Economics and Bankruptcy Flashcards
What does the Bankruptcy act of 2005 require?
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
What is the business cycle?
A cycle that reflects movements in economic activity and illustrates the concepts of supply and demand
What is chapter 11 bankruptcy?
A reorganization which allows businesses to continue to operate and maintain possession of assets. Chapter 11 is also eligible for chapter 7 (7-11)
What is chapter 13 bankruptcy?
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
What is chapter 7 bankruptcy?
The individual is permitted to retain some assets, but all others are relinquished to satisfy the cost of bankruptcy and the claims of creditors
What are coincident indicators?
Indicators that occur simultaneously during the business cycle that confirm the stage that the economy is in
What does the Consumer Credit Protection Act provide?
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.
What does the consumer reporting reform act provide?
This requires credit bureaus to include relevant, accurate information about the financial situation of credit applicants
What is the consumer price index (CPI)?
This is a monthly data point on the prices paid by urban consumers for a representative basket of goods and services
What is contraction policy?
Incorporates decreases to government spending and increases to taxation of individuals and businesses to cool down inflation and the economy
What is the credit card accountability responsibility and disclosure act of 2009 (CARD act)?
This act established improved practices required for consumers to understand their credit transactions
What is deflation?
When the prices of goods and services fall in absolute terms (below 0%)
What is the level of desire or need for goods and services called?
Demand
What is a depression?
When GDP has experienced a decrease in real terms for six consecutive quarters
What is the discount rate?
The rate at which banks can borrow against any of the federal reserve banks
What is disinflation?
When the prices of goods and services are still rising, but at a declining rate (ex: inflation rate goes from 3% to 2%)
What is the study of production, distribution, and consumption?
Economics.
The study of choices in the presence of scarce resources, divided into two broad categories; micro and macro economics
What is elasticity?
Those items demanded which respond relatively more to price changes, such as luxury items.
What is the equal credit opportunity act?
This act prohibits any kind of discrimination, including whether the applicant’s income partially comes from public assistance
What is equilibrium?
The intersection of supply and demand
What is expansion policy?
Increasing government spending or reducing taxes for individuals / businesses to warm up the economy
What does the Fair and Accurate Credit Transaction Act of 2003 (FACTA) do?
It adds new protections to the FCRA. Consumers can request their credit report every year and consumer info must be disposed of properly
What is the fair credit billing act?
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
What is the Fair Credit Report Act?
Gives additional access to an individuals credit score, particularly after being denied credit.
What is the Fair Debt Collection Practices Act?
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
The interest rate charged on short term borrowing between banks is called?
The federal funds rate
The use of government spending and tax policies to influence economic conditions is called?
FisCAl policy (current administration)
How is gross domestic product calculated?
It is the total monetary value of all goods and services produced within the domestic US over the course of a year
How is gross national product calculated?
This is measured economic activity by ownership that takes into account production both in and out of the country
What is inelasticity?
Those demanded items, which respond relatively less to price changes, such as necessities
What is inflation?
The rise in the average level of prices of goods and services
What are lagging or confirming indicators?
Those indicators that change after the economy has passed through one business cycle
What are leading indicators?
Those indicators that precede actual economic change
The study of the economy as a whole
Macroeconomics
The study of how individuals and companies make decisions to allocate scarce resources, which helps in understanding how individuals and companies prioritize their wants
Microeconomics
What is monetary policy?
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
What is the privacy act of 1974?
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
What is the producer price index(PPI)?
This measures the average change over time in the selling prices received by domestic producers for their outputs
What is a recession?
Experienced when the GDP has experienced a decrease in real terms for two consecutive quarters from a baseline of zero
What is stagflation?
When both high inflation and high employment occur at the same time which makes any short-term fix by the fed or government, difficult
What is supply?
The amount of goods or services available
What is the only rate that the Fed uses to exercise monetary control?
THE DISCOUNT RATE!!!!!
