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Economics > The Individual As Producer, consumer And Borrower > Flashcards

The Individual As Producer, consumer And Borrower Flashcards

1
Q

what are the functions of money?

A
  • a medium of exchange(widely excepted)
  • a store of value(can save)
  • a unit of account
  • a standard of differed payment.
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2
Q

what is the need for exchange?

compare money to barter.

A
  • means of exchange are essential to gain the benefits from specialisation.
  • comparing money to barter, the problem with bartering is that it relies on both people wanting something this wasn’t always possible
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3
Q

what are some functions of central banks?

A
  • they act as a banker to the government
  • act as a lender of last resort (e.g Northern Rock 2008)
  • manages the national debt of the government.
  • holds a country’s reserves of gold and foreign currency.
  • controls the banking system.
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4
Q

what are some functions of commercial banks?

A
  • provide deposit/savings accounts
  • provide loans to households and firms
  • provide foreign currency.
  • provide safe deposit facilities e.g. keep important documents.
  • provide people with financial advice.
  • provide overdrafts.
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5
Q

what is the role of stock exchange?

A
  • provides a market for buying and selling of shares, bonds and other securities.
  • this enables finance to be raised.
  • a means of savings for both private and institutional investors.
  • the share prices give an indication of how well particular firms are doing.
  • it thus contributes to the growth of an economy.
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6
Q

what are the factors affecting an individuals choice of occupation?
-WAGE FACTORS

A
  • wage (payment for the job)
  • salary (based on a fixed annual amount)
  • overtime (payment for excess from contracted hours)
  • bonus (extra payment acting as an incentive)
  • commission (payment based on the percentage of sales a worker makes)
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7
Q

what are the factors affecting an individuals choice of occupation?
NON-WAGE FACTORS

A
  • job satisfaction
  • working conditions
  • working hours
  • career prospects/ opportunity for promotion.
  • fringe benefits (a company car)
  • holidays
  • pension scheme (normally attracted to a generous and safe pension scheme)
  • location
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8
Q

what are earnings like for someone entering the workforce?

A

earning relatively low due to lack of skills and experience

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9
Q

what are earnings like for a person with an increase in skills/experience?

A

earnings rise significantly.

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10
Q

what are the earnings like for an older/end of career worker?

A

earnings may fall as the workers may take less responsibility close to retirement.

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11
Q

what are some differences in earnings between men and women?

A
  • males may work in occupations with higher demand of labour.
  • females may be concentrated in occupations with a higher supply of labour.
  • f emails more likey to take a break from work to raise a family (can impact on promotion and pay)
  • also discrimination to consider.
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12
Q

what are some differences in the earnings between skilled and unskilled workers?

A

LOWER DEMAND OF UNSKILLED WORKERS- lower efficiency/productivity/value added by them.
A HIGHER SUPPLY OF THEM- as there is little time needed to train/study to gain the requirements needed for the job.

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13
Q

why are there often differences in the earnings of workers in the public sector and the private sector?

A
  • demand for workers may be higher in one sector (higher earnings)
  • supply of workers may be lower in one sector (higher earnings)
  • job security may be greater in one sector, this may encourage higher supply.
  • may be more overtime available in one sector.
  • skills required may be higher in one sector (reducing supply, raising earnings).
  • risk involved in jobs in one sector may be higher (reducing supply).
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14
Q

why is a worker in the services sector more likely to receive a higher wage than one in the manufacturing sector?

A
  • service sector includes banking, doctors and teachers.
  • increase in the demand of services will increase demand of labour (pushing up the wages of the workers)
  • profits in the service sector may be high (increasing the ability of the firms to pay higher wayes).
  • deindustrialisation (unemployment for workers in manufacturing)
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15
Q

why is a worker in the services sector less likely to receive a higher wage than one in the manufacturing sector?

