revision for gcse economics section 3

www.fetsystem.com [GCSE ECONOMICS SECTION 3 REVISION NOTES

F R E E O N L I N E L E C T U R E S & R E V I S I O N M A T E R I A L B Y F E T S Y S T E M

Functions of money

Medium of exchange

Store of value

Unit of account

Standard for deferred payment

Need for exchange

If someone produces pens and has to buy a eraser then he/she will need

money to buy it.

Money aids trade and specialization

Functions of central bank

Government’s bank

Banker’s bank

Issues notes/money

Implements monetary policy

Lender of last resort

Regulation of banking system

Functions of stock exchanges

Providing trading facility to buyers and sellers

Describing market trend bullish or bearish

Generating capitals for companies by providing shares for sale

Promote savings and investment

Establishing rules and regulations for sale and purchase or shares

Functions of commercial banks

Receiving deposits

Granting loans/ lending

Providing payment options for example

Credit cards, cheques and debit card

Agency services

Investment

Factors affecting individual’s choice of occupation

Wage factors

Non-wage factors



Wage factors

Wages

Overtime aka moonlighting

Bonuses

Commission

Non-wage factors

Job contentment

Working conditions

Fringe benefits

Location and size of the firm

Chances of promotion

Changes in earnings over time for an individual

Change in earnings occurs due to change in demand for labor and change is

supply of labor

If demand for labor increases the earnings increases

If supply of labor decreases the earnings increases

Differences in earnings

Male/female

Skilled/unskilled

Private/public

Agricultural/manufacturing/services

Male/female earnings

The reasons male earn more than female are:

Male devote more working hours

Males are always part of labor force, so they have more experience

Males are better at negotiating salaries

Discrimination



Skilled/Unskilled earnings

Skilled workers earn more than unskilled workers because:

Skilled workers have greater productivity

Their supply is low

They have special skills to perform a particular job

Their job requires a qualification

Private/Public earnings

Private sector employees get higher wages than public sector employees

Reasons:

Main aim of private sector is profit

So they can give money to motivate

Public sector employees get other benefits

Public sector workers may also get higher wages by the help of trade unions

Agricultural/manufacturing/services earnings

In the third world countries the agricultural workers are paid less than

manufacturing worker because the supply of agricultural workers in third

world countries is high.

Workers belonging to the services industry earn more than the workers in

manufacturing industry

Trade unions

An organization of people who represent and protect the rights and interests

of it members

Trade unions demand:

Higher wages

Better working conditions

If demands are not met they may take an industrial action (strike)

Role of trade unions

Protect the rights

Negotiate with the management on behalf of the members (collective

bargaining)

Improve pay and working conditions

Act as a pressure group

Call a strike if demands are not met



Advantages of specialisation for an individual

Productivity increases

Increased experience

Less wastage of time

Efficiency increases

Disadvantages of specialisation for an individual

Job dissatisfaction

Risk of unemployment

No flexibility

Motive for spending

To survive

To buy the things they want

To maintain a standard of living

Fulfill their desires

Motive for saving

Save for the bad times

Save for retirement

Save money to fulfill a particular purpose

Eg. Save money to buy a house

People save money to buy shares so that they can get Capital gains

Motive for borrowing

To fulfill immediate need or demand

Pay of expenses

Maintain standard of living in bad time

How different income groups have different expenditure patterns

The rich spend more than the poor

The marginal propensity to consume is proportion of income which people

spend

The poor have greater marginal propensity to consume because poor spend

the entire money because it is less whereas rich save it.



Why different income groups have different expenditure patterns

Poor have less money so they spend the entire money on their necessities

Rich are able to save money after fulfilling their needs and wants

Rich may spend more than poor but the poor spend a higher proportion than

the rich

What is retained profit?

Profit reinvested into the business for further growth

revision for gcse economics section 3

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