FIN1010_Exercises_Module1.docx - FIN1010 Exercises Module 1...

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FIN1010 Exercises Module 1 1. How do the business cycles and the health of the economy affect the value of your labor? In terms of supply and demand, what are the optimal conditions in which to sell your labor? How might further education increase your mobility in the labor market (the value of your labor)? Business cycles and the health of the economy can influence the amount of money we are paid for our labor and our nominal income, or the purchasing power of our currency. When the economy is doing well unemployment rates are generally low, this means that there is an adequate demand for work and labor can be scarce. During these times employees have more bargaining power, especially collective bargaining done by unions, to drive up wages, this will increase workers nominal income. In an economic downturn there is an excess of labor and jobs are scarce, this forces workers to accept a lower wage to remain employed. The prime time to sell labor is at peak market price, which would occur just before an economic downturn. Seeking further education can increase a worker’s skills and make them more valuable as human capital to a firm. Workers who improve their technical, interpersonal, and business skills are more marketable to a wide range of employers and can ask for higher salaries. Completing a degree can make you more visible to your employer for promotions and can open countless possibilities for your career path.
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