4. Income and spending

Income is the monetary payment received for goods or services, or from other sources, as rents or investments. While there are many sources of income, all income is separated into two types: earned and unearned.

Earned Income means money received, in cash or in-kind, from wages, salary or commissions in exchange for the performance of services by the employee. Earned income includes payments made at one time for services performed over a long period of time.

Self-employment earned income means money received, in cash or in-kind for producing or selling goods or services, after all allowable expenses are subtracted from the income.During the past century, the percentage of people who work for themselves has generally declined. Increasingly, people are employees and not self-employed.

Unearned Income meansall income that is not considered earned income. It includes:

• Retirement benefits, Social Security benefits, and Veteran's pensions;

• Dividends and interest;

• Unemployment compensation;

• Strike benefits;

• Direct child support;

• Royalties;

• Contest or lottery prizes;

• Payments from any type of cash assistance program;

• Cash gifts by someone who is not in the household;

• Donations and so on.

Determining If Income Is Earned or Unearned

It is important to determine if income is earned or unearned, because certain deductions are made from earned income that is not allowed for unearned income.

When an individual reports income of a type that is not clearly earned or unearned, the caseworker must examine the degree of personal effort the individual must make to generate the income. If no direct personal effort or activity is required, the income is unearned.

In the market system a person’s income is determined by how the market values that person’s resources and skills. Individuals, such as doctors, whose skills society values, receive high incomes. People who own valuable resources, such as capital to invest or land to develop, also receive high incomes.

Spendingis the amount of expenses an individual has accounted for during the year. It may include mortgage, car payments, medical bills, shoppingcosts and other outlays.

The circular flow of income and spending is a simple economic model which describes the circulation of income between producers and consumers.

In this process, household sector provides various factors of production such as land, labour and capital. Producers or business sector in return makes payments in the form of rent, wages, interest and profits to the household sector.

Again household sector spends this income to fulfil its wants in the form of consumption expenditure. Business sector supplies them goods and services produced and gets income in return of it.

5. Recruitment. The letter of application. Cv.

When a company needs to recruit or employ new people, it may decide to advertise the job or position in the appointing page of a newspaper. People who are interested can then apply for the job by sending in a letter of application and curriculum vitae containing details of their education and experience. The company will then draw up a list of candidates, who are invited to attend an interview.

The most important thing when interviewing a candidate is his character, his ability to react, his intelligence and his suitability for the position for which he is being interviewed. It is important that the person is well presented, is neat and tidy, and that he or she has a good manner, because that shows a lot about personality. Normally the candidate has had one or two interviews with junior members of the staff before he gets to the level of personnel manager, and it is expected the person concerned to have a good knowledge of what the company does, what he’s expected to do, and who is going to report to. If the candidate doesn’t give an impression of understanding one of those three times, then he gets marked down accordingly.

The major way a candidate goes wrong is by basically becoming a yes-man or a yes-woman and agreeing with everything you say.

The most important pieces of advice to the candidates are: first of all you should listen; secondly, you ask right questions; and, thirdly, perhaps, the most important, you should create the right kind of relationship – an adult-to-adult relationship with the interviewee or the interviewer.

The letter of application normally contains three or more paragraphs in which you should:

• confirm that you wish to apply where you learned about the job

• say why you are interested in the position and relate your interests to those of the company

• show what you can contribute to the job by highlighting your most relevant skills and experience

• indicate your willingness to attend an interview (and possibly state when you would be free to attend)

To apply for a job you need to write a curriculum vitae (CV). Here are some advice on writing it properly.

At first you should give the general information about you: your name, address, telephone, date of birth and marital status. Remember to write your first name in full and to give your work telephone number beside home number. The date of birth should also be written in full.

In graph called “Education” you should list all schools and colleges you graduated from and do not forget to mention the years you were studying there.

The next section should be filled with all the qualifications you have got with mentioning the year of getting each qualification.

The section “Experience” requires listing all the jobs you’d had before applying for this one. You’d better give more details about your last job.

It is also necessary to give other information such as your knowledge of foreign languages and other activities or interests.

One of the important parts of the CV is references from your friends, teachers and former employers – anyone who can tell your prospective employer about your working habits and experience.

6. Markets and monopolies. Markets. Competition. Monopoly.

   A market economy is a type of economic system in which the trading and exchange of goods, services and information takes place in a free market. A market economy may therefore also be known as a free market economy.In a free market economy, the ‘invisible hand’ of supply-and-demand market forces defines what is produced, in what quantity, and at what price.

Since free markets are governed by the law of supply and demand, the market itself will determine the price of goods and services. Businesses can decide which goods to produce and in what quantity, and consumers and businesses can decide what they want to purchase and at what price.The main characteristics of a market economy are its flexibility and decentralized nature. This type of economic system is more apt to cope up with ever-changing market trends, making it faster and more reactive.

The opposite of a market economy is a planned economy, where the government decides what to produce, in what quantity, and to be sold at what price.Mixed economies blend market and planned economies, meaning that the government will have some role in regulating the market, but all other activity will be driven by the decisions of buyers and sellers.

The role of the national and state governments in the market economy is debatable, although it has been found that government interventions are sometimes necessary. In these cases, the government mainly deals with the formation and implementation of rules and regulations and ensures that monopolistic behavior does not obstruct competition in the marketplace.

State planning and central control of the economy often mean that a state government has the monopoly of important goods and services, e.g. most national authorities monopolize the postal services within their borders. A different kind of monopoly arises when a country, through geographical or geological circumstances, has control over major natural resources or important services, e.g. Russian Railways (РЖД) and the Norway Statoil. Such monopolies can be called natural monopolies.