Chapter 1 Flashcards
standard of living
the necessities, comforts, and luxuries enjoyed or desired by an individual family
average propensity to consume
the percentage of each dollar of income, on average, that a person spends for current needs rather than savings
wealth
the total value of all items owned by an individual, such as savings accounts, stocks, bonds, home, and automobile
financial assets
intangible assets, such as savings accounts and securities, that are acquired for some promised future return
tangible assets
physical assets, such as real estate and automobiles, that can be held for either consumption or investment purpose
personal financial planning
a systematic process that considers important elements of an individual’s financial affairs in order to fulfill financial goals
financial goals
results that an individual wants to attain, such as buying a home, building a college fund, or achieving financial independence
money
the medium of exchange used as a measure of value in financial transactions
utility
the amount of satisfaction received from purchasing certain types or quantities of goods and services
goal dates
target dates in the future when certain financial objectives are expected to be completed
flexible-benefit (cafeteria) plans
the employer allocates a certain amount of money to each employee and lets the employee “spend” that money for benefits that suit his or her age, marital status, number of dependent children, and level of income
expansion
the phase of the economic cycle when real GDP increases until it hits a peak
peak
the phase of the economic cycle when an expansion ends and a contraction begins
contraction
the phase of the economic cycle when real GDP fails
trough
the phase of the economic cycle when a contraction ends and an expansion begins
