5. Budgeting & Consumer skills

Question 1

Discretionary income

Answer 1

Income which is available after paying for the essentials— food, clothing, shelter

Question 2

Budget

Answer 2

A spending-and-savings plan, based on estimated income and expenses for an individual or an organization, covering a specific time period.

Question 3

Income

Answer 3

Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends, etc.

Question 4

Expenses

Answer 4

Payments for goods and services

Question 5

Balanced budget

Answer 5

A budget where income equals expenses.

Question 6

circular flow model

Answer 6

The movement of output (goods & services) and income (money) from one sector of the economy to another, often illustrated as a circular flow diagram.

Question 7

Describe the circular flow model.

Question 8

PACED decision making model

Answer 8

A five-step process for making economic choices:

1. state the problem, 2. list the alternatives, 3. state the criteria
2. evaluate the criteria,
3. make a decision.

Question 9

Marginal benefit

Answer 9

The additional gain from consuming or producing one more unit of a good or service; can be measured in dollars or satisfaction.

Question 10

Marginal costs

Answer 10

The increase in a producer’s total cost when it increases its output by one unit. The additional costs of getting one more.

Question 11

Provisions

Answer 11

the action of providing or supplying something for use

Question 12

Contract

Answer 12

A formal agreement between parties that specifies what each party is going to do in return for receiving something from the other party.

Question 13

Co-signer

Answer 13

A party to agrees to become part of a contract, guaranteeing payment if one of the parties defaults.

Question 14

Rescission

Answer 14

A part of many contracts that allows one or other party to change their mind and void the contract within a specified period of time.