Econ Final Flashcards
Insurance to help the poor
Medicaid
Legal way for a person to walk away from paying some or all of their bills
Bankruptcy
Option given up in order to get something else
Opportunity Cost
Person who creates a business from scratch
Entrepreneur
Insurance to help the elderly
Medicare
What does a Form W-4 tell the employer
How much to withhold from your pay each pay period; this form can change how much net pay one gets and change the amount of deductions in one’s pay
A Form W-2 tells
How much income you have made over the entire year
The purpose of a Form W-2 is used to
To file your income taxes
Who do you pay federal income tax to?
IRS
T/F Taxes are the lowest payroll deduction
True
T/F Gross income can be found by hours worked times wages per hour minus payroll deductions
False, hourly rate of pay times wages per hour (gross income is calculated without payroll deductions)
What is the difference in net and gross pay
Gross: amount of money you make before payroll deductions,
Net: amount of “take home” money after payroll deductions
2 ways a person makes their money “work” for them
Savings, Investing
What does a credit report show about a person’s finances?
What loans they currently have, previous loans, accepted/denied and paid/unpaid loans. How responsible they are with paying loans.
How a person can increase their auto insurance
How a person can decrease auto insurance
Increase: Gender-Men have more accidents, single people have higher rates bc they have more accidents
Decrease: Drive safely, drive a safer car, be a woman, be married
T/F A person who buys insurance is agreeing to no loss for protection in case of a problem
False; a person who buys insurance is agreeing to a small loss for protection in case of a problem
T/F The shorter a person’s loan term, the less the person pays at the end
True
T/F When buying insurance, an insurance company transfers risk and responsibility from the individual to the company
True
T/F A person can increase their premium by increasing their deductible
False, a person can decrease their premium by increasing their deductible
T/F One with higher coverage (insurance) will have a relatively more expensive premium
True
Earning interest on interest
Compounding
hen someone is willing to loan you money
Credit
Amount of money a person actually borrows and must pay back
Principle
Amount a person must pay to transfer risk to an insurance company
Premium