Economics

maximum profit

occurs when the marginal cost of producing each unit is equal to the marginal revenue of producing that unit

long run

provides enough time for every variable to be changed

price elasticity of demand (PED)

reflects the consumer's response to price changes

price elasticity of supply (PES)

reflects the producer's response to price changes

franchise

relationship between the owner of a trademark, service mark, trade name, or advertising symbol, and an individual or group (the franchisee) that wants to exploit such identification in a business

average revenue

the average amount of money that is gained from selling each unit of a product

average product

the average output of every laborer

tools to affect aggregate spending

(1) taxes, (2) transfer payments, and (3) government purchases.

steps to evaluate fraud

1. Call the company's fraud department 2. File a police report 3. Contact the credit bureaus 4. Review your credit reports

steps of decision model

1. Identify the problem 2. Identify the alternatives 3. Select the criteria 4. Evaluate the alternatives 5. Make a decision

utility expenses

10% of take-home pay Gas/Electric Other utilities (water, garbage pickup) Phone/Internet/television

repairs expenses

2% of take-home pay, then divide by 12

Household Maintenance/Miscellaneous expenses

3% of take-home pay, then divide by 12

penalty charges

A bank or credit card company will collect these charges from you if you violate the card contract. Two common penalty fees are the over-the-limit fee and the late payment fee

cartel

A group of firms that colludes to set the market price that might otherwise be competitive

economic boom

A long period of rapid expansion; often leads to a reduced unemployment rate

anti-competitive conduct

A misuse of market power (such as preventing competitors from entering the market) includes actions that try to gain or maintain control of the market to maximize profits

short run

A period of time where at least one factor of production is a fixed quantity while the amount of other factors vary. A few variables can be manipulated

floating exchange rate

A system that allows exchange rates to change frequently according to marketplace supply and demand

economic contraction

A time of decreased real GDP and a negative economic growth rate; If it lasts for two consecutive quarters (half a year) or longer, it is called a recession

Ticker Symbol

A unique series of letters identifies each stock. A stock ticker is an electronic display of stock purchases and sales

not in the labor force

Adults who are not actively seeking full-time employment Examples: retirees, homemakers, full-time students, and people who have stopped looking for a job

recovery

After the economy reaches the trough; This is when the economy begins to grow again

full employment

All eligible people who want to work can find employment at current wage rates

treasury bills

Also called T-bills, these short-term securities can reach full value in only a few days or possibly a year. You pay less than face value for a T-bill, and it takes a specific amount of time for it to "mature," or reach its face value

treasury notes

Also called T-notes, these are slightly longer-term securities. As with T-bills, you pay less than face value, but it takes two, three, five, seven, or ten years for them to mature

umbrella policy

Also called a personal catastrophe policy or an extended liability policy, an umbrella policy goes well beyond the personal liability coverage that property insurance policies provide

Offer to Share in Millions

An e-mail offers the recipient a chance to share in millions with a self-proclaimed government official, and the author wants money to be transferred to a country outside the United States. The scheme relies on convincing victims to send money in installments

astroturf

An organization that claims to be a popular grassroots organization could actually be just a few people implying that they have widespread popular support usually funded by a large organization that has a financial interest in presenting a message to consumers

how to build character

Apply for a retail store credit card, Ask a person with an established credit history to cosign a loan application/credit card application, Get a debit card and use it wisely, Finance a larger purchase, Take out a small loan from the bank where you have an account

conversion option

As they get older and their lives get more complicated, some people might see a benefit in switching from term to permanent life insurance. This is called a conversion option. This switch allows people to to pay the same premium without submitting to a medical examination or risking qualifying for a permanent policy

assigned risk pool

Bad drivers are categorized in the assigned risk pool when they lose their auto insurance coverage and cannot get new policies with other insurers

compound interest

Balances on credit cards—built up by purchases, fees, and cash advances—are charged interest. The interest is recalculated continuously, meaning that interest is charged on the original amount and the accumulated interest.

income tax

Based on personal/business income federal gov receive revenue from personal income taxes can be levied by both state and federal government

working class

Below the middle class; They typically worked in manual or industrial jobs in factories owned by the bourgeoisie, or as servants to the wealthy.

consumer sovereignty

Businesses have an incentive to produce what consumers want and need

Overseas Investments to Avoid Taxes

Check out the tax implications with the Internal Revenue Service (IRS) to make sure any supposed offers about overseas tax-free investments are true

antitrust law

Competition law; intended to protect competition in the marketplace promote or maintain market competition by regulating anti-competitive conduct make cartels illegal in the United States

Consumer Complaint Program

Consumers with complaints about financial deals can contact the Fed, which will often send investigators to look into the complaints

fraud protection

Credit card companies tend to monitor the types and locations of purchases as another means of protection and sometimes alert you about suspicious activities

types of financial institutions

Deposit-taking institutions that accept and manage deposits and that make loans—these include commercial banks, building societies, credit unions, trust companies, and mortgage lenders, Insurance companies and pension funds Brokerage funds, underwriters, and investment funds

economic downturns

During recessions or depressions unemployment increases, which decreases national income because fewer people are earning or spending money

commodity money

Early forms of money with intrinsic value

credit bureaus

Equifax, Experian, or TransUnion These reports can alert you if someone has stolen your identity to open accounts or to borrow money

companies that monitor credit ratings

Equifax, Experian, or TransUnion occasionally make errors that can affect your credit rating

Goals of United Nations

Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality rates Improve maternal health Combat HIV/AIDS, malaria, and other diseases Ensure environmental sustainability Develop a global partnership for development

in the labor force

Everyone who is willing and able to work Examples: the employed, but also anyone who is unemployed and actively seeking employment

anticipated inflation

Expected inflation

annual budget

First, it helps ensure that you have or can make more money than you spend. Second, if you spend more money than you make, an annual budget can help you find areas where you can reduce spending. information needed: a calculation of your annual income, a list of your short- and long-term goals and their calculated costs, a list of your anticipated monthly or yearly expenses helps show the relationship between your income and your expenses

National Credit Union Share Insurance Fund (NCUSIF)

For federally-chartered credit unions, it insures the deposits up to $250,000. State-chartered credit unions are also often insured by NCUSIF or by private insurance programs.

using credit cards responsibly

Get a credit card with a low borrowing limit and no annual fees; Make sure that you know the terms and the interest rate charged; Keep a careful record of all expenditures; Review all expenses every month to guard against identity theft; Pay the full amount owed each month.

club goods

Goods that are excludable but are non-rival

common goods/common-pool resources

Goods that are non-excludable and rival

formula for inflation

Growth rate of the money supply (%) + Growth rate of the output velocity of money (%) − Growth rate of real GDP

red flags of an investment scam

High Rate of Return with Little or No Risk, Company with No Street Address or Landline Phone Number, Foreign Country Investments and E-mail Offerings, Pressure to Act or Lose the Deal, Free Seminar and Free Food, Large Upfront Investment, Overseas Investments to Avoid Taxes, Free Gifts or Other Valuable Prizes, Offer to Share in Millions, Ponzi Scheme

high rate of return with little or no risk

High returns come with high risks. If an investment is guaranteed, it is not legitimate. Investments are risks, and there are no guarantees—just the hope of a return on your risk

stealing

Identity thieves steal whatever information they can get their hands on—wallets and purses, mail, pre-approved credit offers, new checks, etc. They might even steal personal information from their own coworkers from personnel files

overnight loan

If a bank does not have the required amount in reserve, it needs to borrow money from another bank or from a Federal Reserve System.

trade surplus

If exports are greater than imports Net exports are positive GDP increases

proportional tax

If high-income and low-income families pay the same percentage of their income on a tax

trade deficit

If imports are greater than exports Net exports are negative GDP decreases

budget deficit

If the government spends more money than it collects in taxes during any given year

carry a balance

If you do not pay the credit card company the full amount of your bill, the money you owe is the balance

withholding

If you earn a paycheck, your employer will withhold, or keep, a percentage for taxes and then pay that amount to the federal and state governments

foreclosure

If you fail to make your payments, the lender can take over the property ; will negatively affect your credit rating, possibly for the rest of your life. It may also result in bankruptcy

exclusion

If you inherit assets from someone who dies, you must pay an estate tax if the value of the assets exceeds a certain amount. If the amount you inherit is less than this predetermined amount, you do not need to pay taxes on it federal

purchase protection

If you make a purchase and the product is faulty or not what the seller led you to expect, and the seller will not refund your money, cards with purchase or fraud protection will refund the purchase amount you charged to your credit card

store of value

If you save your money over time until you need it, it will still have value in the future. allows you to leave money in a bank account or in your wallet until you need it

overdrawn account

If your debit card purchase is more than the amount of money you have in your bank account, your bank may allow you to make the purchase. However, it will then charge you a fee for not having enough money in your account

Building inspection office

If your landlord ignores repairs that involve safety, contact this

wiring of funds

If your relatives need money, you could wire the funds to their account. Usually, the financial institution will charge a fee for this service

Attorney general's consumer protection section

In Virginia, the main government agency that protects tenants' rights

collusion

In a competitive economic environment, when multiple firms get together to act like a monopoly and become price makers rather than price takers.

price maker

In a monopoly, the firm that controls the industry sets the price

character

In terms of borrowing money, it is the borrower's history of paying bills; refers to a borrower's reputation and history of paying obligations

public four-year colleges (in-state)

In-state colleges have an average cost of $7,600 a year

driver classification

Insurance companies look at your sex, age, marital status, and driving record when determining your premium.

End of Bretton Woods system

International investment has actually increased greatly since 1973, mainly because countries have lowered trade barriers.

Free Gifts or Other Valuable Prizes

Investment scammers entice you with the promise of gifts, vacations, prizes, and discounts. These perks are just bait to get you to answer an e-mail, place a phone call, or attend a seminar

Fair Debt Collection Practices Act (FDCPA)

It protects U.S. citizens from abusive debt collection practices; also protects legitimate debt collectors so that they are not hurt by collectors who engage in abusive practices

discretionary expenditures

Items that you want but that are not necessary for your day-to-day survival; This type of spending is for goods and services beyond the essentials of food, shelter, and clothing.

laddering

Laddered CDs have one CD near maturity, and one that is invested for the longest term at the highest interest.

loss of use coverage

Loss of use refers to the state of your property after an unexpected event. If the property cannot be used normally, you will experience loss of use.

costs of buying a used car

Many used car loans are financed at higher rates than loans for new cars You could have more repair bills as the car gets older. Your car might not come with a warranty.

multifactor productivity

Measuring productivity across these different input categories

paying your bill early

Missing the due date by a single day could trigger a late fee as well as interest charges on the entire balance. To avoid this possibility, pay your bill as soon as you receive it.

reasons for increasing health care costs

More people in the United States are living longer, healthier lives. Advanced but costly medical technology is now available to most doctors. Many people have access to doctors and medical care. Doctors and certain health care professionals earn relatively high salaries. A large segment of the U.S. population is growing older and are suffering from chronic diseases that are very expensive to treat. Doctors are ordering too many, often unnecessary, tests as a means of avoiding patient lawsuits or in response to consumer demand for testing. Those who are uninsured and do not have access to regular doctors increase the cost of premiums and deductibles for insured people

mobile banking

Most banks allow customers to bank with a cell phone or other mobile device. Electronic banking can be done digitally and on the move.

