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www.fetsystem.

com [GCSE ECONOMICS SECTION 3 REVISION NOTES


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
Governments bank
Bankers 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 individuals choice of occupation
Wage factors
Non-wage factors

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

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

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


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

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

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.

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


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

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