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Finance > Finance Test 1 > Flashcards

Finance Test 1 Flashcards

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1
Q

What is consumption?

A

The action of consuming a good or service in exchange for money.

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2
Q

What’s a good?

A

A good is something you can touch, feel and bring home with you.

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3
Q

What is a service?

A

A service is something you pay people to do for you.

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4
Q

Why do we consume?

A

To satisfy basic needs or secondary needs (wants).

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5
Q

What is a need?

A

A basic requirement that must be fulfilled in order to survive.

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6
Q

What is a want?

A

Something you’d wish to have but not essential to survive.

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7
Q

What is opportunity cost?

A

The thing you gave up to get something else.

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8
Q

What are economic factors that influence consumption?

A
  • Income
  • Price of product
  • Rate of interest
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9
Q

What are socio-cultural factors that influence consumption?

A
  • Life cycle
  • Belonging to a social class
  • Supply and advertising
  • Values
  • Peer pressure
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10
Q

What are factors that influence the price?

A
  • Competition
  • Supply and demand
  • State regulation
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11
Q

When demand declines and supply is stable, what happens to the price?

A

It declines.

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12
Q

When demand is stable and supply declines, what happens to the price?

A

It increases.

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13
Q

When demand increases and supply is stable, what happens to the price?

A

It increases.

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14
Q

When demand is stable and supply increases, what happens to the price?

A

It declines.

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15
Q

What is equilibrium price?

A

When all products are sold and all potential consumer have bought these products.

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16
Q

What can the government do? (I have no idea how to phrase this question, sorry)

A
  • Regulation of economic activity
  • Universal access to services deemed essential
  • Redistribution of income
  • Nationalization of certain sectors of activity
  • Establishment of budgetary policy
  • Establishment of monetary policy
17
Q

What is inflation?

A

The increase in the overall Consumer Price Index.

18
Q

What is Canada’s inflation rate?

A

Typically 2% per year.

19
Q

What’s Consumer Price Index?

A

A measure of the average price change for goods and services bought by consumers in Canada.

20
Q

What’s purchasing power?

A

The amount of goods and services that an income allows you to buy.

21
Q

What is disposable income?

A

The amount that consumers have available for consumption or savings after applicable deductions.

22
Q

When price increases and disposable income is stable, what happens to purchasing power?

A

It decreases.

23
Q

When price is stable and disposable income increases, what happens to purchasing power?

A

It increases.

24
Q

When price is stable and disposable income decreases, what happens to purchasing power?

A

It decreases.

25
Q

When price decreases and disposable income is stable, what happens to purchasing power?

A

It increases.

26
Q

What are some non-taxable items?

A
  • Basic groceries
  • Subways and city buses
  • Prescription drugs
  • Healthcare services
  • Childcare
  • Books (only non-taxable for QST)
27
Q

What are the consumer socialization skill?

A
  • Observing and imitating certain models
  • Reinforcing behaviour
  • Repeated exposure
28
Q

What are the internal factors that influence consumers?

A
  • Their individual values
  • Their income and access to credit
  • Their age and stage in life
  • Their gender
  • Their search for identity and self-esteem
  • Their consumer skills
29
Q

What are the external factors that influence consumers?

A
  • The social groups to which they belong
  • The commercial environment in which they grow up
  • The frequency of their exposure to advertising
  • The planned obsolescence of the goods and services they purchase
30
Q

What is planned obsolescence?

A

Purposefully limiting the lifespan of a good.

31
Q

What is perceived obsolescence?

A

Thinking we need the newest model to fit in.

32
Q

What are the types of planned obsolescence?

A
  • Aesthetic
  • Compatibility
  • Functional
  • Quality
  • Environmental or safety standards
33
Q

What are the steps in the rational purchasing process?

A
  1. Need recognition
  2. Research
  3. Compare products
  4. Choose
  5. Buy
  6. Use
34
Q

What are reliable and relevant sources?

A
  • Investigative journalism
  • Specialized magazines
  • Consumer associations
  • Public organizations
35
Q

What are less reliable sources?

A
  • Blogs
  • Youtube
  • Personal website
  • Comment sections
  • Reviews
  • Celebrities
  • People being paid

Finance (1 decks)

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