Consumer Price Index (CPI)

One commonly used price index for measuring inflation; most commonly used measure of price levels a measure of the average prices paid by the average urban American household; includes the prices of housing, food, clothing, transportation, and other commonly purchased goods and services When the CPI increases, the average American household pays more money to buy this fixed basket of goods and services

medicare parts

Part A covers inpatient hospital care and some follow-up care. No extra payments are required. A person is eligible to apply for Part A at 64 years and 8 months, even if that person is not planning to retire. Part B covers physician's services, some hospital costs (that are not covered by Part A), as well as medical supplies necessary to treat diseases or conditions. Part B is optional and a monthly premium is charged for this plan. Part C allows a person who is covered by both Part A and Part B to choose a health care provider from which to receive these medical services. Part D is prescription drug coverage. There is an optional extra charge for this, too.

unavailable in the labor force

People who are not currently able to work Examples: children under 16 years of age, people in prison

unbanked

People who do not have a bank account are considered this

over-insured

People who have too much insurance. For example, they might have insured their homes for far more than it would actually cost to rebuild them after an unexpected event; as such, they would not receive anything more than the value of the home, no matter how much insurance they had. If you are over-insured, you might be paying too much for your insurance

personal property taxes

People who live in places that impose personal property taxes can take this deduction.

examples of market failures

Poisons in food or pharmaceuticals; people working in dangerous jobs; pollutants in the land, water, and air

Bernie Madoff's

Ponzi scheme is the most famous and largest in history;He deceived investors by promising them a great return on their investments

Regional Federal Reserve Systems

Provide perspectives and expertise about their local economies; Store excess cash from local commercial banks; Process checks and electronic payments; Conduct research on local and regional economies. has its own board of directors with nine members in total; six of them, including the bank's chairman, represent the public. The remaining three members represent the banking industry. The reserve banks execute the regulations established by Congress and its Board of Governors

company with no street address or landline phone number

Real companies have addresses you can verify with reputable sources, such as the Better Business Bureau. If you are asked to respond to a post office box, a mail stop, or an e-mail address, be wary

real property

Real estate, houses, and land represent one kind of property. These types of property are fixed geographically in one place; they are not mobile

Ponzi Scheme

Scammers promise high returns or dividends, but they keep the money. They use funds from other investors to pay the first group of investors, which is the only group to get money back on the initial investment

Large Upfront Investment

Scammers want to get money from you before you can figure out what has happened. Do not send checks, give out credit card numbers, or make payment arrangements unless you are 100% certain the deal is legitimate

ways to pay for after high school education

Section 529 programs, such as those offered by Virginia 529, Scholarships or grants, Student work-study programs, Student loans

No close substitutes

Simply put, if you do not want to buy the product, then you are choosing to live without the product

characteristics of a monopoly

Single firm, no close substitutes, price setting, barriers to entry, High capital costs and research and development costs, legal barriers, resource control

disability

Social Security pays disability benefits to a person who cannot work because he or she has a medical condition that is expected to last at least one year or that likely will result in death

online banking

Some banks allow customers to manage checking and savings accounts online. You can view your account statements and pay bills online and receive e-mail alerts to keep track of your money. Some banks also have financial tools and resources to help you manage your accounts online

free ATMs

Some banks allow you to use any ATM without charging a fee; however, some banks do charge a fee

itemized deductions

Some people's financial lives are more complicated, and they qualify for other kinds of deductions. If these deductions add up to more than the amount of the standard deduction, the taxpayer will want to itemize, or list, them individually, on a tax return

points rewards

Sometimes, banks give you points on qualifying purchases; once you have enough points, you can redeem them for such items as gift cards and airplane tickets.

beneficiaries from tax deductions

State and local governments benefit because taxpayers face a smaller overall tax burden Taxpayers are able to keep more of their income, which is often spent or invested in their local communities. As a result, state and local governments collect more revenue.

Responsibilities of the Federal Reserve System

Supervise and regulate banks within the country to promote reliability and confidence in the banking system. Maintain stability in the financial markets by controlling the money supply (amount of money in the economy). Ensure that all banks comply with the laws and regulations that apply to them. Supply paper currency and coins to banks. Process checks and electronic payments.

Comparison-Shopping Strategies

Take advantage of coupons and mail-in rebates. Shop sales; comparison-shopping can sometimes save you more than 50%. Buy factory seconds, rebuilt items, and used items on eBay, Amazon, or Overstock.com when it is practical to do so. Beware of online auctions—especially those that require you to buy purchasing credits in advance

Community Reinvestment

The Fed also looks into compliance with consumer protection laws. One law is the Community Reinvestment Act. According to this law, a bank must invest in its community. It must offer credit to people in low-income areas for affordable housing

Community Affairs

The Fed also makes sure that underserved groups have access to credit through these programs. Each Federal Reserve Bank has programs to educate consumers about their rights.

Truth in lending

The Fed enforces the Truth in Lending Act to be sure banks and other institutions offer detailed information about terms and costs of credit for products such as mortgages

New York Stock Exchange (NYSE)

The biggest and oldest stock exchange in the United States

consumption bundle

The collection of goods or services a consumer chooses

output gap

The difference between actual and potential output

four-step process for consumers to address complaints

The first step is to return to the place of purchase; The second step is to contact the business's main office; If there is still no resolution, consumers can get help from a government or private consumer protection agency; Once these other options have been tried, the consumer can take legal action

expansionary fiscal policy

The fiscal policy that increases aggregate spending a government can increase aggregate spending by increasing transfers, reducing taxes, or increasing government purchases. These can impact the variables "C" or "G" in the GDP equation

copayment

The flat fee the patient pays at the time medical services are provided.

federal funds rate

The interest rate that the Federal Reserve charges to commercial banks on overnight loans

Annual Percentage Yield, or APY

The interest rate; Higher APY rates generate more interest, allowing you to reach your financial goals more quickly

security deposit

The landlord keeps this sum of money, usually equal to one month's rent, during the term of the lease. When the lease ends and you move out, this money will be refunded to you if you have not damaged the property

certificates of deposit reward

The longer the term, the higher the interest rate will be, and the earnings are predictable since they have a fixed rate

cash

The main benefit is that you will have immediate access to your money costs: the chances are greater that you will lose your money. And, if you are trying to save money, it might not be safe to keep all your savings in your room

national highway traffic safety administration

The main watchdog organization for all issues of automobile safety

check

The money is certainly safer because only YOU are allowed to cash that check. However, if you do not have a bank account and need to cash your check at a check-cashing store, there will be a significant cost: the fees at those stores can be quite high

economic growth

The overall output of goods and services increases over time. occurs when the amount of goods and services per person increases; parallels an increase in real GDP When a country's real GDP per capita increases over time

daily balance summary

The part of the bank statement that shows all of your day-to-day transactions in chronological order

reserve requirement ratio (RRR)

The percent of the bank's funds that are held in its vaults, or on deposit at a Federal Reserve System The Fed can use it to impact how much money banks loan out

Savings and Loan Companies

The primary purpose of most savings and loan companies (sometimes called S&Ls) is to provide financing so its customers can buy homes

reconciling

The process of matching your personal records to the bank's records This process is how you make sure that you—and the bank—are on track and that you know how much money you currently have.

capital cost

The rental fee businesses spend to rent a tool, machine, or building

fixed-rate mortgages

The safest approach; based on interest rates that do not change as you repay the loan. If interest rates are low, it is to your advantage to choose a fixed-rate mortgage. the overall interest rates could decrease, in which case you would be stuck paying the original higher interest rate

Virginia Residential Landlord and Tenant Act (VRLTA)

The state law that addresses tenant-landlord issues; You can see a copy of this law in the VRLTA Handbook, published by the Virginia Department of Housing and Community Development

frictional unemployment

The time lag between when people decide to work and begin working

Individual Retirement Account (IRA)

There are different types of IRAs. These may be set up with a financial institution (such as a bank), life insurance company, mutual fund, or stockbroker have tax benefits, but there are penalties for early withdrawal. The tax benefit of an IRA retirement account is limited. This means you can deposit up to a specified amount of money that will be tax deferred

Cancellation and Termination

These are circumstances under which the insurer can terminate or cancel your policy

treasury bonds

These long-term securities take 30 years to mature.

Money Market Mutual Funds convenience

They are easy to buy at a brokerage firm or from a mutual fund company.

certificates of deposit convenience

They are easy to buy from banks.

Money Market Mutual Funds liquidity

They are liquid since investors can buy into them or sell them easily.

Money Market Mutual Funds risks

They are not insured, and the returns could vary. Also, you could have reduced profits due to fees and could miss out on an opportunity for a better rate of return

certificates of deposit liquidity

They are not very liquid since you cannot take out money when you want

bank/finance fraud

They might create counterfeit checks using your name or account number. They might open a bank account in your name and write bad checks. They might clone your ATM or debit card and make electronic withdrawals that drain your accounts. They might take out a loan in your name.

government documents fraud

They might get a driver's license or official ID card issued in your name but with their picture. They might use your name and Social Security number to get government benefits. They might file a fraudulent tax return using your information.

other fraud

They might get a job using your Social Security number. They might rent a house or get medical services using your name. They might give your personal information to police during an arrest. If they do not show up for their court date, a warrant could be issued for your arrest

phone/utilities fraud

They might open a new phone or wireless account in your name or run up charges on your existing account. They might use your name to get utility services, like electricity, heating, or cable TV.

under-insured

They underestimate the values of their properties. They might be saving money on their insurance premiums, but they will lose out when it is time to file a claim because they will not get enough to cover their expenses

medical payment

This coverage pays for medical expenses related to injuries that occurred on your property

Social Security Disability Insurance (SSDI)

This disability program is for workers (and certain family members) who paid into the Social Security system for a certain amount of time, making them eligible for benefits. These benefits include a monthly check and the use of Medicaid.

trading volume

This figure shows the total number of shares traded for the day. (Place "00" at the end of the number to find the number of shares.)

W-2 form

This form contains all the information about an employee's earnings and withholdings over the course of a year Not only do you need the information on it, if you file a paper return, you will need to submit the actual W-2 form to the government with your completed tax form

guaranteed renewability

This guarantees that the insurer will not cancel the policy without reason or will not raise rates only on certain policyholders.

professional liability insurance

This insurance helps them financially protect their assets in the event of a lawsuit

Stock Name

This is the name of the company, which often is abbreviated

Whole Life Insurance

This kind of permanent life insurance is also called straight life, ordinary life, or cash value life insurance. involves a policy where the owner pays a fixed premium. Upon the policyholder's death, the insurer pays benefits to the beneficiary little risk involved on the part of the policyholder. He or she pays a fixed rate for the life of the policy; this kind of policy acts somewhat like a savings account. The policyholder pays a premium, which is typically higher compared to other forms of life insurance, covering the face value of the policy and a cash value

52-Week High

This lists the highest price for the stock in the last 52 weeks

52-Week Low

This lists the lowest price for the stock in the last 52 weeks

actual cash value

This means that the policy covers what you paid for the property minus depreciation

replacement value

This means that when you submit a claim, the insurer will pay you the cost of replacing the damaged or lost property. In this method, the depreciation of the value of the property is not part of the equation

collateral

This means the lender has a lien on the property, which gives the lender the right to evict you from the property if you fail to make your mortgage payments or live up to other terms of the loan.

7/7o method

This method assumes that a "typical" family would need roughly 70% of the policyholder's income for a period of seven years after his or her death

50% method

This method assumes that you are childless but married to someone who is healthy and who will be able to continue working after your death. That means you need a relatively small policy—just enough to help your spouse out for a time. This method involves determining your half of your debt load (cosigned mortgages, cosigned credit cards, etc.) and adding it to your estimated funeral expenses.

single-parent method

This method essentially insures the family member who stays at home with the kids. Married couples with children use it to calculate how much money they might need to cover the costs of child care and homemaking in the event that one parent dies.

fiat money

This money has value only because the government says it does. Fiat money has no intrinsic value in itself; instead, it has value because a government backs it and declares that it has a specific value

wage garnishment

This occurs when your employer withholds money from your paycheck to pay someone to whom you owe money. It is a result of a lawsuit filed against you because you owe someone money may be assessed for taxes, child support, credit card debts, or defaulted student loans.; can have a negative impact on your credit rating

Fixed-Rate Level Term (or Straight Term)

This policy allows the owner to pay a locked-in premium rate for a period of 5 to 30 years.

annual renewable term

This policy is renewed annually, but the premiums increase yearly.

Credit Life

This policy pays off loan debts in the event of the policyholder's death.

