3A Money Households Workers Unions

• What does barter involve?

  Exchanging goods and services
• What is a problem associated with barter?

  Finding someone to swap with due to the double coincidence of wants
• How do people agree on values in a barter system?

  By negotiating how many of one good is equivalent to another
• What are the functions of money?

  • Medium of exchange
  • Good store of value
  • Measure of value
  • Means of deferred payment
• What characteristics must a good money possess?

  A good money must be acceptable, durable, portable, divisible, and scarce
• What are examples of money?

  Notes, coins, and bank deposits
• Why are bank deposits considered 'near money'?

  Because they can be quickly withdrawn to provide cash for payments
• What do banks do with money?

  Banks lend money to people, firms, and government organizations
• How do banks act as financial intermediaries?

  They connect savers with borrowers and facilitate payments
• Why do banks offer interest to savers?


  To encourage them to save their money in savings accounts
• What is the base rate of interest?

  It is the rate set by the central bank for lending to banks
• If a bank offers an annual interest of 3% on a $1,000 savings account, how much interest will be earned in one year?

  $30
• What is the total amount repayable if a small firm borrows $10,000 at an interest rate of 5% per year?

  $10,500
• What are the risks involved in lending money?

  Administrative costs and risks of non-repayment
• What is the main function of a central bank?

  To maintain the stability of the national currency and money supply
• What does the central bank do?

  Supervises the banking system and regulates banks
• What role does the central bank play?

  Issues notes and coins, manages national debt, and operates monetary policy
• How does disposable income affect consumer expenditure?

  The more disposable income people have, the greater their potential consumer expenditure
• What factors influence consumer spending patterns?

  Age, gender, wealth, lifestyle, and culture
• What is dissaving?

  Withdrawing savings to spend
• What are common reasons people save money?

  For future spending, to earn income from interest, and to prepare for economic changes
• What is personal debt?

  The total stock of money borrowed and yet to be repaid by a person or household
• What determines how much we borrow?

  Wealth, consumer confidence, and availability of credit
• What is the stock market?


  The global market for buying and selling government stocks and company shares
• What is the role of a stock exchange?

  To enable buying and selling of loan stocks and company shares
• How do share prices fluctuate?

  They can vary based on market demand and supply conditions
• What is a dividend?

  A payment from profits to shareholders
• Why is the stock market important for economic activity?

  It allows companies and governments to raise capital needed for financing activities
• What factors determine share prices?

  Market demand, supply conditions, and company performance
• What is the difference between wages and salary?

  A salary is a fixed amount paid per pay period, while wages are paid by the hour
• What are net advantages in job selection?

  All wage and non-wage factors affecting the attractiveness of a job
• What are the advantages and disadvantages of specialisation?

  Advantages:

  • Best use of skills and abilities
  • Opportunity to improve skills
  • More experienced employees earn more

  
  

  Disadvantages:

  • Dependence on others for goods and services
  • Potential boredom from repetitive tasks
  • Risk of job loss due to changing demand or technology
• How does the supply of labor depend on wage rates?

  It depends on the time rate, piece rate, and performance-related pay
• What are the net advantages of a particular job or occupation?

  They are the benefits associated with that job beyond wages.
• What is the essential difference between a salary and wages?

  A salary is a fixed amount paid per pay period, while wages are paid by the hour.
• Who is more likely to be earning wages, blue collar or white collar workers?

  Blue collar workers are more likely to be earning wages.
• What are some disadvantages of specializing at work?

  Disadvantages include reliance on others, boredom from repetitive tasks, and job loss due to changing demand or technology.
• What are some advantages of specializing at work?

  Advantages include making the best use of skills, improving skills through repetition, and higher earnings for experienced workers.
• What are the advantages and disadvantages of specialization for an individual, a firm, and an economy?

  • Advantages for individuals: skill improvement, higher earnings
  • Disadvantages for individuals: job loss, boredom
  • Advantages for firms: increased productivity
  • Disadvantages for firms: reliance on specific skills
  • Advantages for economy: efficient resource allocation
  • Disadvantages for economy: vulnerability to market changes
• What happens to the supply of labor when the wage rate for a particular occupation rises?

  The supply of labor expands as the occupation becomes more attractive compared to leisure and other occupations.