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economics micro ending - Coggle Diagram

- - - - pay on the other hand can be used in place of both wages and salary as it stands for the amount of money you earn
    - - workers may not be able to move between jobs because they...
        
        lack the skills required - eg train driver cant become a teacher
        
        are unwilling to relocate to another part of the country - can be linked to lack of skills eg knwing other language
        
        have personal factors such as family ties that ristrict moving between jobs or preference for a location
        
        may lack the information about the jobs available
      - what is meant by the interaction between workers and employeers :
        
        the interaction between workers and employeers takes place in many ways
        
        many jobs workers deak directly with employeers to establish wages working conditions etc if a worker wants a pay rise they dicuss it with theier employer
        
        many workers belong to trade unions -a major function of trade unions is to negotiate with employers in behalf of its members set the wage rate and working conditions
        
        this is called collection bargaining
  - - - wuithin a short commuting distance of a workers home
    - - covers the whole of the uk
    - - this sees the labour makret as covering the whole world or covering a large section
    - - qualifications
      - skills
      - geographical locations
  - - - this type of demand is often called derived demand
      - derived demand is demand that comes from the demand for something else
      - this means that if consumers want more of a good or service, producers will want more of the workers that producec the product
    - - factors which affect the supply and demand of labour
        
        factors affecting demand for llabour
        
        the state of the economy
        
        if the economy is growing more labour is likely to be demanded, as existing firms are expanding and new firms are entering the market
        
        uncreased demand
        
        if particular marekts in the economy are growing fast thne demand for labour in these areas will also rise sharply
        
        wage rates
        
        the downward slope of the demand curve shows that there is an inverse relationship between demand for labour and the wage rate
        
        real wages
        
        a fall in real wages may persuade employers ti employ more people
        
        wages in terms of the goods and services which cna be baught
        
        wages adgusted for inflation
        
        productivity of labour
        
        if the productivity of labour increases labour may become cheaper than capital leading to morepeople being employeed
        
        profitability of firms
        
        firms that are making large profits are likely to expandand therefor hire more labour
        
        factors affecting the supply of labour
        
        wage rate
        
        the higher the wage rate the more labour likely to be supplied
        
        otehr money payments
        
        if there are opportuniies to boost earnings through overtime payments or producitivity related pay schemes this is likely to increase the supply
        
        size of the working pop
        
        the gradual rise in retirmeent age will mean there are more people available to work
        
        Non monetary factors
        
        these include working conditions and job security opp for job promo
        
        barriers to entry
        
        these may consist of necassary qyalifications as in the cases of doctors lawyers and veterinatians
        
        education and traning
        
        this will increase the number of skilled workers available
        
        if the demand for labour is high while the supply of this labour is low and inelastic the age or salary will be hugh
        
        in some cases the supply will be perfectly inelastic leading to potentially very high wages - this will be the case if employers see the person as having unique talent
  - - - gross pay is the amount of money an empoyee earns before any deductions are made - includes overtime payments, bonuses and allowances
    - - sometimes called take home pay - the amount of money that employee is left with after deductions are made from the gross income
        
        these deuctions include
        
        income taax - a tax levied on personal income ie on a persons wgaes
        
        national insurance - a contribution paid by workers and their employers towards the cost of state benefits
        
        pension - a fized amount paid at regular intervals to a person or their surviving deendants
- - - - itconsists of notes and coins - which are regarded as a legal tender
      - as well as bank deposits in the form of both current and saving accounts
      - its important to realise that cheques, debit cards and credit in card are noy money
        
        cheques and debit cards allow money in the form of bank deposits in current accounts to be transferred between buyers and sellers
        
        credit cards enable the holder to spend it ow and pay it back at a later point in time
      - debit and credit cards
        
        debit cards
        
        take money directly from your current account and transfer it to the seller - if you dont have enough money in your account you cant buy the product
        
        there is no charge to the seller for accepting these cards in payment
        
        credit cards
        
        enable you to buy goods and services wether or not you have the money in your acccount ie a loan for up t 30 days
        
        if you cant pay it back you are charged interest on the amount outstanding
        
        retailers are charged for allowing you to use these cards in payment
  - - - the financial sector consists of financial organisations and their products and invo,ves the flow of capital
      - Financial sector helps markets to function and consuers/households to carry out economic activities all within a regulatory frame work
        
