Final Exam Review (EPF) Flashcards
What concept says that money received today is worth more than the same amount of money received sometime in the future?
The Time value of money
To determine the time value of depositing $100 in a savings account, what two things does a person need to know?
interest rate and received interest
What is interest earned on interest?
compound interest
What helps you to calculate how fast your savings will double in value at a given interest rate?
The rule of 72
What are the four factors of production?
Land, Labor, Capital, Entrepreneurship
What is a centrally planned economy?
Command Economy
What type of economy has individuals and private businesses own and control production?
Market Economy
What is the study of how individuals and societies satisfy their unlimited wants and limited resources?
Economics
What exists when there are not enough resources to satisfy human wants?
Scarcity
What two things do you need to consider when making a decision?
Marginal costs and Marginal benefits
What is known as the father of economics?
Adam Smith
What famous economics book did Adam Smith write?
Wealth of nations
What government organization is responsible for distributing new coins and currency into the general economy?
The Federal Reserve
Why is depositing money into a bank or credit union usually a better idea than saving your money under a mattress?
Guaranteed interest
What institution’s deposits are insured by the NCUA?
Credit unions
What can you apply for if you do not have enough money to purchase a car with cash?
Loan
When you need to access your money within the next few months, where should you invest your money? The stock market or a savings account?
Savings Account
What type of investment represents ownership in a company?
Stock
Why does a company issue bonds?
To raise money for expansion
What is the relationship between risk and return?
Higher the risk, Higher the return
What are corporate profits paid to stockholders?
Dividens
What is the federal government that requires all stock issuances be registered?
Securities and Exchange Commision
What is the typical retirement age?
65
What concept is best described as, “a dollar today is worth more than a dollar tomorrow?”
Time Value of MOney
What are the two most important factors in calculating your credit score?
Payment history and amount owed
Why is it more difficult for young adults to borrow money?
Less payment history
What types of items will you find on your credit report?
Salary
Which government run website allows you to download your credit report for free each year?
annualcreditreport.com
What is the single best way to improve a credit score?
Make payments on time
How does a low credit score impact the interest rates available to the consumer?
increases them
What is your creditworthiness measured by?
fico score
What debt payoff method pays off the smallest loans first, which can be motivating because you have fewers sources of debt?
snowball
What is the largest category of earned income?
salaries and wages
Education, training, and experience increase what type of capital?
human capital
What are retirement plans, paid vacation, and health insurance plans considered?
benefits
Gifts, returns on investments, and inheritance are considered what type of income?
unearned income
What is the amount you earn before paying taxes called?
gross pay
What is the government agency responsible for processing tax returns?
The Internal Revenue Service (IRS) administers and enforces U.S. federal tax laws.
IRS
What month is considered tax season?
April
What is the amount of tax owed to the government by a taxpayer in a given year?
Tax Liability
The amount owed on a homeowner’s insurance premium can be influenced by what factors?
Value of the property, type of property, location of policy
What type of insurance covers the possessions of a renter?
renters insurance
What is the amount a policyholder must pay before the insurance pays a claim?
deductible
What is the purpose of insurance?
Protect assets, shared risk, protect against loss
What is insurance frequently described as a method of “sharing the risk?”
Shared with the other policy holders
Why would a policy have a high deductible?
Lower premium
What is the cost of an insurance policy?
Premium
What is the flat-fee paid when you see a doctor?
Lo-pay
The law of supply states that producers will ___ the quantity of their supply at high prices.
increase
What is the willingness and ability to bring to market specific quantities of goods or services?
supply
What is the willingness and ability to buy specific quantities of a good or service?
demand
The law of demand states that people will buy more goods or services at ___ prices.
lower
How can you identify the equilibrium price and quantity?
interest
What is the key signal to buyers and sellers about a good or service?
price
What describes the degree to which buyers and sellers respond to price changes?
Elasticity