Decreasing Term

This policy's coverage decreases each year, but the premiums stay the same

dividend per share

This refers to the annual dividend payment shareholders receive based on each share owned. This space is left blank if a company is not paying dividends.

benefit limits

This refers to the maximum amount of benefits a policy will allow. As an example, some policies pay up to $250,000 or cover a maximum hospital stay of 120 days

Exclusions and Limitations

This refers to the medical conditions that the insurer will not cover or provide benefits for

assigned benefits

This refers to the person or entity that receives benefits from the insurer. Examples could include your doctor, the hospital, or you.

eligibility

This refers to those who are qualified to be covered under a medical or health care policy. Examples could include adults over 18, spouses, or dependents.

No fee/no balance credit card

This type of credit card does not charge an annual fee. The consumer pays all the charges on the bill (does not carry a balance) every month

Social Security Act

Title I provides funds to support state welfare programs. Title II is what we know now as Social Security. In the original legislation, benefits were to be paid only to the primary worker when he or she retired at age 65

net exports

To calculate, economists subtract the total number of a nation's imports from its exports

general sales taxes

To deduct general sales taxes when calculating your federal income taxes, you must do two things: (1) itemize your deductions and (2) not deduct state income taxes

promotional incentive

To encourage you to use your card to make purchases, credit card companies may offer an incentive in the form of frequent airline flier miles, reward points, or cash back when you charge items on your card.

760

Virginia's state individual income tax form for residents

initial public offering (IPO)

When a corporation sells stock for the first time

pro bono

When a lawyer offers free legal advice to a litigant

bull market

When a market's overall value increases for an extended period of time often characterized by people believing that the economy will grow and that stock values will increase, so they invest more money in a stock market An increase of more than 20% in a market index

intestate

When a person dies without a will; In this case, the estate goes through a legal proceeding called probate, and the court appoints an administrator who determines what assets the deceased had and how to distribute them.

depression

When a recession is particularly long and severe

Pressure to Act or Lose the Deal

When salespeople use high-pressure techniques, they want you to invest without thinking. Most offers have reasonable deadlines. Con artists try to rush you to make a decision before you have the time to figure out the offer is a scam

depreciated dollar

When the dollar becomes less valuable compared to a particular foreign currency

online payments

When you buy something online, you can pay for it instantly with a credit card. When the time comes to pay your bill, some credit card companies offer secure Web sites so you can pay online.

credit card purchases

When you make a purchase with a credit card, you do not have to pay back the money until your monthly credit card bill is due—in between the time you make a credit card purchase and the date when your bill is due, your money remains in your checking account

deferred payments

When you use a credit card to make a purchase, the seller receives payment from the credit card company. Meanwhile, the credit card company is lending you the money until you can make the payment. You have the choice to either pay for the purchase in full when your credit card bill is due or pay the credit card company over time.

establishing credit

When you use a credit card, you are creating a record of your spending and paying habits. If you pay your credit card bill on time and do not carry too large a balance compared to your income, your credit record will be good.

debit card purchases

When you use a debit card to make a purchase, the money is removed from your checking account as soon as the transaction clears

Free Seminar and Free Food

While some seminars are legitimate, others are scams. Often, the fraudulent seminars prey on seniors. A slick presentation promises high returns, and participants start writing checks

Foreign Country Investments and E-mail Offerings:

While there are some legitimate foreign investment opportunities, it is more difficult to research companies in another country. Do not open e-mail offers related to lottery winnings, inheritance, or other subjects that appear to be suspicious. Delete them and mark them as junk mail.

Low-Risk Tolerance

You are a conservative investor, willing to accept lower returns if your capital is safe. You likely would have your money in bonds, money markets, and annuities, with no prospects for high returns over time.

Medium-Risk Tolerance

You are a moderate investor, wanting to balance your portfolio by using asset allocation. You could have a diverse portfolio with both low- and high-risk investments. You would avoid "get-rich-quick schemes."

High-Risk Tolerance

You are an aggressive investor, willing to use high-risk investments for higher profits. You could gain high profits or suffer high losses.

bankcards

You can choose whether to use this type of card as credit or debit.

Money Market Mutual Funds reward

You can invest money short term while deciding where to invest long term

power of attorney

You can plan ahead by selecting someone you trust to make these decisions for you

benefits of buying

You can remodel your home to suit your needs. You build equity in your home with every mortgage payment. This could eventually generate a profit when you sell. Additionally, once the mortgage payments are finished, the home is yours. You can deduct mortgage interest and property taxes from your federal income tax. As a homeowner, you could develop more of a sense of community with your neighbors

certificates of deposit risks

You must invest a certain amount, have to pay taxes on interest earned, and have to pay a penalty for early withdrawal

costs of buying

You need a substantial amount of money for a down payment. You are responsible for the property taxes, which could increase over time. You must pay for all the repairs—both inside and outside the house. Repairs can be expensive and often arise unexpectedly. It is much more difficult to move: you have to pay the mortgage on the property until you pay it off or sell the house, whether you live there or not.

benefits of buying a used car

You save money thanks to former ownership. Your car depreciates less after the first two years. Your insurance will cost less since the car is older. You might be able to afford extra options that you could not afford with a new car. Your used car might still be under factory warranty.

consequences of filing for bankruptcy

Your credit rating is affected negatively and the bankruptcy stays on your credit report for 10 years, It is difficult to get unsecured credit for two years, It is difficult to get a home mortgage or loan for two years, Certain professions frown upon hiring employees who have filed for bankruptcy in the past

The Wealth of Nations

a book describing economic individualism as "the obvious and simple system of natural liberty."

s corporation

a business designated based on Subchapter S of Chapter 1 of the Internal Revenue Code

monopoly

a business entity that controls a particular market; exists when there is only one supplier of a product the seller has market power and can control both price and quantity EX: NBA and NFL

partnership

a business owned jointly by two or more people.

trade-off

a choice about resource allocation

mutual fund

a collection of several different stocks and bonds

indifferent

a consumer who equally prefers two different product bundles equally,

401(k) plan

a contribution plan where an employee can make contributions from his or her paycheck before taxes are taken out. The contributions go into a 401(k) account and are invested and managed by the 401(k) company, with the employee often choosing the types of investments based on options provided under the plan

fixed exchange rate

a country chooses a specific exchange rate for each currency with which it trades Countries maintain it by buying and selling their own currencies in the foreign exchange market, using foreign currencies

time lag

a delay between an economic action and its consequence often the results of contracts between exporters and importers and delayed changes in production.

credit report

a detailed compilation of an individual's credit history; This history presents information on whether you pay your bills and loans on time (and in full), the total amount of debt you owe, and how much credit you have available

Check 21 Act1

a federal law that improved the efficiency of handling electronic checks. Prior to this act, checks had to be moved physically from one place to another. As a result of the act, an electronic conversion can now be made

point

a fee levied by the lender when you have a closing; The lender charges you these points for lending you its money. A point is 1% of the amount you borrow. Many lenders charge 1.5 points for a home mortgage

overdraft fee

a fee the bank charges you for not having enough money in your account

identity theft

a felony in which a criminal gains access to your personal information and then pretends to be you to gain access to your bank account, to purchase things with your credit card, or to blame you for their actions; could plague you for years, making it difficult for you to make financial transactions, such as renting an apartment or getting a student loan

not reliable sources

a financial advisor who does not have a CFA

bank

a financial institution that accepts deposits from its customers and, in turn, provides loans to its customers. Commercial banks offer a variety of services. Along with checking and savings accounts, banks also offer mortgage loans and even credit cards

savings-and-loan association (or S&L)

a financial institution that provides residential mortgage loans and some other real estate loans. Interest rates vary.

certificate of deposit

a financial product that is virtually risk-free. It has a fixed term and usually a fixed interest rate

patent

a form of intellectual property that consists of a set of exclusive rights granted by a sovereign state to an inventor for a limited period of time in exchange for the public disclosure of an invention

Property

a form of investment. Fine art, old jewelry, precious metals, and real estate (houses, buildings, land) are typical forms of investments. Physical objects often make good investments because they generally keep or increase their value over time

commodity

a form of money that has intrinsic value

tax return

a form where taxpayers report their annual personal income and specify applicable deductions/ exemptions in order to determine tax liability

positive externality

a free benefit to a third party

credit disclosure agreement

a full write-up of all terms and conditions for a debit card or credit card

private good

a good that is excludable and rival

indifference curve

a graph that shows all bundles being equally preferred, or having the same degree of satisfaction

529 plan

a higher education savings plan, typically sponsored by a state, designed to help families plan and invest for future college expenses. offer tax advantages—they grow tax-free—and some offer additional state tax advantages

rental insurance

a kind of property insurance, covers your assets within your rental unit

sierra club

a large and influential advocacy group for the environment. It works to influence government policy to protect the environment, wilderness areas, and animals

will

a legal document that is an important part of an estate plan

liens

a legal right to claim another's property to pay a debt. For example, if you hire a plumber to fix the water heater in your house, but you refuse to pay for the repair, the plumber can put a lien on your house. This means you are not allowed to sell the house until the debt has been paid.

market basket

a list of typical goods and services that are frequently bought by urban households The quantity and quality of the goods in the market basket never change market basket for the GDP deflator includes every item in the GDP, including consumption, investments, government spending, and net exports

bailout

a loan or financial gift given to a financial institution or company on the verge of closing

factor market

a market for the factors of production

monopsony

a market form that exists as a type of imperfect competition. a single buyer faces multiple sellers

oligopoly

a market form where a market or industry is dominated by a small number of sellers somewhere between a monopoly and perfect competition Ex: airline industry

GDP per capita

a measure of average income within a country

Medicare

a medical insurance benefit provided by Social Security. Current retirees are eligible to use Medicare to help pay medical bills available to people 65 and older or to people who are disabled and cannot work

health care proxy

a medical power of attorney

game theory

a method of how an individual can take into account not only the costs and benefits of their own choices but also how these costs and benefits might change when another person or persons makes a choice that impacts them

bank statement

a monthly record of what has happened with your bank account. Each action—a deposit, a withdrawal, a transfer, interest earned, or a fee—is a transaction.

brand

a name, a term, or a design that distinctively represents a business, a good, or a service; an important marketing strategy for any business by making its goods and services more memorable or inviting to consumers

check-cashing store

a non-bank institution that provides check cashing services to consumers who don't have a bank account; fees are usually relatively high

litigant

a party in a lawsuit

negative incentive

a penalty that discourages a certain type of behavior

economic expansion

a period of growing economic output characterized by increased real GDP. This results in a positive economic growth rate

stockholder

a person that owns one small piece of the corporation and is entitled to a fraction of its profits

executor

a person who is responsible for administering the will

borrowing

a place to borrow money for specific purposes, such as paying college tuition or buying a car

investing

a place to earn money over the long term by allowing other companies to use your money

budget

a plan for managing your money; it lists income from all sources and fixed expenses that must be paid

dividend

a portion of the profits

SWOT analysis

a procedure that entrepreneurs use to analyze before entering into business ventures (strengths, weaknesses, opportunities, threats)

final good

a product purchased for consumption

Supplemental Security Income (SSI)

a program for people who have limited financial resources. Recipients must be at least 65 years old or have a disability (such as blindness). The benefits include a monthly check and health insurance. Very specific health and income guidelines restrict eligibility. This benefit is based on financial need

social security

a program that provides retirement and disability benefits

joint tenancy

a property right in which two or more people own property together. Each person has equal rights and equal responsibilities regarding the property

financial institutions

a range of businesses hat help people and organizations to save, invest, and manage money include credit unions, commercial banks, finance corporations, savings and loan companies, as well as insuring agencies and non-bank institutions

hyperinflation

a rapidly increasing inflation rate "out of control" inflation usually very harmful to an economy often occurs when a country is unstable due to war or other volatile situations; It causes a country's currency to lose its value rapidly

tax credit

a reduction in your taxes based on your expenses

c corporation

a regular corporation based on Subchapter C in chapter 1 of the Internal Revenue Code

order to buy

a request to purchase stock.

