Economics- Individual as producer, consumer and borrower

kushagramodi56's version from 2015-05-11 18:16


Question Answer
Functions of money1. Medium of exchange 2, Unit of account 3. Store of value 4. Standard for deferred payments
Define medium of exchangeMoney accepted as payment for goods
Define unit of accountPrice of item measured upon units of currency it is worth
Define store of valueSave money as it keeps its value. Use of money in future
Define standard of deferred paymentsBorrowers able to borrow money and pay it back at future date
Functions of commercial banks1. Keep money safe in currents/ savings account after providing interest to depositors 2. Lending (mortgage, loans, credit cards, overdraft) 3. Means of making payment 4. Provide foreign currency
Define overdraftWhen firms/ consumers spend more than in current account. Overdraft allows transition with either small charge to bank or warning letter from bank.
Define means of making paymentDebits and credits paid electronically so improves efficiency
Functions of central bank1. Banker for commercial bank and government 2. Supervises monetary policy 3. Issues notes + coins 4. Sets interest rates 5. Lender of last resort
Define monetary policyDetermines quantity of money in economy and sets interest rates
Define lender of last resortIf other bank needs money in hurry, then it borrows from central bank
Functions of stock exchange1. Allows individuals + institutions o buy + sell shares 2. Enables businesses to raise financial capital by selling shares
Wage factors1. Basic pay 2. Earnings 3. Overtime 4. Bonus 5. Commission
Define basic payAmount of money employee receives without any increases/ deductions
Define earningsTotal amount of money received with any additional payments
Define overtimeHours worked additionally
Define bonusExtra production given to employee as target for incentive
Define commissionExtra payment of %sales salesperson makes
Non- wage factors1. Job satisfaction 2. Career prospects 3. Fringe benefits 4. Length of holiday 5. Good pension schemes. 6. Job security 7. Location of job
Why does skilled labour receive higher wageContributing more to production
Why does public sector workers receive higher wageHigher level of skills required and have greater bargaining power in trade unions. Also, they may do essential work.
Functions of trade unions1. Negotiate wage 2. Negotiate to protect pensions 3. Negotiate to improve working conditions 4. Provide legal support
Positives of trade union on economyHigher disposable income so more goods are bought creating jobs and growth
-ve of trade union on economy1. Wage increase, price increase, international competitiveness decrease, decrease exports affecting economy 2. Strikes cause lost working time and disturbance reducing economic growth.
What is specialisationProduction of certain goods and services in which they hold comparative advantage. It involves division of labour
+ve of specialisation1. Efficiency through repetition, increasing output, increasing wages, increasing icing standards. 2. Increase output, firms produce more at low price, increase sales, increase profit, increase international competitiveness
-ve of specialisation1. If lose job, few skills increasing unemployment decreasing living standards 2. Any breaks in chain decreases output decreasing profit
Which income workers spend more moneyHigh
Which income workers save more moneyHigh
Which income workers borrow more moneyHigh
Which income workers spend more percentage of their incomeLow
Which income workers save more percentage of their incomeHigh
Which income workers borrow more percentage of their incomeLow