Chapter 13 Flashcards
What is our economy in a constant state of?
flux
Business cycles
is regular ups and down in the economic growth marked by periods of expansion (economy is in a period of growth) and contraction (the economy is in a period of decline)
Business fluctuation
alternating periods of expansion and contraction.
Phases of Business cycle
recession
expansion
Recession
a decline in the GDP lasting at least two quarters in a row or more. The recession begins when the economy reaches a peak (the point where the real GDP stops going up) and ends when the economy reaches a trough (the point where the real GDP stops going down)
Expansion
a period of uninterrupted growth of real GDP
what happens if recession becomes severe/
it turns into a depression
Causes of the business cycle
- External shock- such as wars, internal conflicts
- Changes in investment spending- are companies growing and investing or not
- Changes in monetary policy- the policies of the federal reserve (increase or decrease in interest rates)
- Fiscal policy shocks- federal government spending
- Speculation and bubbles- expectations about the future
how did the great depression begin?
stock market crash “black tuesday”
How much did the GDP drop in the great depression?
50%
What was the darkest period economically in history?
great depression
What are the causes of the great depression?
- unequal distribution of wealth
- credit
- international trade wars
What came out of the depression?
economic reforms
What are some economic reforms ?
social security
minimum wage
what did unemployment programs give?
relief to people out of work
Name a unemployment program
federal deposit insurance corporation
What did the FDIC do?
created banking insurance for peoples deposits
how much did the GDP decline in great recession?
5%
what was the major cause of the great recession?
home loans grants to borrowers with poor credit histories and no down payments considered high risk loans.
what are the causes of instability in economy?
inflation
deflation
inflation
a sustained rise in general level of prices and services
deflation
a sustained decline in general level of prices and services
what does the flow of money in the family represent?
the value system under which that family operates
what do men say about emergency fund savings?
its boring and not sophisticated enough
what do women say about emergency fund savings?
its the most important key to our financial plan
how do men get good deals?
negociating
How do women get good deals?
hunting
how do men feel about financial problems?
lose self esteem because money usually represents a scorecard to them
how do women feel about financial problems?
they face fear or terror, because money means security.
what is the number one cause of divorce in america?
money fights
what happens when you agree on the money system?
you will reach a unity in marriage that you can experience no other way
who does the financial planning?
both
who can prepare the budget?
the partner with the natural gift but both do decisions
why does the nerd like doing the budget?
because it gives them control, and they fell like they are taking care of loved ones.
how can the free spirit appear to the nerd when doing finances?
can appear irresponsible
how does the free spirit feel when doing finances?
controlled and not cared for
what can lead to poor money management?
time, poverty, and fatigue
what can impulse buying be brought on by?
stress or even I owe it to myself
What does a written plan give a single person?
empowerment, self accountability and control
what must accountability frinds be?
loving enough to be brutally honest with you
whos responsibility is it to teach kids to handle money?
parents
What should parents do instead of allowances?
commissions
how should parents teach their kids?
by example
What should parents teach their children about money?
how to live debt-free, how insurance works, IRA
what money-saving technique should you use with 5-12-year-olds?
giving, spending, and saving
What money-saving technique should you use with 13-15-year-olds?
open a checking account for the child and teach him how to run it by monthly reviews
nerd
the one who likes to deal with numbers and the budget
commission
getting paid based on the work you complete
free spirit
the one that goes with the flow
accountability
taking responsibility and assisting with wise decisions
Value system
what is important to you
