GCSE Economics: Unit 11, Chapter 1

Question and Answer flashcards for AQA GCSE Economics Unit 11, Chapter 1: Money.

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  • Created by: Jaimini_L
  • Created on: 07-02-17 12:00
What are the stages of the personal life cycle?
Childhood (0-12), Adolescence (teenager), Young Adult, Middle Adult (middle age), Late Adult (old age)
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What changes during the personal life cycle?
(1) Income. Job and Promotion- income rises. Retirement- income falls. (2) Needs and Wants. When buying a house a huge amount of money is usually borrowed.
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What are some key milestones in the personal life cycle?
Leaving school, Gaining employment, Promotion, Unemployment, Retirement.
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How does the government affect stages of the personal life cycle?
During the personal life cycle, there are many points where people may need additional financial help. This is provided through the benefits system.
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What are benefits?
Regular payments from a government to support people in need.
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What are some examples of benefits?
Education Maintenance Allowance, Tax Credits, Jobseeker's Allowance, Pensions.
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What is the education maintenance allowance?
£10-£30 payed weekly to those aged 16-19 to encourage students from poorer families to continue their education.
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What are tax credits?
A state benefit paid to employees through the tax system which acts like a negative tax. It increases the take home pay of low paid workers.
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How does the government afford to pay taxes?
The government collects taxes. One of the main taxes is income tax.
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How does income tax work?
You are only required to pay income tax if you earn above the personal allowance. The rate you pay is then dependent on how much you earn.
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What is the 2017 personal allowance?
£11,000.
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What are the different levels of rates for income tax?
Basic Rate (20%) for up to £32,000. Higher Rate (40%) for £32,001 - £150,000. Additional Rate (45%) for over 150,001
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What are needs and wants?
Needs are essential to our lives while wants are things we could survive without.
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What is the basic economic problem?
Our needs and wants are infinite while our resources are finite, creating the problem of scarcity.
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What do decisions involve?
A choice, an opportunity cost, benefits, costs and trade-offs.
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What is opportunity cost?
It is the most highest valued alternative to your choice.
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What is a trade-off?
Trade-offs are all the choices that were given up.
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What is demand?
The quantity of a good or service that consumers are willing or able to purchase at a particular price.
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What is meant by 'factors affecting demand'?
Things that cause consumers to buy more or less of a product at a given price.
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What are factors affecting demand?
Price, Income level, Advertising and Branding, Prices of Substitutes and Complements, Fashion and Trends.
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What are substitutes and complements?
Substitutes are similar goods, while complements are things needed for the good (example: fuel for cars).
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How do you draw the demand curve?
"Demand to the ground"
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How is an increase in demand shown?
The demand curve is shifted to the right.
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How is a decrease in demand shown?
The demand curve is shifted to the left.
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What is supply?
The quantity of a good or service that businesses will offer for sale at a particular price.
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What is meant by 'factors affecting supply'?
Things that cause suppliers to offer more or less of a good or service at a particular price.
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What are factors affecting supply?
Price, Cost of raw materials, Wage rates, Productivity of the workers, Climate (agriculture), Cost of production, Technology (Advanced tech-easier to produce goods), Transport Conditions
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How do you draw the supply curve?
"Supply to the sky"
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How is an increase in supply shown?
The supply curve is shifted to the right.
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How is a decrease in supply shown?
The supply curve is shifted to the left.
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What is a market?
A market exists whenever buyers and sellers come together.
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What is market price?
The price that buyers and sellers agree on for a particular good or service.
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What is competition?
The process of trying to beat others / gaining new customers.
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How do businesses fight to win consumers?
Advertising and branding, Improving quality, Changing the design and features, Lowering the price by improving production methods.
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How do consumers benefit from competition?
Lower prices, Greater variety, Better quality.
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How are consumers disadvantaged from competition?
Quality can be lowered as consumers cut costs. After sales service suffers if too much is put into sales.
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Why do people save?
To buy something special, for emergencies, for retirement.
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What are the different methods of saving?
High-street banks, Building societies, Internet-only banks, National Savings and Investments, Post Office Card Account.
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What are high street banks?
Banks on the high-street such as NatWest and HSBC.
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What are building societies?
A financial organisation that is very similar to banks, such as West Bromwich and Derbyshire.
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What is National Savings and Investments?
State owned savings banks.
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What are post office card accounts?
A simple account mainly for pensioners or those receiving benefits. It only allows you to withdraw cash using the card. You cannot go overdrawn as you will not get any charges.
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What are the different savings accounts?
Savings accounts, ISAs, Fixed-term investment accounts, Share based savings, Government securities.
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What are ISAs?
Individual Savings Accounts are savings in which interest payments are tax free.
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What are fixed term accounts?
Savings which cannot be withdrawn for an agreed a amount of time (term).
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What are share based savings?
Share based savings (unit trusts) are saving products that spread risk by investing in a range of shares.
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What are government securities?
Bonds issued by the government through National Savings and Investments,
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What are the characteristics of Savings Accounts?
Low/Medium Reward, Low Risk, Short to Long Term, Easy to withdraw money.
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What are the characteristics of ISA Accounts?
Low/Medium Reward, Low Risk, Medium to Long Term, Easy to withdraw money.
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What are the characteristics of National Savings and Investments Accounts?
Low Reward, Very Low Risk, Medium to Long Term, Often requires a written notice of withdrawal.
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What are the characteristics of Unit Trusts?
Medium/High Reward and Risk, Long Term, Obtaining your money may take some time.
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What are interest rates?
An annual rate which is charged to borrowers or paid to savers.
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What is gross interest?
The interest rate before tax has been deucted.
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What is net interest?
The interest rate you receive after tax has been taken off.
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What is the general trend with interest rates on saving?
Generally the longer you leave your money, the higher rate of interest you get (not always though). Also, if you save larger amounts of money, your interest rates will be higher.
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What are some of the benefits and costs of an internet only bank?
Pro: Higher interest rates due to lower running costs. Con: Believed to be less safe/secure.
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What is AER?
Annual Equivalent Rate. A figure quoted in savings advertisements to help people compare one savings products with another.
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Other cards in this set

Card 2

Front

What changes during the personal life cycle?

Back

(1) Income. Job and Promotion- income rises. Retirement- income falls. (2) Needs and Wants. When buying a house a huge amount of money is usually borrowed.

Card 3

Front

What are some key milestones in the personal life cycle?

Back

Preview of the front of card 3

Card 4

Front

How does the government affect stages of the personal life cycle?

Back

Preview of the front of card 4

Card 5

Front

What are benefits?

Back

Preview of the front of card 5
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