keogh plan

a retirement plan for the self-employed or for those in unincorporated businesses. Through these plans, money can invest in the same securities as a 401(k) or IRA-including stocks, bonds, certificates of deposit, and annuities

positive incentive

a reward or other enticement that encourages a specific type of behavior

bonus

a reward paid to productive employees for meeting performance goals

real GDP per capita

a rough approximation of average income per person in a country calculated by determining the value of total production of goods and services divided equally among the residents of a country

saving

a safe place to save money and to make money by earning interest

Virginia Education Savings TrustSM (VEST)

a savings program that offers a selection of investment options to help pay for college costs are subject to financial markets and have the potential for investment losses as well as gains

market failure

a scenario in which the free market does not provide necessary goods and services—such as clean air, police protection, and highways occur when supply and demand do not lead to an outcome that people desire Markets also fail when it becomes too costly for producers to generate goods that have positive effects for society

Consumer credit counseling (also known as debt management)

a service that works with consumers when their debt becomes unmanageable.

stock

a share in the ownership of a company

(common) stock

a share of ownership in a corporation

underemployment

a situation where when people struggle to find a job, they make take a job that pays less than what they used to earn

Net worth

a snapshot of a person's financial condition at a given moment. It is the total value of the person's assets, or possessions, minus the value of his or her liabilities, or debts To calculate your net worth, first identify and add up your assets. Then, identify and add up your liabilities. Finally, subtract your liabilities from your assets

income redistribution

a social program that attempts to redistribute income from wealthier to poorer families

return of premium

a special option with term life insurance; if the person insured outlives the policy, the insurer returns the amount of money that the insured has paid into the policy

trading post

a specific location on the floor where a stock is bought and sold

National Association of Securities Dealers Automated Quotations (NASDAQ)

a stock exchange where shares can be bought and sold; was the first electronic stock exchange in the world; All NASDAQ trades are carried out by a complex computer and telecommunications network was created out of a competitive need because it was becoming increasingly expensive to buy and sell on the NYSE. As a result, entrepreneurs created the NASDAQ to increase the trading of cheaper over-the-counter (OTC) stocks

risk management

a strategy for protecting against risk of loss. Insurance helps you manage risk by sharing it with an insurance company

standards of weights and measures

a system that ensures consistent usage of agreed-upon measurement units

estate tax

a tax collected on a recently deceased person's assets (e.g., bank accounts, investments, property); however, these assets must be valued at a certain amount before the estate tax kicks in

excise taxes

a tax collected on a recently deceased person's assets (e.g., bank accounts, investments, property); however, these assets must be valued at a certain amount before the estate tax kicks in

in transit

a term that means banking transactions have not been completed yet

credit score

a three-digit number used by banks to assess your financial behavior These scores range from very low (300) to very high (850). The higher your credit score, the more likely lenders are to offer you lower interest rates. On the other hand, the lower your score, the higher the interest rate will likely be a number that comes from a formula that determines creditworthiness

revolving account

a type of account provided by a lender in which the balance doesn't have to be paid in full every month

Tax-Sheltered Annuity (TSA)

a type of annuity in which employees make contributions. The money is taken out of the employee's pretax income automatically, reducing that person's taxable income. Employers can also make contributions to this plan, and it is considered a fringe benefit of the job.

paternalistic

a type of behavior displayed by a government over its citizens/businesses that resembles an overbearing parent

liquid investment

a type of liquid that is cash, money in a savings/checking account, or possessions that can be sold quickly for cash

technology-based standard

a type of regulation that specifies the method that needs to be used within an industry

accounting cost

a value that can be expressed by adding the other goods and services associated with the original purchase

nominal cost

a value that can be expressed in monetary terms

1040 Schedule A

a way for taxpayers to itemize their tax forms to take deductions

time value of money

a way of thinking about how money changes in value over time. Think of it this way: the value of a dollar is greater today than the value of any dollar you make in the future

price ceilings

a way the government tries to influence the economy to protect consumers from high prices

filing system

a way to keep all your banking records in one place so your paperwork is organized and available when you need it

Human Development Index (HDI)

a way to measure a country's development calculated based on three equally weighted factors: gross national income per capita, average life expectancy, the education index (based on the average of years of schooling for 25-year-old adults and the expected years of schooling for children)

annual fee

a yearly fee charged for having certain credit cards--it can be avoided by choosing cards that do not have this fee

Composition of the Federal Reserve

a) the Board of Governors, b) the regional reserve banks, and c) the Federal Open Market Committee. These three entities work independently from the government to carry out their core decisions

Certificates of deposit (CDs)

accounts that earn an interest rate proportional to the length of time your money is held. The longer the bank keeps your money, the higher the interest rate will be. useful because they are guaranteed to earn a specific interest rate, which can be calculated when you open the account

Women's Bureau of the Department of Labor

administers policies to monitor the interests of women in the workforce. It promotes equality and security for women workers and aims to empower

consumer organizations

advocacy groups that seek to protect people from potential abuses by businesses. These abuses can include unsafe products, unfair practices, predatory lending, false advertising, and pollution seek to correct market failures by educating consumers and lobbying the government to enact protective legislation.

American Association of Retired Persons (AARP)

advocates for people over age 50, is one of the most powerful advocacy groups in the United States.4 The AARP tries to influence the government on Medicare and Social Security issues and other matters that affect older people.

checking accounts

allow people to deposit and withdraw their money over a short period of time

bank accounts

allow people to manage their money on a day-to-day basis safe places to store money, allow various ways to access and use that money, and establish good credit for the future To open a bank account, you need to choose a bank, meet with a banker, fill out an application, provide an ID, and complete a signature card

inter-vivos trusts

allow people to put their assets in a trust while they are living. They still control the assets and can make changes to the specific details of the trust at any time. They do not have to get permission from the beneficiaries of the assets to make these changes

living trusts

allow people to put their assets in a trust while they are living. They still control the assets and can make changes to the specific details of the trust at any time. They do not have to get permission from the beneficiaries of the assets to make these changes

revocable living trusts

allow people to put their assets in a trust while they are living. They still control the assets and can make changes to the specific details of the trust at any time. They do not have to get permission from the beneficiaries of the assets to make these changes

Chapter 9 adjustments of debts of a municipality

allows a city or town to reorganize while repaying creditors

hybrid market

allows a transaction to be executed manually on the trading floor (as above) or by electronic trading via computer

cafeteria plan

allows employees to choose different benefit options just as they might choose different types of food in a cafeteria

Revolving Open-End Credit

allows for purchases to be charged up to an approved limit, which is different for everyone. A monthly minimum payment is required, but finance charges are calculated on unpaid balances. One example is a credit card

private enterprise

allows individuals to invest their capital to make a potential profit

Virginia Prepaid Education ProgramSM (VPEP)

allows parents and students to prepay their cost of tuition and mandatory fees at Virginia's public colleges and universities (but benefits may be used at any qualified higher education institution). carries a statutory guarantee from the state

Installment Closed-End Credit

allows the consumer to receive a certain amount of credit to purchase one item or a few goods. One type of installment closed-end credit is a car loan. The car company offers the consumer credit to buy the car. The credit does not extend beyond the sales price of the car. In addition, the person pays the credit in installments over a period of time instead of paying it back in one lump sum

other coverages

allows you to submit claims to cover the costs of towing or unexpected repairs while you are on the road

term life insurance

also called temporary life insurance because you hold the policy for only a short time (1 to 30 years), not for your entire life short term, no cash value, low premiums that can increase on renewal, no payments if policyholder outlives a policy w/o ROP option, not always renewable/convertible to permanent insurance

how the Fed achieves national economic goals

altering the amount of money circulating in the economy, adjusting a key interest rate that the Fed controls directly, changing deposit requirements of commercial banks

North American Free Trade Agreement (NAFTA)

an FTA that has increased trade among the United States, Canada, and Mexico. NAFTA makes imports from Mexico and Canada into the United States less expensive The purpose was to reduce trade barriers, promote fair trade practices, and increase investment opportunities.

GDP deflator

an adjustment that accounts for inflation in computing the national income can be calculated as the ratio of a country's aggregate output at current market prices (nominal GDP) to its value at base year prices (real GDP) ((nominal GDP)/(GDP deflator)) x 100 only deals with products and services made in the U.S. basket of goods includes government services

tax deduction

an amount of money the government allows you to subtract from your taxable income. The remaining income is then taxed

rental unit

an apartment, a house, or some other sort of structure, like a duplex.

credit rating

an assessment of the financial trustworthiness of individuals and corps; an assessment of creditworthiness

predatory pricing

an attempt to eliminate competition by setting the price of a good/service below market value

price index

an average of prices for a good/ service ((cost of basket this year)/(cost of basket in base year)) x 100

spending

an easy way to spend money through services like ATM cards, automatic payments, and checking accounts

European Union

an economic and political partnership among 27 European countries. It has its own currency, the euro, and a single market where products and services, investments, and even people can move freely among member states. The creation of the EU has raised standards of living among the European population works not only to encourage trade and investment, it promotes human rights and democracy, sets environmental policies, and has its own flag, making it far more than a trading bloc

conspicuous consumption

an economic concept that describes the act of buying things not for their practical value but as a status symbol. In a nutshell, it is when consumers buy goods and services for the purpose of impressing others in hopes of improving their social status; can lead to spending beyond one's means, resulting in excessive borrowing and debt problems; highlighted the dividing line between these classes

true cost economics

an economic model that factors the costs of negative externalities into the pricing of goods and services

perfect competition

an economic model which describes a hypothetical market form in which no producer or consumer has the market power to influence prices

closed economy

an economy that does not trade with other countries can achieve a consumption level within its production possibilities

open economy

an economy that trades outside of its bounds can consume at levels outside its production possibilities. This means that through trade, a country can consume a bundle of goods greater than the amount of goods it could produce and consume on its own

American Opportunity Credit

an education credit

arbitrary redistribution of income

an effect of inflation in which decreases of income hurt borrowers and help lenders It is arbitrary because neither the lender nor the borrower knows in advance what will happen because the inflation is unanticipated

DOT

an electronic method of sending buy and sell orders directly to the trading post for a particular stock.

opting in

an individual gives permission to the bank or credit union to add a service

insurer

an insurance company

security

an investment contract, or a loan to the federal government The federal government sells securities to corporations, financial institutions, foreign governments, and individuals

annuities

an investment plan that is an agreement between an individual and an insurance company. Basically, an individual puts money into the plan, and the insurance company guarantees a steady stream of income, usually on a monthly or quarterly basis, during the person's retirement. It is an insurance policy that guarantees steady income.

cooperative

an organization owned and operated by people who use its services and are designated as members, or user-owners

Federal Deposit Insurance Corporation (FDIC)

an organization that has significantly contributed to U.S. financial stability since its creation in 1933 insures only bank deposits, which include savings and checking accounts and certificates of deposits; does not insure other types of financial investments that banks offer, such as mutual funds and U.S. Treasury bonds gives bailouts & has reduced fear of bank runs

embargo

an outright ban on imports from and/or exports to a particular foreign nation, usually for political reasons

sole proprietorship

an unincorporated business owned by a lone individual who pays taxes on the business through his or her personal tax returns

very reliable sources

annual reports, credit unions, newspaper financial pages

electronic bill paying

another convenience of electronic banking; you can set up electronic bill paying through his financial institution—there may or may not be a cost for this service

planning for debtt

another important task in financial planning; Finding out how to pay these debts with the lowest possible interest rates is essential. Paying off debt is particularly difficult when you are in high school and college, especially if you do not have a budgeting plan in place

trusts

another legal tool in an estate plan. Trusts put conditions on how and when your assets will be distributed after you die. A goal of setting up a trust is to minimize the tax burdens for beneficiaries and to avoid probate court

