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The Individual
3. The individual as producer, consumer, and borrower
| Term | Definition |
|---|---|
| Functions of Money | Medium of exchange, unit of account, store of value, and method of deferred payment |
| Characteristics of Money | Acceptable (can be easily transferred), portable, durable, divisible, and limited |
| Difficulties in bartering | needs “double coincidence of wants”, goods may not be portable, hard to decide value, goods may not be divisible, and goods may not hold their value |
| Stock | the name used to describe money by a joint-stock or corporation, or a government |
| Shares | are shares of the company profits and they never have to be repaid |
| People who buy shares… | become shareholders/owners |
| Dividend | Payment from profits |
| Commerical Bank | make loans to individuals and businesses, offer interest in individual savings, help customers pay bills and receive money, offer financial advice, and is what we use |
| Central Bank | centre of the banking system in most countries, maintain stability (value) of the national currency and the money supply, keeps inflation down by at least (2%), and issues notes and coins. |
| Factors which affect earnings | Skills, “perks”, enjoyment, and value of products made |
| Supply of Labour | Provided by workers, willing to work in that industry |
| Demand for Labour | From firms in that industry that need employees |
| Wages | The units/prices of labour |
| Quantity | The number of workers employed in that industry |
| Non-wage Factors | holidays, enjoyment of job, other “perks”, unemployment rate, and attractiveness of other industries |
| Market Capitalisation | total value of a corporation’s issued shares |
| Stock Market | one of the most important sources for companies to raise money |
| Stock Exchange | Business organisation that help companies and government authorities to sell their stocks and shares to people to people who are willing to buy them. |
| Factors which make supply of Labour more Inelastic | length of training, labour mobility, restriction on Labour Supply, the level of unemployment, and time |
| Reasons why an industry may demand more labour | Increase demand for their product, the price of their product increases, labour becomes more efficient |
| Types of Trade Union | Craft Union, General Union, Industrial Union, and Non-manual |
| Trade Unions | Organisations that work to improve the interests of their members. |
| Common Trade Union Aims | better working conditions, improved health and safety, better pays and benefits, defend workers’ rights, job security, provide training for members, and provide social amenities for members. |
| Unions are strong if… | represents most or all of the workers in the firm/industry, union members provide essential services such as healthcare, the union is able to support its members financially during strike action, company profit and sales are high, and unemployment is low |
| Actions taken by Trade Unions | Strike, Overtime Ban, Go Slow and Work to rule |
| Wealth | assets |
| Disposable Income | money I can throw away |
| Consumer Confidence | how bright the future looks overall |
| Interest Rates | The cost of borrowing or the reward for saving |
| Boom/Recovery/Growth | increase in interest rate, reduces disposable income, stops economy “overheating” |
| Recession/Slump | reduce interest rate, increases disposable income, encourage spending, “cheap money” |
| Utility | Satisfaction gained by a consumer from his or her spending and saving decisions |
| Consumer Expenditure | total spending on consumer goods and services |
| Saving | That portion of disposable income not spent on the current consumption of consumer foods and services |
| Dissaving | Withdrawing savings to spend on consumer goods and services |
| Real disposable income | Personal income remaining after income taxes have been deducted and after the effect of inflation on its purchasing power has been accounted for |
| Private Wealth | The stock of physical and financial assets of value owned by individuals |
| Experience goods and services | A product with characteristics that are difficult to observe and, therefore, their impact on utility is difficult to judge prior to their consumption |
| Savings ratio | Total savings in an economy as a proportion of total disposable income |
| Personal Debt | The total stock of money borrowed by individuals or households they have yet to repay |
| Collateral | Property or other valuable assets that are offered to a lender to secure a loan or other credit. It provides a lender with protection against the borrower’s default |
| Insolvent | The inability to pay off debts because person or business has run out of cash and assets it can easily convert to cash |
| Closed Shop | Trade Union membership is made a compulsory condition for workers in an organisation |
| Collective Bargaining | The process of negotiating pay and working conditions between trade union representatives and employers |
| Industrial Dispute | A disagreement over a pay or employment issue between a trade union and an employer, or groups of employers, that often results in the trade union taking actions that disrupt production |
| Arbitration | use of an independent referee to help trade union and employer representatives resolve an industrial dispute |
| Work to Rule | An industrial action that involves workers deliberately reducing their productivity by complying rigidly with every rule and regulation. |
| Single Union agreement | An agreement between an employer and a single trade union to represent all workers at a particular workplace. The arrangement saes time by negotiating with only one union and avoids disagreements arising between different unions. |
| Official Strike | A disruptive action taken by a group of workers in a firm or industry who refuse to supply their labour to work and which has the backing of their trade union. |
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