Economy and Business Terms - Charlie, your teacher of English
Edward Deming) have brought dramatic shifts in management thinking and improvements in the
performance of organizations.
Corporation tax: Corporation tax is paid by UK companies on their profits. It is currently paid at
30% but will reduce to 28% in April 2008, the first cut in the rate since 1999.
Supporters said the cut would restore Britain's attractiveness as a home for companies operating
across the globe but small businesses said it would mean more burdens for them. The Treasury has
been under pressure to cut corporation tax as Britain has slipped down the international league
table of low tax countries.
Consumer Price Index (CPI): The Consumer Price Index (CPI) is a measure that examines the
weighted average of prices of a basket of consumer goods and services, such as transportation,
food and medical care. It is calculated by taking price changes for each item in the predetermined
basket of goods and averaging them. Changes in the CPI are used to assess price changes
associated with the cost of living; the CPI is one of the most frequently used statistics for identifying
periods of inflation or deflation.
Consumer Spending (consumption): Consumer spending is another term for voluntary private
consumption, or an exchange of money for goods and services. Contemporary measures of
consumer spending include all private purchases of durable goods, nondurables and services. In a
purely free market, the aggregate level of private consumer spending in an economy is necessarily
equal to the total market value of economic output.
Contingency Plan: Contingency is a potential negative event which may occur in the future such as
a natural disaster, fraudulent activity or a terrorist attack. In finance, managers often attempt to
identify and plan for any contingencies that they feel may occur with any significant likelihood. To
mitigate risk, financial managers often err on the conservative side, assuming slightly worse-thanexpected outcomes, and arranging a company's affairs so that it can weather negative outcomes
with the least distress possible.
Contract: It's a legally enforceable agreement between two or more parties generally relating to a
transaction for the purchase or sale of inputs, goods and services. A contract involves obligations
on the part of the contractors which may be expressed verbally or in writing. Formation of a contract
involves one party making an offer to the other party which must then be accepted by the latter
party. For example, one firm may offer to supply a product to another company at a given future
date and on specified terms. In return, the latter company would agree to pay a specified sum of
money as consideration for the product to be supplied. Both parties would then be legally bound to
honor their agreement to sell and to buy the product. In the event of either party failing to comply
with the terms of the contract the other party could seek damages for breach of contract through the
courts.
Corporate Income Tax: It's a tax levied on corporations' profits. Because corporations are legal
entities separate from their owners, they may be taxed as if they were persons. A corporate tax,
then, is the equivalent of the income tax for natural persons. Corporate taxes vary from country to
country; in the United States, they are levied at both the federal and state levels. Proponents of the
corporate tax argue it guards against excessive profits that may result from unethical or illegal
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