Study Guide

Question 1

inflation

Answer 1

when the prices of everyday objects increase

Question 2

four different types of goods and services

Answer 2

consumer, business, government, goods/services sold to other countries

Question 3

two advantages of credit

Answer 3

credit card perks and not needing to carry cash

Question 4

two disadvantages of credit

Answer 4

paying interest and easy to overspend

Question 5

credit

Answer 5

the ability to buy goods and services in exchange for payment later

Question 6

credit history

Answer 6

a record of past payments of credit in the last five years

Question 7

interest

Answer 7

cost of credit (price you pay to borrow money)

Question 8

three credit bureaus

Answer 8

equifax, experian, and transunion

Question 9

one advantage to buying stocks

Answer 9

can make a lot of money

Question 10

one disadvantage to buying stocks

Answer 10

high risk investment and can lose all the money invested

Question 11

where can you buy/sell stocks

Answer 11

new york stock exchange (NYSE)

Question 12

two ways to make money in stock market

Answer 12

capital gains (stock price increases after purchase) and dividends (earnings shared to shareholders)

Question 13

difference between goods and services

Answer 13

goods are tangible items that can be weighed or measured, while services are tasks that people or machines perform

Question 14

profit

Answer 14

money leftover after paying expenses

Question 15

consumer

Answer 15

people that purchase, use, and/or dispose of goods and services

Question 16

decision-making process

Answer 16

identify the problem. list the alternatives. determine pros and cons. make the best decision. evaluate the decision.

Question 17

difference between private and public want

Answer 17

private want is individual and provided by businesses. public want is shared by many and provided by the government.

Question 18

connection between unlimited wants and limited resources

Answer 18

people have never-ending wants, but finite number of resources. competition between businesses

Question 19

how do consumers affect business

Answer 19

consumers dictate what businesses produce and the price they charge (supply and demand)

Question 20

types of banks

Answer 20

thrift banks (credit union), commercial banks, retail banks

Question 21

how do banks make money

Answer 21

interest income on loans and charge fees for the services they provide

Question 22

five c’s of credit

Answer 22

capacity, character, collateral, capital, conditions

Question 23

capacity

Answer 23

CAN the borrower repay the loan (paychecks and tax returns)

Question 24

character

Answer 24

WILL the borrower repay the loan (credit report)

Question 25

collateral

Answer 25

secondary source of repayment (house, car, investments)

Question 26

capital

Answer 26

borrower’s “skin in the game” (down payment)

Question 27

conditions

Answer 27

external or environmental factors

Question 28

difference between entrepreneur and small business owner

Answer 28

entrepreneur sees need in community and creates innovative product/service to fulfill need. small business owner is just independently owner business.

Question 29

two advantages of entrepreneurship

Answer 29

satisfaction from taking risks and success/prestige

Question 30

two disadvantages of entrepreneurship

Answer 30

possible business failure and long hours initially

Question 31

difference between checking and savings accounts

Answer 31

checking is for everyday use, paying bills, and depositing paychecks. savings are for emergency funds, limited transactions, and can earn interest

Question 32

two types of id needed to open bank account

Answer 32

photo id (driver’s license/passport) and social security/birth certificate

Question 33

examples of credit rights

Answer 33

know why you were denied credit, creditors can’t change length or interest rate of fixed-rate loan, and can’t base decision off gender/sex/race

Question 34

examples of credit responsibilities

Answer 34

know how much you can afford, paying off bill in full at the end of each month, not ignoring credit problems that come up

Question 35

command economy

Answer 35

government makes all economic decisions on goods/services (Communism)

Question 36

four factors of production

Answer 36

natural resources, human resources, capital resources, and entrepreneurial resources

Question 37

sole proprietorship

Answer 37

business owned by one person

Question 38

corporation

Answer 38

business as a separate legal entity owned by shareholders

Question 39

equal pay act of 1964

Answer 39

men and women paid same wages for same work

Question 40

food and drug administration

Answer 40

regulates the safety and efficacy of food, drugs, and biological products