A
  • manufacturering sector includes e.g. car production, food processing and furniture making.
  • demand for workers in some manufacturing industries may be increasing more than the demand for workers in the services sector.
  • not all workers in the service sector are skilled.
  • some workers in the manufacturing sector will have more experience.
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16
Q

describe what is meant by trade unions?

A
  • an association of workers.
  • it engages in collective wage/salary bargaining with employers.
  • protects the working conditions, health and safety of its members.
  • will negotiate on behalf of the workers.
  • may provide other benefit schemes for its members.
17
Q

what is the role of trade unions in an economy?

A

ADVANTAGES

  • better basic pay/overtime.
  • a union has more power than one individual worker.
  • better working conditions.

DISADVANTAGES

  • workers have to pay a fee to be a member.
  • union might bring workers out on strike.
  • strike action could force a firm to go out of business.
18
Q

what are some possible benefits for a firm if it’s workers join a trade union?

A
  • may encourage more workers to apply for jobs (may expect better working conditions)
  • reduces cost of negotiation (one organisation instead of many individuals)
  • provides a chanel of communication.
  • may promote training (increasing labour productivity).
  • may reduce conflict (workers discontents can be resolved)

-

19
Q

what are some possible disadvantage to a firm if it’s workers join a trade union?

A
  • may push up wages
  • increase the firms cost of production
  • reduce the firms competitiveness.
  • may reduce flexibility (as the union may insist that it’s members only undertake the tasks in their job description)+(only working inside working hours)
  • may strike.
20
Q

what is specialisation?

A
  • the process by which individuals concentrate on producing those goods and services in which they have an advantage.
  • where it relates to the dividing up of the production processes into a sequence of different tasks, it is known as the division of labour. (production line)
21
Q

what are the benefits of specialisation for the worker?

A
  • the worker can concentrate on a particular task
  • and therefore become very good at it
  • time can be saved
  • the worker can be more productive
  • can lead to greater output
22
Q

what are some disadvantages of specialisation for the individual?

A
  • the task can become very repetitive
  • the lack of variety can make the job very boring
  • this can lead to demotivated and lower productivity.
  • dependency on other people.
23
Q

what factors influence spending by households?

A
  • disposable income/wealth
  • anticipated inflation rate in the future.
  • confidence
  • interest rates (high interest rates will discourage borrowing but encourage saving)
  • taxes
  • other factors affecting the pattern of spending e.g. age, time of the year.
24
Q

what factors influence saving?

A
  • (disposable) income- those on higher incomes tend to save a higher percentage of their income.
  • rate of interest
  • expectations of future price rises/falls.
  • confidence- more = spending
  • age structure of the population.
25
Q

what influences borrowing?

A

the main influence is the rate of interest

  • a fall in the rate of interest will reduce the cost of loans/overdrafts.
  • people take into account expected future interest rates.
  • confidence
26
Q

what is the difference in saving between high income groups compared to low income groups.

A

HIGH = save a higher proportion
-as they have a higher disposable income so will be better able to save.
-will have already purchased many items so less of a need to spend.
LOW = save a lower proportion.
-will have a lower disposable income so will be less able to save.
-will have more of a need to spend on basic necessities.

27
Q

what is the difference in spending between high paid workers compared to low paid workers?

A

HIGH = spend more in total but a lower proportion.

  • spend a higher proportion of their income on luxuries.
  • lower proportion on necessities.
28
Q

why might the poor be more likely to borrow than the rich?

A
  • lower income so may have to borrow to buy basic necessities.
  • poor may be more inclined to get into debt.
  • for large purchases e.g. furniture.
  • less likely to have savings to enable purchases.
29
Q

why might the poor be less likely to borrow money than the rich?

A
  • banks may be more reluctant to lend to the poor (may not get the money back)
  • the poor may lack the conference that they will be able to repay the loans.
  • the poor may be reluctant to borrow from previous bad experience of being in debt.
  • the poor are less likely to have a bank account / access to borrowing.

Economics (4 decks)

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