Definitions

Question 1

Opportunity cost

Answer 1

The next best alternative given up when you make a decision
Ex) gap year or uni

Question 2

Inflation

Answer 2

A rise in the average price level of goods and services in the economy

Question 3

Deflation

Answer 3

When prices decline across a sector or the entire economy
Freezes economic growth

Question 4

Hyperinflation

Answer 4

Inflation rises rapidly, causing a rapid decrease in the value of currency. Prices rise at least 50% each month
Ex) post war; civil unrest

Question 5

CPI

Answer 5

Tracks changes in price consumers pay per month for certain goods and services. Uses basket of goods approach and looks at 8 major categories. Formula is current (price-former price)/ former price

Question 6

Asset

Answer 6

Something you own that has positive value

Question 7

Liability

Answer 7

Something that you owe or something that has negative economic value

Question 8

Liquid asset

Answer 8

Things that can easily be exchanged for cash

Question 9

Net worth

Answer 9

Rough representation of your financial position at one point in time
Asset-liabilities

Question 10

Appreciate

Answer 10

Something that goes up in value after you buy it
Ex) land/property, real estate, some designer items, investments and stock

Question 11

Depreciate

Answer 11

Something that goes down in value after you buy it
Ex) cars, most clothing, electronics, machinery, and appliances

Question 12

Intrinsic value

Answer 12

When money has value in and of itself
Ex) money made from gold or silver

Question 13

Fiat money

Answer 13

When money has no value in and of itself but only in terms of the value it represents and what it is able to buy- it’s purchasing power

Question 14

Legal tender

Answer 14

The official money in a country that is widely accepted

Question 15

Exchange rate

Answer 15

The value of one country’s currency in terms of the currency of another country

Question 16

Foreign exchange market

Answer 16

Locations where the currency of one country can be exchanged for the currency of another country

Question 17

Bartering

Answer 17

When one item is exchanged directly for another without using money

Question 18

Medium of exchange

Answer 18

One of the roles of money where money makes it easier to acquire goods and services we need and want

Question 19

Purchasing power

Answer 19

The ability of money to acquire goods and services. As prices rise, the purchasing power of money falls.

Question 20

Bank of Canada

Answer 20

Canadas central bank that holds the responsibility, among other things, of influencing interest rates to keep prices relatively stable and protect the purchasing power of Canada’s money.

Question 21

Financial planning

Answer 21

Setting goals for things you hope to achieve and acquire over time and making a plan for how to achieve these goals