General Principles Flashcards
Who sets Fiscal Policy and what levers can they pull to influence the economy?
U.S. Congress and government spending and taxation
Who sets monetary policy and what 3 things can they do in a contractionary environment to tighten?
The Federal reserve bank and they can increase the discount rate, increase the reserve requirements and sell securities on the open market.
List 3 qualifications for a 529 able plan:
1) diagnosis of a significant disability prior to age 26
2) expected to last at least 12 consecutive months
3) Must be in receipt of benefits under SSI and/or SSDI OR be able to obtain disability certification from a doctor
For the EFC amount, parent’s assets are included at a max rate of _
5.64%
Most debts are eliminated under chapter 7 bankruptcy. Name the 5 that are not.
1) Child support
2) Alimony
3) Income taxes less than three years past due
4) Student loans
5) Secured debt (ex: homes and cars backed by another asset)
Length of credit history accounts for what percent of an individual’s credit score?
15%
What are 2 other names for the front-end ratio?
The housing cost ratio or mortgage debt ratio
What are the 2 other names for the back-end ratio?
The total debt ratio or the debt repayment ratio
What is another name for the consumer debt ratio?
Simply the debt ratio
What are qualified expenses in a 529 plan?
College tuition, fees, books, computers, and related equipment, supplies, special needs; room and board for minimum half-time students. Up to 10K in tuition expenses, ONLY TUITION, for K-12 schools. Up to 10K annually in student loan payments.
What is the federal estate tax treatment for a 529 plan?
Value is removed from the donor’s gross estate; partial inclusion for death during a 5-year election period.
Can you put an EE or I bond in an UTMA/UGMA?
You cannot
What are the age restrictions for a coverdell?
Must make contributions BEFORE beneficiary reaches age 18 and use account or change beneficiary by age 30
What is the definition of GDP
the market value of the goods and services produced by labor and property in the United States
What are the max investments for a series EE and series i bond?
Series EE: $10,000 per year, per owner
Series I: $10,000 (digital); $5,000 (paper) per year, per owner
In a 529 ABLE plan, account balances of _ are disregarded for Federal Financial Aid
100,000
If a student receives a scholarship for $5,000, how much is the parent able to withdraw penalty-free but not tax-free from the 529 account?
$5,000
What is the student protected amount from income used in the EFC formula?
$9,410
Are rollovers permitted from a 529 account to a 529 able account?
Only if the beneficiary of the able account is the designated beneficiary of the tuition account or is an eligible family member.
What is expansion characterized by?
Increasing GDP and decreasing unemployment.
What is contraction characterized by?
Decreasing GDP and increasing unemployment?
What is peak characterized by?
Very high GDP and very low unemployment.
What is trough characterized by?
Very low GDP (very typically negative GDP) and by high and widespread unemployment. Ex: -4.2% GDP coupled with widespread unemployment
If there is a calculator question with a loan amount, will the loan amount by added to the FV at the beginning or the PV at the end?
FV at the beginning