CollegeAmerica,®

another savings program, available only through a financial advisor, which provides investment options in mutual funds to build a college savings account that meets their specific needs. are subject to financial markets and have the potential for investment losses as well as gains

insolvent

another term for bankrupt

money market account

another type of savings account that banks and credit unions offer. The interest earned is based on the interest banks make on short-term investments. differ from regular savings accounts because they typically earn higher interest but also have higher minimum balance requirements

banking

another way to invest. Your deposit is essentially a loan to the bank. The bank uses your money to support other transactions, such as loans or mortgages. In return, the bank pays interest on your investment

safety net programs

anti-poverty programs that include earned-income credits, food stamps, and unemployment insurance

E-trading

any digital screen-based method for online trading and investing; can be considered a subset of e-commerce

installment loan

any loan that you pay off over time because it is paid off "in installments," meaning that you pay a portion of your debt—plus interest—every month

tort

any wrongdoing not involving breach of contract for which a legal action for damages may be filed

bequests

anything left to someone in a will

self-employed people

are not subject to payroll taxes and withholdings in the same way; each quarter, they must pay estimated taxes to the government.

tangible assets

are real, physical objects. Tangible assets may include fixed assets and liquid assets; most experts do not consider restricted assets as being tangible

loans

are used to pay for goods and services that cost a good deal of money and that continue to be useful even after the last payment has been made

negative externality

arises when a third party receives an unwarranted cost

Bernoulli's Hypothesis

asserts that when an investor accepts a risk, that risk should include any losses that could occur and the intrinsic value of the investment evaluates the direct risk against the risk's intrinsic value. Bernoulli's Hypothesis also explains why different people have different investment risk tolerances

restricted assets

assets that cannot be turned into cash without paying a penalty. (Ex certificates of deposit, retirement funds)

underbanked

assigned to people who do have checking or savings accounts but who still do a lot of business with check-cashing services and pawnshops. At these types of businesses, people can get money or payday loans that carry much higher interest rates than those charged by a bank or credit union

red herrings

attempts to divert attention from a problem or limitation of the product. For example, an automaker might highlight a car's cool design to draw attention away from its poor mileage

specialized coverage

available for people who live in areas that regularly experience earthquakes or floods. Insurers can provide endorsements, or additional coverage, for these special circumstances.

financial data

available from a number of Internet sources: for-profit Web sites (".com"), educational sources (".edu"), government sources (".gov"), and nonprofit organizations (".org") Banks, stockbrokers, financial advisors, and financial publications are other for-profit sources of information

Medicaid

available only to people with limited income. You must meet certain requirements to be eligible for Medicaid. The program does not pay money to you; instead, it sends payments directly to your health care providers

457(b) plan

available to state or local governments and to tax-exempt non-profit organizations. Employers or employees, through salary reductions, contribute up to a certain annual limit on behalf of participants under the plan

grants and scholarships

awards of money students may receive to pursue higher education. Grants typically come directly from the institution and scholarships may come from many different sources can both be awarded to a student based on academic merit, financial need or accomplishments, or just meeting certain criteria

Personalized Check Card

banks allow you to personalize your debit card, such as featuring your favorite sports team. Some banks even include a photo ID of the cardholder on the check card to reduce the odds of identity theft.

identity theft insurance

banks offer identity theft insurance; if your personal information is ever stolen, the insurance will compensate you for any qualified expenses.

somewhat reliable sources

banks, brokers, financial magazines, investor services and newsletters, ".com" internet sources

Card Accountability, Responsibility, and Disclosure (CARD) Act

bans unfair rate increases and unfair fees

housing discrimination

based on any of the following is illegal: race color religion national origin gender family status age (but only if the tenant is 55 or older) disability

FICO score

based on: Length of credit history, Payment history, Amount you owe, New credit (including recently opened accounts), Types of credit A FICO® score of 700 or higher is a good credit score. A score of 600 or less would make it difficult to get a loan or even a credit card with reasonable terms.

guidelines for setting goals

be specific, state the estimated cost, realistic and attainable goals, set a time limit

why trade-offs are necessary

because resources are scarce

Great Recession

began in December 2007 and ended in June 2009; partly the result of unwise lending practices by financial institutions. In the early 2000s, many banks approved mortgages—bank loans for buying houses—for individuals who should not have received them

Mortgage or Rent expenses

between 28% and 36% (multiply annual take-home pay by a number between 0.28 and 0.36, and then divide by 12 to give you the maximum monthly amount you can afford to pay for housing)

beneficiaries of inflation

borrowers, consumers, and owners of resources that increase in value at a rate greater than the inflation rate

Banks/Online Banks

businesses that accept deposits and make loans with interest. Banks are owned by companies and operated to make a profit for the bank's owners or shareholders.

sixth-tier bills to pay

buy new clothing and pay for entertainment such as movies, books

stock portfolio

buying several different kinds of stocks

small order execution system (SOES)

buys and sells trades automatically. The SOES is a type of electronic trading platform bypasses brokers and automatically puts through orders at the best available share price. It is used for smaller purchases—usually fewer than 1,000 shares

Producer price index (PPI)

calculated based on the selling prices that the producers receive for a basket of goods different from the CPI because producers not only sell consumption goods to consumers, they also sell intermediary goods and raw materials to other producers important because raw material prices affect the prices of final goods and services. can be an early indicator of inflation

expenditure approach

calculates GDP by adding together the money spent on buying goods and services in a country over one year GDP = Consumption + Investment + Government Spending + Net Exports

Chapter 7 liquidation

calls for the liquidation of a debtor's nonexempt property. proceeds are given to creditors

direct deposit

can arrange with his employer to deposit his paycheck directly into his checking account. Some banks and credit unions offer no-fee checking accounts for customers who use direct deposits

gross domestic product (GDP)

can be calculated by adding consumption, investment, government spending, and net exports measures the growth rate of a nation's economy by adding the total value of all goods and services produced in a given year Officials compile this statistic by adding the value of all final goods and services, including those used for consumption, investment, government, and net exports a measure of production, not sales

technical schools

can be expensive, especially if they are profit bearing. They can cost upwards of $11,000 a year (although they may be shorter programs than traditional colleges)

chapter 11 reorganization

can be filed by a business. the court approves a payment plan; creditors are repaid while the business is still in operation and reorganizing

SEP IRA (simplified employee plan)

can be set up by an employer, who makes contributions toward an employee's retirement. Or, self-employed individuals can set up their own SEP. The SEP allows people to set aside larger amounts of money than they could with only a Traditional IRA or a Roth IRA.

simple IRA

can be set up by an employer, who then makes the contributions. In general, this type of IRA allows people to set aside the largest percentage of money for an IRA account without paying taxes until it is withdrawn. Not all employers offer this type of plan.

functions of money

can be used as a medium of exchange, a unit of account, or a store of value

inflation

can happen if the economy grows too quickly without enough workers to fill all the new jobs, wages will increase the price of goods and services also will increase

recession

can happen if the economy grows too slowly workers may find it difficult to find a job, and the unemployment rate can soar

short run inflation

can have a variety of causes (two possibilities are demand-pull and cost-push inflation) refers to a variation in inflation relative to its long-run value a temporary increase in the economy's aggregate demand can cause prices to increase

Technology

can help improve productivity

portfolio restructuring

can help reduce your investment risks since you are making changes based on your needs

internships

can help you make decisions about your career, as well as valuable professional connections.

income sources

can include already existing savings, gifts, inheritances, work income, and income funds

rewards programs

can include cash back for purchases, frequent flier miles, or awards of products. Remember, rewards are given only for purchases made. You cannot receive rewards on money you pay for fees or interest.

free trade

can lead to widespread benefits for consumers and encourage businesses to produce more efficiently

long-term goals

can take five years or even a lifetime to achieve. A realistic long-term goal may be buying a house or having enough money for retirement

United States' main exports

capital goods, such as transistors, aircrafts, motor vehicle parts, computers, and telecommunications equipment; agricultural products, such as soybeans and corn; and consumer goods, such as cars and medicines

policies

carefully worded and highly detailed legal contracts that outline the terms of the insurance coverage

credit card fraud

carries much less liability than debit card fraud. If a thief steals your credit card numbers, by federal law the maximum that you are liable for is $50 if you report the fraudulent use They might open new credit card accounts in your name; They might change the billing address on your credit card so that you no longer receive bills and then run up charges on your account

transaction fees

cash advance fees, late payment fees, balance-transfer fees, over-limit fees, and any other fees credit card companies charge for services

exemptions

certain allowances on a salary of a worker that are free from taxation

unit elastic goods

change prices and quantities in equal percentages

irrevocable trust

changes cannot be made unless the beneficiary approves

reasons for restructuring portfolio

changing goals, shifting assets, changing market, underachieving financial strategies

community colleges (two-year)

charge an average of $2,700 a year

credit card

charge high interest rates when the full amount borrowed is not paid back right away your purchases go on your credit card bill. You receive a bill during the month and pay it at that time. You can often use your credit card to obtain cash at an ATM, but you usually have to pay a cash advance fee

subprime mortgages

charged higher interest rates than conventional mortgages, and some were adjustable—when interest rates increased, so did monthly mortgage payments

returned check fees

charged to customers when they write a check for more than they have in their checking accounts; this is also known as a bounced check fee

consumer responsibilities and skills

checking receipts and statements, contesting an incorrect bill, maintaining consumer vigilance, using consumer protection laws, using government consumer protection agencies, using private consumer protection groups

different tax credits

child care and dependent expenses, foreign taxes, retirement, other (adopting a child, participating in college education plans, installing eco-friendly windows or appliances, and numerous other expenses)

households

choose to buy goods and services and whether to sell resources

price takers

companies that must accept the prices determined by the market

labor force

comprises two populations: the total number of people employed and unemployed

lifestyle trade-offs

compromises that affect the way you live

consumer rights

concept of was endorsed by the United Nations through the United Nations Guidelines for Consumer Protection, which expanded them to include eight basic rights explained in the huge body of federal and state laws known as consumer protection law right to be informed, right to be safe, right to choose, right to voice complaints and have avenues for resolution

barriers to entry

conditions that block or impede the ability of a firm to enter an industry keep potential businesses from entering the market to compete with other businesses

barriers to exit

conditions that block or impede the ability of a firm to leave an industry

provisions

conditions that can affect future benefits

elastic demand

consumers of the good will demand much more of the good as the price decreases and much less of the good as the price increases

coercive incentive

contains a threat of penalty for failure to act in a certain manner. For example, going to jail is a coercive incentive for not committing a crime. This is a type of negative incentive.

multinational corporations (MNCs)

corporations with offices, factories, or other facilities in multiple countries part of the world interdependence, which is a characteristic of globalization

Factors That Can Affect a Country's Quantity of Exports and Imports

cost of production, Availability of Raw Materials and Inputs, Trade Agreements Among Countries, Prices of Goods and Services Produced at Home, exchange rate

variable costs

costs that change with the quantity of production of the good or service

higher-risk investment opportunities

could increase your savings more quickly, include stocks, bonds, treasury securities, and mutual funds. Some people also invest their money in real estate (houses) and/or retirement plans.

expansionary policies

countries aim to promote growth by increasing aggregate demand at each price level. This is shown by a shift of the aggregate demand curve to the right

contractionary policies

countries aim to slow the economy's growth rate by decreasing aggregate demand at each price level. This is shown by a shift of the aggregate demand curve to the left

homeowner's insurance

cover the physical structure in the event of an unexpected or catastrophic event. It would cover most of the costs of repairing or rebuilding the house and replacing the possessions inside it

Permanent life insurance

covers a person's entire life, and when that person dies, the insurer pays out the death benefits to the beneficiary. three kinds of permanent life insurance—whole life, universal life, and variable life long term, cash value, high premiums, guaranteed death benefits pay out; cash value can be withdrawn in loans, lifetime policy requires no renewal, unless premiums lapse

bodily injury liability

covers an injury to or the death of another person that results from an accident you caused. It covers the victim's medical expenses and can also pay for your legal defense costs, if needed.

automobile insurance

covers bills after a car accident; Most states require drivers to have automobile insurance. Even drivers with excellent driving records need to carry it because accidents happen and because repairs and medical care are expensive.

