Economics Unit 1

Needs are things that we can live without:

• Food
• Water
• House

Wants are things that we can live without:

• TV
• Internet
• Holidays

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• Childhood (0-12)
• Adolescence (12-18)
• Young Adult
• Middle Adult
• Late Adult

Opportunity costs are things that we give up to do/ have something else

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The supply and demand of a product can change the price

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Competition is good for comsumers because it means:

• Lower prices
• Better quality
• Faster updates
• Gifts/Free items
• Discounts

A- Surplus: More supplied than demanded

B- Deficit: Less supplied than demanded

C-Equilibrium/ Selling price: Supply is the same as demand

You can save in your wants

You might want to save for:

• Special occasions (wedding)
• Starting a family
• Retirement
• Education

I.S.A: 

• Tax free up to   15,000 a year, Long term savings
• Low interest (1%), Limit on how much you can save

Instant Access:

• Access to money at all times, Very flexible
• Low interest (0.5%), Must visit bank to get money

Fixed:

• High interest (2.3%)
• NO access, There is a minimum amount (approx   1000)

Unit trusts:

• Investing can lead to a profit, but could lose money

Shares: Unit trusts but with more risks

AER: Annual equivalent rate: Interest you get paid during the year

Gross Interest: Before tax is taken off

Net interest: After tax is taken off

Compound interest: Interest ontop of your current interest

You might want to borrow if:

• You want to buy something big
• You dont have enough money for needs

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APR: Annual Percentage rate- interst rate including beneifts, compounding etc

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Increase in Interest rates: Pay back more overall

Decrease in interest rates: Pay back less overall

Loan:

• Medium amount (  7500), Medium Term (2-5 years)
• Medium APR (6%)

Mortgage:

• Large amounts- for property, Long term (10+ years), Low APR, pay monthly
• House can be taken away if you dont pay
• Hire purchase: Mortgage for cars, sofas etc

Credit Card:

• Used in store/online, Pay whenever
• High APR, Credit Limit
• Store Card: Credit Card for one shop (with benefits)

Overdraft:

• Attatched to current account, can spend more than you have, pay back monthly
• High APR, Small amounts (Limit:  3000)

Budget: A financial plan of all income and spendings

Benefits of budgeting: Keep track of spending so you dont spend too much and go into debt

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Money ethics: Doing whats gight for the environment/ other people over profit

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Uncertainty: issues that cause financial problems:

• Family death
• Accidents
• Job Loss

These can be prevented by saving for emergencies