesses and if there are certain restrictions which a
business will have to face if it is eligible for the government funding
• M – most importantly if entrepreneurs are not helped to set up, or helped when
they are in times of trouble, jobs will be lost and tax revenue will undoubtedly be
lost
• S – in the short term, the government may find the help a strain in terms of
funding but in the longer term jobs will be saved and created as a result, as well
as extra tax revenue being generated when the businesses are successful