major medical expense insurance

covers hospital expenses and costs that are not covered by basic health insurance; does not cover visits to the doctor, prescriptions, or routine tests. Dental and vision care are also not covered; also called catastrophic care, major medical insurance is for people who can handle the costs of day-to-day health care—annual checkups, prescriptions, and so on but want to be covered in the event of a major medical problem

basic health care insurance

covers some medical expenses—hospital care, surgery, and physicians' care, including annual physicals, up to a certain point; For major health emergencies, such as a long-term illness or serious injury, additional coverage is needed. Eye care and dental visits are not typically covered by basic health insurance

collision insurance

covers the costs of getting your car repaired. With collision insurance, it does not matter who caused the accident. Your insurance will cover the costs even if another driver caused the damage; involves a deductible

bad debt

debt incurred to buy something that will be consumed quickly and lose value over time.

corporate bonds

debt securities issued by corporations; selling these allows the corporations to fund projects

municipal bonds

debt securities issued by local/city governments; funds from these go toward public resources

US bonds and treasuries

debt securities issued by the federal government

productivity

defined as the relationship between its output (GDP) and the amount and quality of inputs (workers and capital goods) higher when either one of the following occurs: (a) you produce more output with the same amount of inputs as before, or (b) you produce the same output while using fewer inputs.

creditworthiness

defined by the perceived ability to pay back a loan You can develop creditworthiness by establishing character and capacity. You can build character by taking out small loans and developing a track record of paying your debts in a timely manner. You can develop capital by increasing your cash reserves in a savings account, money market account, or certificate of deposit

VRLTA Handbook

defines the obligations of a landlord to make repairs

appliance expenses

depends on need

furniture expenses

depends on need

social security check monthly

depends on: the amount you have contributed to the system during your working years your average earnings during your lifetime under the Social Security system your age when you finally retire

business cycle

describes how an economy expands and contracts over time—through periods known as growths, peaks, recessions, troughs, and recoveries has important implications for the economy because it affects people's incomes and their chances of finding jobs

Account disclosure agreement

describes the terms and conditions of your credit or debit card account. When you sign the application for a credit or a debit card, you are agreeing to accept all the interest rates, fees, incentives, and conditions described in the account disclosure agreement

tax software

designed to save you time. Most tax software programs contain all the forms you might need. They also help you select the proper forms and input the information into the correct places. consider: your situation, your paperwork, your budget, your experience, your technology

savings account

despite offering a fairly low annual percentage of interest, are the safest place to keep money that you will definitely need in the future allow people to save money over the long term and earn extra money, called interest. They can earn more interest by depositing their money into a money market account. Depending on the amount of money in the account, a savings account can earn between .20% and 2% interest, depending on the type of institution providing the account

nominal GDP

determined by evaluating the production of goods and services at current prices an increase could be caused by an increase in production and/or an increase in prices

FICO

developed by banking consultant Fair Isaac Corporation, to determine your credit score

skimming

dishonest salespeople use a special device that records (and steals) your credit or debit card information as they process your card.

soft inquiries

do not impact your credit record. These occur when someone requests your history—for example, when a landlord investigates your creditworthiness, or when a company tries to confirm your identity.

benefits of renting

do not need as much cash to rent a house as they would to make a down payment to purchase one, freedom to move easily, few maintenance expenses because the owner is responsible for all major repairs and upkeep, If housing prices fall you have no risk of losing money, even if there are restrictions on the property you are free to personalize their space without making any physical changes.

private four-year colleges

do not usually have separate charges for in-state or out-of-state residency. Their average cost is $27,700 per year

unsecured loan

does not require collateral. People get these loans because they have a good credit record. Lenders believe they will be able to repay the loan. Sometimes, the lender may offer this loan at a higher interest rate since there is more risk.

international trade

drives globalization, affecting culture, the environment, and the economic development of countries

types of identity theft

dumpster diving, phishing, skimming, hacking, stealing, stealing your wallet, stealing your mail, stealing your trash, changing your address, impersonation Opening credit cards in your name, making purchases, and then not paying the bills. Applying for a loan in your name. Opening a new cell phone service, a new landline phone service, cable or satellite TV service, or any other utility service in your name. Opening new bank accounts, writing checks that bounce, stealing money from your savings accounts, or gaining access to your debit card number and withdrawing money. Getting a driver's license in your name

financially self-reliant

earning enough to buy food, pay for rent or other housing, and cover additional expenses

three main national economic goals

economic growth, full employment, price stability

local government programs/services

education (public schools and community colleges), libraries, police and fire departments, city and county roads, trash collection, street cleaning, animal control, public utilities

state government programs/services

education (public schools, including community colleges, state colleges and universities), libraries, public welfare agencies, health care (state hospitals), state roads, state police, motor vehicle agencies, state prisons

Noninstallment Credit

either secured or unsecured, depending on the company offering the credit. This credit does not have monthly payments. Instead, the bill is due in a lump-sum payment for the full amount owed. Non-installment credit tends to be due in a short period of time, such as a month.

payroll tax

employers withhold these taxes from employees' paychecks to help fund federal programs federal/state governments can levy these

competition

encourages efficiency in the marketplace by eliminating inefficiency and waste and by forcing producers to provide quality goods to consumers offers consumers a choice of goods and services. It can lead to different prices, quality, and levels of customer support

Federal Trade Comission

enforces both the Sherman Antitrust Act and the Clayton Antitrust Act, two laws Congress passed to help prevent anti-competitive conduct established, in part, to eliminate trusts; continues to monitor business practices that limit competition

Equal Employment Opportunity Commission (EEOC)

enforces laws involving job discrimination based on race, color, religion, sex, national origin, age, or disability. It also enforces laws to protect people who complain about discrimination from further retaliation from their employers separate from the Department of Labor

strategies to address externalities by government

enforcing property rights, imposing taxes and subsidies, regulating systems

Office of Disability Employment Policy (ODEP)

ensures that people with disabilities and special needs have full opportunity in the work force.

federal government programs/services

entitlement programs (Social Security, Medicare, Medicaid); national defense and security; agriculture; health services; justice system; national resources (environmental protection, conservation, pollution control, flood control); technology and space exploration; energy regulation and conservation; interest on the national debt; transportation; benefits for federal retirees and veterans; support for education (grants and research); research institutions (Library of Congress, National Archives, National Centers for Disease Control)

public goods and services

essential to a society's welfare but are not provided by a private market due to a lack of financial incentives. The government uses taxes and borrowing to fund them

variable life insurance

essentially allow policyholders to play the stock market. With variable life policies, part of the policy's cash value can be invested in stocks, money market funds, or bonds. When the stock market is up, a variable life policy can bring big returns, but there is plenty of risk

I-9 form

establishes your employment eligibility

marital deduction

exempts from taxes any assets you leave in your will to your spouse

highly elastic goods

experience large changes in quantity demanded when their prices change by a small amount

inelastic goods

experience small changes in quantity demanded when their price changes by a small amount

Five C's of Credit

factors that determine your creditworthiness: character, capacity, capital, conditions, and collateral

costs of using credit cards

fees for late bill payments, annual fees for having a card, over-limit fees for charging an amount over your credit limit, interest charged on balances and cash advances

Liabilities

financial obligations, or amounts of money you owe. Liabilities include outstanding bills and debts of any kind, such as student loans, car loans, money borrowed from friends or family, mortgages (and rent, if you have a lease), and taxes

Utility Deposits/One-Time Set-Up Charge expenses

fixed amount

auction market

floor traders, brokers, or other specialists execute most of the trades

AD and AS model

focuses on the behavior of two variables: the economy's total output of final goods and services (real GDP), and the overall price level

tickler filing system

folders are organized based on the date that payments or paperwork are due. If you want to make sure you are meeting responsibilities on time, this is a good option

education after high school

four-year college, technical school, community college, introductory courses at a community college and more advanced courses at the university, internships at various companies

internal balance

full employment and price stability in a country

income funds

funds you receive as a result of your investments. They also can be reinvested to continue building your investment portfolio.

financial aid

generally is a package of grants, work-study options, and loans

short-term goals

generally reached within one or two years. These goals should be very specific.

dental and vision care insurance

generally sold separately from basic insurance and major medical expense insurance. Dental insurance covers typical dental procedures, such as annual exams, cleanings, X-rays, fillings, oral surgery, and orthodontics. Vision care insurance covers examinations, eyeglasses, contact lenses, and eye surgery; It does not cover visits to your regular doctor or major surgical and hospital expenses;

rules for investments

get it in writing, know the risk, know who is offering it, if you do not understand the offer do not buy it, do not respond to scam email offers, almost nothing is free

property rights

give people the right to claim their possessions and use them as they choose (within the limits of the law) may be assigned to individuals, groups, or governments include the right to (1) exclude others from using a good or service, (2) transfer its ownership, or (3) control its use by others provide an incentive to invest

subprime loans

given to people who do not meet the typical requirements needed for most home loans

intermediate goods

goods that are purchased for resale or goods that will be used to produce other goods

substitutes

goods that may replace each other in use/consumption as a result of changed conditions

costs of tax breaks

government may have to cut back on programs or services. This response, however, may hurt low-income families or elderly retirees who depend on those programs or services it could respond with deficit spending—borrowing money to make up for the missed revenue. In this case, public services might not get cut, but the deficit spending will increase the national debt. In turn, interest payments on the debt will go up, driving up the debt amount even more

remedies to market failures

government provides socially beneficial goods and services that are not part of the free market, such as police protection

US Treasury bonds

government-issued debt obligations with fixed interest rates

gold standard

governments linked the value of their currency to the value of a specific amount of gold they held

subsidies

grants of money that lower the cost of a good/service to account for social benefit

national debt

growing at an increasing rate the total amount of money the U.S. government owes to individuals, corporations, and foreign governments—the sum of all past annual deficits and surpluses, plus the interest on money borrowed by the government

structural unemployment

happens when a worker's skills no longer match the job

United Nations Developmental Programme (UNDP)

has staff in 177 countries. The UNDP mostly serves in a networking or coordination role, connecting the governments of low-income countries with development resources.

public four-year colleges (out-of-state)

have an average cost of $11,900 per year

inflation rate

he average percentage of prices that increase over a specified time, such as one year (Current Year's Price Level - Previous Year's Price Level ) / (Previous Year's Price Level) × 100%

medicare

health insurance for those 65 years or older, or, for those who have a permanent disability. There are three main components to the benefit

unanticipated decreases in inflation

help lenders & hurt borrowers

FTC and Department of Justice

help to encourage competition by reviewing proposed mergers and occasionally breaking up existing companies

health insurance

helps patients pay medical bills; Most basic health insurance policies cover regular trips to the doctor and emergency room visits. Many policies also cover surgical procedures, medications, recovery, home care, and so on; Everybody in the United States needs health insurance, including people who are young and healthy. Because health care is so expensive, even a small mishap, like a sprained ankle, could be costly if you do not have health insurance.

property insurance

helps pay to rebuild or replace lost or damaged property; covers assets, such as your house and the possessions you keep in it; Those who own homes and valuable possessions, such as jewelry, electronics, fine art, and so on, need property insurance.

World Trade Organization (WTO)

helps promote free trade worldwide. Its purpose is to reduce barriers to international trade and increase production efficiencies. This increases total world output and improves living standards across countries.

insurance

helps protect against financial losses caused by unexpected events

liability insurance

helps protect against lawsuits; helps protect policyholders against financial losses caused by liability claims or lawsuits that claim malpractice. The insurance helps cover the costs of paying or fighting liability claims; Most homeowners have liability insurance in case someone gets injured while on their property. Many professionals, such as medical care providers, also carry liability insurance to protect against lawsuits

life insurance

helps survivors pay expenses after a person has died; most life insurance policies pay out a specific sum of money to survivors, called beneficiaries, after the policyholder dies; People with dependents should have life insurance so their families will have money to pay their bills and plan for the future

investment bank

helps the corporation sell the stock for a fee

consumer choice

how consumers distribute their limited budgets among available goods and services

market power

how much a company influences the price of a product by controlling its supply/demand occurs when limited competition results in higher prices one source of market failure. It happens when a shortage of competition increases prices

unanticipated increases in inflation

hurt lenders & help borrowers

phishing

identity thieves send you e-mails in the name of banks, companies, or government agencies, trying to trick you into giving them your personal information

progressive tax

if high-income families pay a higher percentage (ex income tax, estate tax)

regressive tax

if low-income families pay a higher percentage

financial incentive

if the material reward is money. For example, maybe your parents said you would get $50 for earning an A

debit card fraud

if you do not notify the bank within 48 hours of a fraudulent use, you can be liable for up to $500. Even worse, if you do not notify your bank within 60 days, you are liable for the entire loss.

