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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