Economics

Key words and key ideas to remember.

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  • Created by: Izzy
  • Created on: 15-05-12 15:46

Savings

  • total £
  • Salary / wages / interest / dividend

Borrowing

  • getting money
  • need to be repaid in the future
  • mortgage / car loan

Savings

  • putting £ away for later use
  • savings account / investing in stocks

National Insurance

  • direct tax paid directly from a persons wage
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Needs

  • basic products needed to survive
  • food / shelter / warmth

Wants

  • wants are unlimited

Scarcity 

  • resources are limited compared to our wants


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Opportunity Cost 

  • something given up when making a choice

Worlds Economic Problem

  • wants are unlimited -  the worlds resources are unlimited 
  • e.g. oil / gas / coal
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Demand

  • quantity
  • consumers are willing and able to buy
  • particular price
  • more purchased 
  • price is low
  • income level of customers
  • marketing and promotion
  • brand loyalty
  • tastes and fashion
  • price of substitutes
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Supply

  • quantity
  • businesses will offer for sale
  • at a given price
  • cost of raw materials
  • wage rates
  • productivity of employees
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Saving

Methods 

  • Bank 
  • Building Society
  • Post Office card account
  • National Savings and Investments

Types

  • ISA 
  • Fixed term accounts
  • Unit Trusts
  • Government bonds
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Choosing where to save

Things to consider

  • how high is the interest rate?
  • how risky? how safe?
  • ethical considerations?
  • any penalties from withdrawal?
  • ease of access?
  • flexibility of account?
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Borrowing Money

  • Mortgage
  • Credit Card
  • Store Card
  • Personal Loan
  • Hire Purchase
  • Overdraft
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Work

Why?

  • Pay
  • Job satisfaction
  • Motivation

Why not?

  • Education
  • Childcare
  • Retirement
  • Lack of oppurtunities
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Items deducted from pay

  • ni
  • income tax
  • pension
  • student loan
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Reasons for difference in wages

  • Training and skills
  • Gender - women
  • Age - old
  • Government Influences
  • Trade Unions
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Unemployment

  • Loss of income 
  • Loss of spending
  • Loss of skills
  • Health increase
  • Crime increase
  • Family and societal problems
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International Trade

Exports - Goods and services sold to another country 

Imports - Goods and services bought from another country

BOP - A record of the value of a country's exports, imports and financial transactions with the rest of the world over a year.

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Benefits of International Trade

  • Growth - increase in production, leads to GDP increasing
  • Income - more workers are needed so more jobs
  • Raw materials - We can import products that we can't make
  • Choice - larger range of products to choose from
  • Competition + Innovation - more attractive/ better quality products
  • Prices - lower prices as lower cost production overseas
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Disadvantages of Trade

  • Competition - price wars that we can't match
  • Economic Dependency - we are dependent on other countries
  • Unstable commodity prices - this affects production costs and prices
  • Power of MNC's - hard to control
  • Carbon Footprint
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Disadvantages of Trade

  • Competition - price wars that we can't match
  • Economic Dependency - we are dependent on other countries
  • Unstable commodity prices - this affects production costs and prices
  • Power of MNC's - hard to control
  • Carbon Footprint
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Exchange Rates

S piced
P ound
I mports
C heap

E xports
D ear

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Firms operating overseas

Advantages

  • Lower operating costs and labor costs
  • Increased competitiveness
  • Nearer to markets and materials - reducing costs
  • Overcome exchange rate fluctuations

Disadvantages

  • Jobs are lost in the UK
  • Unfamiliar culture and language
  • Transport costs to home markers
  • Exchange rate changes may increase costs and reduce profits
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Why do foreign firms choose to operate in the UK?

  • Highly skilled labor force
  • Tariff-free access to the UK market
  • To buy existing UK owned brands
  • English is the accepted language of business
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Globalization

Benefits

  • Jobs are created in industries that are doing well
  • New migrant labor - lowers labor costs
  • Increase sales in new export markets

Drawbacks

  • Low skilled jobs are lost
  • Increasing immigration depresses wages
  • Relocating production overseas can cause unemployement
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Immigration

Positives

  • New knowledge and skills 
  • Fills gaps in the labor markets
  • Increases competitiveness
  • Reduces wage inflation
  • More spending
  • More workers

Negatives

  • More people per job
  • Strain on health care
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