People who do not necessarily need insurance

if you have... no dependents (no children or grown children, working spouses, or healthy family members) substantial savings (or other liquid assets) no large, outstanding debts (such as mortgages or credit card bills)

people who need life insurance

if you have... dependents (children, elderly parents, ill or disabled family members, spouses who do not or cannot work) mortgages (house payments) large, outstanding debts (credit cards, loans, medical bills)

hard inquiries

impact your credit record. Hard inquiries are used by potential lenders—for example, when you apply for a credit card or when a bank considers you for a car loan

poor credit rating

implies you cannot be trusted with resources. This makes it difficult to get a credit card, insurance, or a job. can restrict your security clearance and limit your responsibilities at work can be an obstacle to "getting ahead," but credit can be repaired over time with responsible borrowing habits.

Product-packaging and pricing strategies

important parts of a business's marketing plan. Features, colors, logos, unit prices, and multipack prices are designed to make products more attractive to consumers. Bulk packaging, for example, may offer a good deal. On the other hand, it may be a way to convince consumers to buy much more than they need

career planning

important to your post-high school years and long-term future

property tax

imposed on buildings/real estate and sometimes motor vehicles and boats. Local governments depend on this for revenue Every year, municipalities calculate the value of local homes, office buildings, farms, land, and other real estate and send the owner a tax bill based on that value

sales tax

imposed on the purchase of goods and services, such as when you buy clothes or groceries

difference between the impacts of tariffs and quotas

in the case of quotas, the importing country (in this case the U.S. government) does not earn any revenue, as it does from tariffs. Instead, the producers in the exporting country (in this case, foreign DVD producers) receive the revenue due to the higher price generated by the quota.

government intervention

in the form of regulation, is often used to in an attempt to correct market failures. Congress passes regulatory laws and sets up regulatory agencies to enforce specific regulations.

government regulations

incentives that help ensure a safe work environment—for instance, by requiring the use of chemicals that are less harmful to human health or the environment

Employer Retirement Plan

include a matching contribution. This means the employer matches the amount you, the employee, puts in, up to a certain amount. Many of these plans mandate that you work at a company for a specified time period before you can participate. This is called being "vested" in the plan. Once you are eligible, or fully vested, it is a beneficial type of plan because it offers an automatic way to save through payroll deductions; plus, your employer contributes. (often called 401k)

incentives for efficient employees

include cash bonuses, profit sharing or stock options, free travel, and free or discounted merchandise. Some employers may also agree to pay for an employee's continuing education

liquid assets

include cash/personal possessions that can be sold for cash. They hold a value that remains fairly constant

fixed assets

include property that is not easily sold or converted into cash (Ex houses, large machinery)

free trade agreements (FTAs)

include rules about trade that are agreed upon by all member nations demonstrate the importance of the world's economic interdependence

M2

includes all the money M1 includes, but also includes the money in certain savings accounts

anti-competitive agreement

includes contracts, agreements, or understandings that would likely result in substantially reduced competition

disposable income

includes payments received from employment, interest, profits, and transfers. This is the amount of money that households can spend after subtracting taxes

intellectual property

includes products of people's creative and intellectual thinking creations of the mind that are then used to produce tangible products and services

personal property insurance

includes the costs of replacing personal possessions that were stolen or destroyed while in the house

M1

includes the dollars and coins in circulation and also the money in different types of checking accounts

division of labor

increased worker productivity by performing specialized tasks allowed each worker to do his or her task faster and very well, leading to greater efficiency

expansionary monetary policy

increases the money supply to encourage economic growth. In the United States, the Federal Reserve conducts this policy during periods of economic contractions or recessions.

total world production

increases when countries specialize in producing goods and services using comparative advantages.

unemployment rate

indicates how many jobs are available and how hard it is to find a job the percentage of the labor force that is unemployed [Number of Unemployed] ÷ [Labor Force] × 100%

federal revenue

individual income taxes, payroll taxes, corporate income taxes, excise taxes, fees, tariffs

United States' main imports

industrial supplies, like crude oil; capital goods, such as computers, telecommunications equipment, office machines, and electric power machinery; consumer goods, such as clothing, medicine, furniture, and toys; and agricultural products

W-4 form

informs your employer about how much to withhold from your paycheck If your employer does not give you a W-4, you are considered "working under the table." This is illegal because it means your employer is not telling the government about your work

buying a house

initial costs, such as the down payment, which can be 5% to 20% of the purchase price, and the mortgage closing. Yearly costs include the monthly mortgage, property taxes, repairs and maintenance, and house insurance. Condos and co-ops also have other fees.

no-fault insurance

instead of spending time and effort trying to get the insurer of the at-fault driver to pay your bills, you can ask your own insurer to pay. This no-fault system saves everyone time and money and keeps lawsuits out of the courts

split limits

insurance shorthand that refers to a quantity of liability coverage. It is expressed in a series of numbers that represent the upper limits in thousands of dollars Ex: 50/25/10 50 - how much your insurer will pay to all people in accident 25 - your insurer will pay up to this amount to one person in accident 10 - your insurer will pay up to this amount for property damage

National Credit Union Administration (NCUA)

insures and regulates federal credit unions. So, the deposits of credit union members are insured—just as the FDIC insures banks

interest on the national debt

interest paid on money that the federal government has borrowed in the past to cover deficit spending

simple interest

interest paid on only the principal. It is a fixed amount paid at regular intervals (usually monthly or annually). It is based solely on the principal in the account and not on any interest that has accumulated

unearned income

interest, returns on investments, inheritance, gifts

IGOs

intergovernmental organizations cooperative organizations that are supported by the governments of many countries

World Bank

international organization dedicated to reducing world poverty goals include alleviating world poverty by providing financial assistance and encouraging investment by allowing countries to borrow money loans money to low-income countries to complete specific projects

403(b) plan

is a retirement plan for certain employees of public schools and other educational institutions. It is also available to employees of certain tax-exempt organizations such as religious organizations.

tax-sheltered annuity (TSA) plan

is a retirement plan for certain employees of public schools and other educational institutions. It is also available to employees of certain tax-exempt organizations such as religious organizations.

federal budget

is balanced when the government takes in as much revenue as it spends. This is quite rare, however. More often, federal expenditures exceed revenues, resulting in a deficit. A really long document—often hundreds of pages—that covers thousands of expenditures and reflects the government's long-term commitment to provide these programs and services, which millions of Americans depend upon every day. It is also based on a proposal from the U.S. president to Congress about how federal dollars should be spent. is a public document that anyone can read. The budget overview section outlines the president's goals and priorities for the next fiscal year.

moral incentive

is possible when certain beliefs are commonly held. Actions that support these beliefs make people feel better about themselves and help gain approval from society. Donating blood is one example

Anticipated income

is the money that you know is coming in, usually from a regular job. You can expect or anticipate a certain amount of income and can budget and spend the money accordingly

down payment

is used to secure the property and the loan. A down payment costs usually around 20% of the negotiated price. If you have a good credit rating, it may be possible to get approved for a smaller down payment, perhaps as low as 10%. The smaller the down payment, however, the larger the loan will be.

Food and Drug Administration (FDA)

issues safety standards for food and medicine; regulates the safety of food, human and veterinary medicines, makeup, vitamins, and other products

Internal Revenue Service (IRS)

issues the W-4 form.

Credit Bureaus/Credit reporting agencies (CRAs)

keep track of your spending and bill-paying habits. There are three main credit bureaus: Experian TransUnion Equifax

standard deduction

kind of like a free pass—you do not have to pay taxes on this amount. How much is a standard deduction? It depends on your filing status and the current rates set by the government To find the standard deduction, you identify your income and filing status in an IRS tax table

consumer protection laws

laws that protect consumers in all 50 states place certain restrictions on how businesses treat their customers. In addition, contracts can prevent businesses from doing unethical things

sublease

letting another person move into the unit or take over the lease

flat tax

levies the same rate on all income levels—everyone pays the same percentage, regardless of income. An example is a sales tax

proportional tax

levies the same rate on all income levels—everyone pays the same percentage, regardless of income. An example is a sales tax

characteristics of c corporation

limited liability in terms of personal assets, continuity of life, centralization of management, and the ability to transfer ownership interests

quotas

limits on the quantity of a good that can be imported into a country

credit card bill/account statement

lists all the purchases, fees, and interest charged to your account

bonds

loans you make to corporations, the government, or federal agencies and are often called debt securities. They pay a specified amount of interest on a regular basis. In addition, you get your original investment back when the bond matures.

The Board of Governors

located in Washington, D.C. It has seven members who are called governors Together, the seven governors and a skilled staff formulate and execute the policies that make the banking system in the United States stronger and more reliable oversees the activities of all twelve regional banks and approves the appointment of their presidents

New York Stock Exchange (NYSE)

located on Wall Street in New York City, is the largest stock exchange in the world by dollar volume

ways to save money

look for student discounts, use discounts online, use loyalty programs, pool resources with friends

costs of inflation

loss of welfare (meaning that people's standards of living can be harmed), investments decline, reduction of economic growth and productivity

layaway plans

made for people who want to buy products but who cannot pay for them in full right at that moment

diversified

made up of a variety of different types of stocks (Ex mutual funds)

ways to control debt

make payments on time, make payments early, contact credit card companies, transfer a credit card balance, ensure against identity theft

Equal Credit Opportunity Act

makes it illegal for creditors to discriminate against a credit applicant on the basis of race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance.

competitive market

many companies offer the same kinds of products, allowing consumers to select among prices, levels of customer support, and levels of quality

retail store credit card

many retail stores give out credit cards with relatively low limits. You can then use this card to purchase something you have already saved for. Then, pay off the charge quickly

part-time workers

marked as employed. This includes all part-time workers, even those who are looking for full-time employment.

good credit rating

may allow you to get credit cards with better terms, which means lower interest rates. You may avoid paying a yearly fee on your credit card. It may also lower your insurance premiums can improve your job prospects. Employers often check a prospective employee's credit rating to help determine whether that person will be reliable and responsible determined by length of credit history, payment history, amount owed, new credit, types of credit

over-the-limit fees

may be charged to debit or credit cards. The fee is charged for exceeding the credit limit on the card. You can avoid this fee by opting out of the over-the-limit option. However, if you opt out, your card will be denied if you try to make a purchase over your credit limit

unit of account

meaning that it can be used to measure the monetary value of objects in an economy. Prices of goods and services state their worth

transfer fees

meaning that she can transfer money from one account to another for only a specified number of times per month. If she exceeds this number, she will be assessed a fee.

high unemployment rate

means it may be difficult for you, a family member, or a friend to find a job

low unemployment rate

means it may be easier to find a job

non-rival

means that one person's use of a good does not reduce anyone else's use of it

repossess

means that the lender has the right to take away the property if the borrower does not follow the terms of the contract.

manual file management

means you will be receive and store bank records in paper form

electronic file management

means you will work with e-mail records and other digital files.

elasticity of demand

measures how much the quantity demanded of a good changes when its price changes Changes in exchange rates cause changes in the prices of goods and, as a result, affect the demand for those goods.

different tax deductions

medical expenses, state and local taxes, interest, donations, theft or loss

aristocrats

members of the society's wealthy upper class; typically had inherited their money and land from their ancestors. They were called old money and had the most prestige in society.