        this normally involves the lending and borrwing of money, both in the short and long run. This is done through financial intermediaries eg banks
        
        firms and govs allowing money to be moved from those who dont need to use it immediately- savers- to those who use it now - borrowers
    - - there is a large numbe rof financial institutions - the central bank,commercial banks , insurance companies and building societies however are considered the most important
        
        the central bank
        
        In the uk , the central bank is the bank of england, its role is to
        
        issue bank notes. In england and wales only the bank of england can do this
        
        The central bank supervises the supply of money in the economy
        
        control monetary policy by setting the bank rate which is the interest rate set by the bank of england from which all other interest rates are clculated
        
        provide financial stability by trying to ensure that the uk's citizens can trust financial organisations
        
        manage the countries foreign reserves and if necassary intervene in foreign exchange market
        
        act as the bank for commercial banks
        
        be the bank for the governemnt
        
        base rate 0.25%
        
        commercial banks
        
        the basic role of commercial banks is to take deposits from customers and turn them into assets for the bank
        
        They do thus by investing or lending the money that customers deposit , thus gaining a hugher rate of intrest than that which they are paying on the deposits
        
        in general , banks charge a rate of interest higehr than the base rate to broowers and offer savers an interest rate lower than the base rate
        
        Banks therefor do the following
        
        Accept deposits and in many cases pay interest on them
        
        keep savings safe
        
        make payments on behalf of their customers either by accepting their cheques or through card payment, mobile phone payments and bank transfers
        
        issue loans ti individuals and firms and provide overdraft facilities
        
        Loans are amounts of oney that a bank gives to a customer for a set period of time , on which interest is charged
        
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        they offer safe deposit boxes for vert expensive items like jewlerry and importantt documents
        
        Provide foreign currencies for firms trading overseas abd fir peoples holidays
        
        Building socities
        
        what are building socities
        
        A building society is a mutual financial institution that is owned by its members. Its primary objectives are to recieve deposits from its members and lend money for members to purchase property
        
        building societies are not companiesbut mutual institutions which means that their members - the people that save money with them own them
        
        these members have the right to attend and speak at meetings and vote on issues , each member has one vote regardless of how much money they have invested or borrowed
        
        building societies are limited as to the amount of money they can borrow from the money market
        
        insurance companies
        
        insurance companies are financial institutions that guarantee compensation for specified loss, damage or illness in return for na agreed premium - payment
        
        their functions are usually diivided into two groups - life insurance and general insurance
        
        life insurance aims to pay out money to the survivinng family if the person insured dies
        
        in addition life insurance also covers areas suuch as long term savings, pensions and annuities that are aimed at providing income during requirement
  - - - credit provision
        
        without credeit the level of economic activity in the economy would be greatly limited - while its true that creditcards has encouraged some people tolive beyond their means and run up very large debts, it is equally true that they provide a valuable way for consumers to buy now and pay later
        
        on a larger scale the provision od mortgages where consmers only have to find a small percentage of the cost of housing has given far more consumers the ability to buy their own home
        
        also the case for producers, they can borrow money from a variety of fnancial instit to enable them to grow without them first having to save all the money
        
        equally gov use credit to enable them to spend money even when tax rev has not yet been collected or when they wish to spend more than they intend to raise in taxes
      - liquidity provision
        
        liquidity refers to how easy it is to turn an asset into cash
        
        banks are the main providers of liquidity to households and businesses, and this allows them to continue to function whe faced with unexpected demands of cash - banks do this by offering eg overdraft facilities
      - risk managment
        
        financial institutions allow both indivs and businesses to pool thir risks from exposure tofinancial markets
        
        for exanole a professional finance manager may take savings from a range of custoemers and invest the money in a range of different companies, so that if one does less well, the savers do not lose all their money as the others may be doing better
    - - the financial sector enables individs and firms to use their savings productively, it also provides an efficiet payment system that reduces the costs and risks of producing goods and services and of purchasing them
        
        it does this by allowing consumers producers and the gov to overcoome economic uncertianties associated with imbalances between income and expenditure