E3A Microeconomic Decision Makers Flashcards
what are the FUNCTIONS of money?
(what money can do)
Medium of exchange
(widely recognized/accepted → ppl all use it)
Measure of value
(measures value of different g/s → ppl trade efficiently)
Store of value
(hold its value → ppl confident)
Standard of deferred payment
(ppl can purchase on credit)
what are the CHARACTERISTICS of money?
(features of money)
Acceptable
Divisible
Durable
Portable
Limited in supply
Easily recognizable
what are the roles of a CENTRAL BANK?
MS (print money, decide reserve ratio for lending)
IR
lender of last resort
what are the roles of a COMMERCIAL BANK?
accept deposits + approve loans financial services (currency exchange, money transfer)
what’s the difference between disposable income and REAL disposable income
disposable income:
income - tax
REAL disposable income:
disposable income adjusted to inflation (pp)
analyze the influences on SPENDING/SAVING/BORROWING
INCOME
higher pp → sp+
more $ to spare → sv+
more confident in ability to repay → b+
INFLATION (P rise faster than W)
lower pp → sp-
money lose value → sv- (sp+)
IR
higher reward → sv+ → sp-
higher cost → b-
CONSUMER CONFIDENCE
more willing to spend → sp+ → sv-
more confident to invest → b+
analyze the influences on ppl’s CHOICE OF JOB
WAGE → PP → LS
WORKING CONDITION
WORKING HOUR/HOLIDAY→ leisure time
SATISFACTION (recognization, interest, fringe benefit)
PROSPECT (promotion, job security, pension, danger)
MOBILITY
GEO: family, cost of living/relocating
OCCU: length+cost of training
analyze the influences on WAGE
D&S
high D + low S = high wage
BARGAINING POWER
trade union/education/experience
- *GOVT POLICY**
min. wage → higher wage for low-income
define TRADE UNION
represent the interests of a group of workers
analyze influences on STRENGTH of trade unions (BARGAINING POWER)
active economy
→ high AD
high + inelastic D for product
→ high DD for labor
skill/qualification
→ high D (productivity) + low S (length of training required)
→ harder to replace
number of workers in union
→ more funds(membership fee)
→ harder to replace
govt legislation
→ allowing strikes
analyze the PROS of trade unions
- *NEGOTIATION & COLLECTIVE BARGAINING**
- wages, conditions, hours… → LS → motivation → productivity
- *ADDITIONAL SUPPORT**
- solve disputes → improved relation → productivity
- info on training opportunity → reduce UE → productivity
analyze the CONS of trade unions
INDUSTRIAL ACTIONS → productivity → profit → tax revenue
INCREASED COP (WAGE) → profit → tax revenue + UE
define SPECIALIZATION / DIVISION OF LABOR
workers focus on + become experts in a particular field/production process
analyze the pros/cons of SPECIALIZATION
what affect S for labor?
population
how many women join labor force
mobility (geo, occu)
