Economics Unit 11.1

Economics Unit 11.1

Understanding the personal life cycle
1. Personal Life Cycle
  1. Childhood
    1. Adolescence
      1. Young Adult
        Middle Adult
        Late Adult
  2. During different stages an individual will get money from various different sources
    Nota:
    - ASdasdsadsad
  3. Milestones are important events
    1. Leaving School
    2. Unemployment
    3. Retirement
    4. Promotion
  4. Government Effect
    1. Tax Credit
    2. Pensions
    3. Tax Allowances
    4. EMA
2. Needs are things people must have to survive
  1. Limited
3. Wants are things people wish they had right now and are dispensible
  1. Unlimited
Making Decisions
1. The basic economic problem is scarcity
  1. Recourses are limited but needs and wants are infinite
2. When you make a decision, the choice you miss out on it the opportunity cost
Choosing to spend
1. Demand is the quantity of all goods and services purchased at any given price
2. Supply is the quantity of a good or service that businesses will offer for sale at a particular price.
3. Factors Affecting Demand
  1. Price
  2. Income Level
  3. Advertising
  4. Price of Substitutions
4. Factors Affecting Supply
  1. Cost of raw materials
  2. Wage Rates
  3. Productivity of workers
5. Competition is the process of trying to beat others
  1. Benefits include lower prices, better value, greater variety and improved quality
  2. Disadvantages include quality, and after service sales can suffer
Choosing to save
1. Reasons to save
  1. Buy something expensive
  2. Put aside for unexpected
  3. Save for retirement
  4. Earn interest
  5. Banks and Building Societies
  6. Post office card account
  7. Internet only banks
  8. NS&I
2. Savings Account: Low reward, low risk, easy withdrawal, short to long term
3. ISA account: Same as savings with medium to long
4. NS&I Same as ISA but with written notice before withdrawal
5. Unit Trusts: High reward, High risk, Long term, obtaining money may take some time.
Interest Rates
1. APR is charged to borrowers
2. AER is paid to savers
Borrowing money
1. Peoples spending needs change so often it is necessary to borrow money
2. Credit and Stores Cards. You must may a minimum outstanding balance each month
3. Mortgage
4. Hire Purchace
5. Personal Loan
6. Overdraft
Managing your money
1. A budget is a financial plan of future income and spending.
2. Financial Planning is a process for ensuring financial goals are met
3. Financial Advisor can help debt by drawing up a debt management plan
4. Ethical Considerations are controversial and some people won't save with a bank if they feel it is not ethical enough

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