Economics and Bankruptcy

Question 1

What does the Bankruptcy act of 2005 require?

Answer 1

Requires consumers to use chapter 13 first, if able, before chapter 7. Debtors using chapter 7 must submit to credit counseling first.

Lenders are required to disclose the dangers of paying only the minimum payments

Question 2

What is the business cycle?

Answer 2

A cycle that reflects movements in economic activity and illustrates the concepts of supply and demand

Question 3

What is chapter 11 bankruptcy?

Answer 3

A reorganization which allows businesses to continue to operate and maintain possession of assets. Chapter 11 is also eligible for chapter 7 (7-11)

Question 4

What is chapter 13 bankruptcy?

Answer 4

A plan is created to pay outstanding debts, usually at a reduced rate, over time, usually 3-5 years. This allows the individual or business to retain assets

Question 5

What is chapter 7 bankruptcy?

Answer 5

The individual is permitted to retain some assets, but all others are relinquished to satisfy the cost of bankruptcy and the claims of creditors

Question 6

What are coincident indicators?

Answer 6

Indicators that occur simultaneously during the business cycle that confirm the stage that the economy is in

Question 7

What does the Consumer Credit Protection Act provide?

Answer 7

AKA the truth in lending act, it requires lenders to reveal in simple terms, the APR, when payments begin, charges for late payments, prepayment info, amount financed, and right of recession.

Question 8

What does the consumer reporting reform act provide?

Answer 8

This requires credit bureaus to include relevant, accurate information about the financial situation of credit applicants

Question 9

What is the consumer price index (CPI)?

Answer 9

This is a monthly data point on the prices paid by urban consumers for a representative basket of goods and services

Question 10

What is contraction policy?

Answer 10

Incorporates decreases to government spending and increases to taxation of individuals and businesses to cool down inflation and the economy

Question 11

What is the credit card accountability responsibility and disclosure act of 2009 (CARD act)?

Answer 11

This act established improved practices required for consumers to understand their credit transactions

Question 12

What is deflation?

Answer 12

When the prices of goods and services fall in absolute terms (below 0%)

Question 13

What is the level of desire or need for goods and services called?

Answer 13

Demand

Question 14

What is a depression?

Answer 14

When GDP has experienced a decrease in real terms for six consecutive quarters

Question 15

What is the discount rate?

Answer 15

The rate at which banks can borrow against any of the federal reserve banks

Question 16

What is disinflation?

Answer 16

When the prices of goods and services are still rising, but at a declining rate (ex: inflation rate goes from 3% to 2%)

Question 17

What is the study of production, distribution, and consumption?

Answer 17

Economics.

The study of choices in the presence of scarce resources, divided into two broad categories; micro and macro economics

Question 18

What is elasticity?

Answer 18

Those items demanded which respond relatively more to price changes, such as luxury items.

Question 19

What is the equal credit opportunity act?

Answer 19

This act prohibits any kind of discrimination, including whether the applicant’s income partially comes from public assistance

Question 20

What is equilibrium?

Answer 20

The intersection of supply and demand

Question 21

What is expansion policy?

Answer 21

Increasing government spending or reducing taxes for individuals / businesses to warm up the economy

Question 22

What does the Fair and Accurate Credit Transaction Act of 2003 (FACTA) do?

Answer 22

It adds new protections to the FCRA. Consumers can request their credit report every year and consumer info must be disposed of properly

Question 23

What is the fair credit billing act?

Answer 23

Requires consumers to report to the creditor any billing errors within 60 from the statement. Creditor has 30 days to respond and 90 days to resolve the complaint

Question 24

What is the Fair Credit Report Act?

Answer 24

Gives additional access to an individuals credit score, particularly after being denied credit.

Question 25

What is the Fair Debt Collection Practices Act?

Answer 25

Prohibits debt collectors from engaging in certain practices such as contacting the debtor at their place of work, harassing or treating the debtor, or using false or misleading information

Question 26

The interest rate charged on short term borrowing between banks is called?

Answer 26

The federal funds rate

Question 27

The use of government spending and tax policies to influence economic conditions is called?

Answer 27

FisCAl policy (current administration)

Question 28

How is gross domestic product calculated?

Answer 28

It is the total monetary value of all goods and services produced within the domestic US over the course of a year

Question 29

How is gross national product calculated?

Answer 29

This is measured economic activity by ownership that takes into account production both in and out of the country

Question 30

What is inelasticity?

Answer 30

Those demanded items, which respond relatively less to price changes, such as necessities

Question 31

What is inflation?

Answer 31

The rise in the average level of prices of goods and services

Question 32

What are lagging or confirming indicators?

Answer 32

Those indicators that change after the economy has passed through one business cycle

Question 33

What are leading indicators?

Answer 33

Those indicators that precede actual economic change

Question 34

The study of the economy as a whole

Answer 34

Macroeconomics

Question 35

The study of how individuals and companies make decisions to allocate scarce resources, which helps in understanding how individuals and companies prioritize their wants

Answer 35

Microeconomics

Question 36

What is monetary policy?

Answer 36

A set of tools that the nations bank has to promote sustainable growth by controlling the overall supply of money that is available to the nations banks, it’s individuals, and it’s businesses

Toolkit:
Reserve requirements
Discounts rate
Open market operations

Question 37

What is the privacy act of 1974?

Answer 37

Established a code of fair information practices that regulates the types of personal information the federal government can collect and how this information can be used

Question 38

What is the producer price index(PPI)?

Answer 38

This measures the average change over time in the selling prices received by domestic producers for their outputs

Question 39

What is a recession?

Answer 39

Experienced when the GDP has experienced a decrease in real terms for two consecutive quarters from a baseline of zero

Question 40

What is stagflation?

Answer 40

When both high inflation and high employment occur at the same time which makes any short-term fix by the fed or government, difficult

Question 41

What is supply?

Answer 41

The amount of goods or services available

Question 42

What is the only rate that the Fed uses to exercise monetary control?

Answer 42

THE DISCOUNT RATE!!!!!