unanticipated income

might come in the form of an inheritance, a gift, overtime pay, or a winning lottery ticket

Department of Labor

mission is to monitor the quality of working conditions. It also helps protect retirement and health care benefits, vacation, and sick leave

personal property

mobile; you can move the items from one location to another—ranging from video games to airplanes

financial capital

money

student loans

money borrowed from an institution, usually the federal government or a bank. The institution provides a set amount of money at a price with an agreed-upon interest rate. Student loans are legal obligations that you must repay Some student loans have high interest rates. Often, graduates end up paying back student loans for years after they leave school

good debt

money owed on something that you will get a return on, such as an investment

currency

money used to make transactions

Securities and Exchange Commission (SEC)

monitors financial transactions to protect investors To help maintain fair financial markets, it investigates fraud and other violations of securities laws an independent federal agency that administers and enforces federal laws on securities (stocks and bonds)

Occupational Safety and Health Administration (OSHA)

monitors issues of workplace safety and health, such as the following: Handling hazardous materials (flammable liquids) Wearing personal protective gear (safety glasses and hard hats) Enforcing environmental controls (sanitation) Providing medical/first aid/fire protection (sprinkler systems and fire alarms)

Employee Benefits Security Administration (EBSA)

monitors workers' health care and retirement plans as well as many other benefits.

maritime transportation

moves goods or people across oceans and seas; typically are relatively slow, so nonperishable goods often are shipped this way the cost has not gone down in recent years because the price of oil has been climbing. On the other hand, maritime transportation allows for the shipping of massive amounts of goods

air transportation

moves goods or people on airplanes. Goods shipped via air transportation frequently are lightweight, perishable, or expensive

Factors That Can Affect the Types of Exports and Imports

natural resources, location in world, labor force, available capital

Preferred Provider Organizations (PPOs)

networks created by doctors and hospitals. They make deals with insurers, such as agreeing to charge their members lower rates in exchange for insurers providing coverage—if they approve the rates

costs of renting

no control over the property, The owner could raise the rent, which would make costs higher, The owner could put restrictions on the property, no equity, do not get a tax benefit for any of the money spent on rent.

payday loan stores

non-bank institutions; When you go to a payday loan store for a loan, you write a check for the amount of the loan plus a fee. You must promise to return to the store by your next payday to repay the loan. If you do not show up, they cash the check. The fees charged by the store are almost always higher than standard bank interest rates

types of consumer credit

non-installment credit, installment closed-end credit, revolving open-end credit

credit unions

non-profit institutions and are owned by its members. Typically, people must belong to a qualifying organization, such as a specific organization like the American Consumer Council, or must live or work in a certain community in order to become members

NGOs

nongovernmental organizations charities run by private foundations (Red Cross)

liability rules

obligations based on law and are accompanied by possible punishments

Bank runs

occur when a large number of people race to withdraw their deposits from a bank because they believe the bank will not be able to pay back the money to depositors reflect a lack of trust in financial institutions

seasonal unemployment

occurs during certain times of the year. Sometimes, more or fewer workers are needed

bait and switch

occurs when a business advertises one product at a low price (the "bait"). This gets consumers to visit the store. Then, once in the store, the consumer is told that the advertised product is sold out, and encouraged to buy a more expensive product (the "switch")

recall

occurs when a company alerts customers and asks them to return a defective product

hacking

occurs when a dishonest person with computer skills uses software to break into your e-mail and online accounts to obtain your information. Or, they hack into a company's site to get information on its customers—one of whom could be you.

affinity fraud

occurs when a scammer joins or poses as a member of a group to get close with other members to scam them

demand-pull inflation

occurs when aggregate demand is greater than aggregate supply can be caused by several factors, such as when people anticipate higher prices, so they stock up on more goods in the present (at lower prices) and an increased demand for a country's exports can be accelerated by the government

involuntary bankruptcy

occurs when creditors file petitions of bankruptcy against debtors who owe them money

voluntary bankruptcy

occurs when debtors file a bankruptcy petition because they have more debts than assets and believe they cannot pay their debts

cyclical unemployment

occurs when people lose their jobs because the economy grows at a slow pace

asymmetric information

occurs when someone in the market knows more than others in the market

bear market

occurs when the market declines for an extended period of time. Investors lose confidence and invest less because they expect the economy to contract further a decrease of more than 20% in a market index occurs when investors sell their stocks in large volumes and are hesitant to buy stocks becomes a recession when economic activity declines over a prolonged period of time

implicitly agreed upon contract

occurs when you buy a product and agree to pay the full price listed for it

commercial banks

offer the same services as other banks, credit unions, and savings and loans. In addition, they can issue loans to businesses (called commercial loans) as well as bank credit cards.

CollegeWealth®

offers FDIC-insured bank savings accounts popular with more conservative investors is guaranteed by federal deposit insurance

payday loan

offers a cash advance from your personal check. The check is payable to the lender for the amount you want to borrow plus a high fee. Payday lenders typically cash the check on the date the you receive your next paycheck as a means of repaying the loan.

chapter 12 adjustment

offers a debt relief to family farmers and fishermen with regular incomes. the debtor arranges a payment plan with the court and has 3-5 years to pay creditors

global economy

offers a number of benefits: exchange of goods/services, exchange of resources/labor, information/technology exchange, financial exchange

title loan

offers cash from the lender when you sign over your car's title. You must own your car outright to hold the title to it. The loan is due within 30 days and carries extremely high interest rates. Failure to repay the loan results in seizure of the car—which you just sold to the loan company for the amount of the loan you failed to repay.

long-run inflation

often caused by increases in the economy's money supply inflation rate is roughly equal to the growth rate in the money supply minus about 3% to account for real GDP growth easier to anticipate than short-run inflation

"good times"

often involves low levels of unemployment, higher wages, and low inflation

"bad times"

often is characterized by high levels of unemployment and lower wages

Good financial health

often results from spending money on needs rather than wants, or having a source of income that meets basic needs

intermediate-term goals

often take two to five years to achieve

tips

ome from customers, not employers. Typically, people in personal services, such as hairdressers, taxi drivers, and waiters, receive extra money from customers as gestures of appreciation

Warren Buffet

one of the wealthiest businesspeople in the world and is a leading investor in the stock market

price fixing

one type of anti-competitive conduct, is an agreement among competitors to establish prices

infant industries

ones in the early development stages

Discretionary funds

ones left over after you have paid for the necessities of food, shelter, and clothing

expansion

opposite of economic contraction

medical payment insurance

optional in most states. It covers your medical expenses—and those of any passengers in your vehicle—whether or not an accident was your fault.

wages

or earnings, refer to money that employees earn for their work; often affected by investments in human capital and the laws of supply and demand

nonprofits

organizations that use their revenues to achieve their philosophical goals rather than for profit

securities firms

pair people and organizations that have money to invest with investors who need money to make their businesses grow. The firms make their money by collecting fees from the investors. Securities firms also provide other services to firms, such as advice on mergers, acquisitions, and IPOs.

benefits

part of an employee's compensation over and above the wages he or she is paid. They add to the financial value of the job may include matching contributions to retirement plans, savings plans, health insurance plans, reimbursements for child care, paid vacations, paid sick leave, and parental leave Employers typically pay for these benefits, which helps them to find and keep good employees

Bureau of Consumer Protection

part of the Federal Trade Commission (FTC), promotes fair-lending practices, protects privacy, informs the public about consumer rights, encourages honest advertising, and prevents fraud (attempts to deceive). can even investigate and potentially sue companies and people that violate regulations. can fine companies that misrepresent the uses, benefits, and quality of goods and services

state governments

pay for goods and services offered throughout a state; these could include the state police, hospitals, and public schools

last-tier bills to pay

pay for restaurants, gifts for others, vacations, and miscellaneous expenses that are not essential

local governments

pay for services in cities, towns, or counties, such as picking up the trash, maintaining public roads, maintaining city parks, etc

fifth-tier bills to pay

pay insurance bills for auto, health, or home. pay transportation expenses such as bus fare, bike expenses

second-tier bills to pay

pay rent/mortgage. shelter is a priority

third-tier bills to pay

pay utility bills like water, electricity, etc.

first-tier bills to pay

pay yourself. save 10% of your paycheck for an emergency fund

premiums

payments on insurance policies, usually paid in regular installments As long as you continue to pay your premium, you will have coverage, and the insurer will pay for your lost assets. If you stop paying your premium, your coverage will stop, and the insurance company will no longer share your risk.

comprehensive coverage

pays for damages from theft, vandalism, acts of nature, fire, and collisions with animals. Many lenders require comprehensive coverage as part of a car loan. It also covers the cost of these damages to victims in case you cause an accident.

uninsured motorist coverage

pays for damages if you are the victim of an accident caused by an uninsured driver. In a "hit and run" situation, you would need this coverage to pay for your medical expenses

collision coverage

pays for damages to your car in case you are in an accident. When pricing collision insurance, consider the cost of your vehicle. There is no point in getting collision insurance that costs more than your car is worth.

human capital

people improving their knowledge and skills in the workplace

money illusion

people tend to think about the value of money in nominal terms, instead of real terms—in other words, even if people are aware and understand the inflation rate, they still tend to think about the monetary amounts of their salaries instead of their purchasing power

unemployed

people who are: age 16 or older; do not have a job; are available for work; and have been job hunting for the past four weeks.

discouraged workers

people who have given up on looking for work In order to be counted among the unemployed, a person must be actively seeking work.

regressive tax

people who make less money pay a higher percentage of their incomes in taxes

non-beneficiaries of inflation

people with cash savings, lenders, and people who do not own properties that gain value from inflation

dividends

periodic payments to stockholders. These payments may be in the form of cash, stocks, or property

sources of federal government tax revenue

personal income taxes, corporate income taxes, and payroll taxes

Information included in a credit report

personal info, types of debt you carry, total amount of debt you owe, specific info for each revolving account, payment history, any debt that has been turned over to a collection agency, the amount of debt due on a monthly basis, the amount of credit available to the consumer, any negative account info, Any disputes about potentially inaccurate information in your credit report, Any requests the consumer has made for additional credit, inquiries, public info

Individual Retirement Accounts (or IRAs)

personal retirement plans. You can open an IRA as soon as you have earned income

life-phase planning

planning that helps outline your various needs through various phases of your life

fiscal policies

policies that are designed to influence spending, such as: changing the level of taxes and altering the level of government spending

contractionary fiscal policy

policy that reduces aggregate spending a government can reduce aggregate spending by decreasing transfers and/or increasing taxes—leading to decreased consumption (C decreases)

universal life

policyholders take on most of the risk. As a result, they can face premium hikes that cover the insurer's costs. In addition, the interest rate on the cash value is not fixed allow people to adjust their premiums. They can pay as much or as little in premiums as they wish. They can also raise or lower the death benefits.

mutual funds

pools of investment tools, like stocks and bonds

incentives

positive rewards that encourage a behavior or they can be negative penalties that discourage a behavior

assets

possessions that have economic value. Assets include cash and investments—such as checking and savings accounts—personal property, stocks, real estate, and business equipment. Assets have economic value that can change over time.

chapter 13 adjustment

preferred over chapter 7. it allows a debtor to keep his/her property and pay debts over a period of 3-5 years

Fair Debt Collection Practices Act

prevents abusive and deceptive practices by debt collectors, such as misrepresenting themselves as law enforcement or reporting false information

rival

prevents another consumer from using that good at the same time.

bubble

prices increase far above the actual value of a company or its assets. When this occurs, certain stocks will be priced much higher than what investors expect of those companies over the long run. After a bubble bursts, there is a market correction, in which the prices of stocks move closer to the actual worth of the companies

lending institutions

primary role of lending institutions is to sell mortgages, or home loans, to consumers. They also provide financing to businesses for major investments and capital expenses, such as new buildings or equipment, startup and/or growth capital for new firms, initial public offerings (IPOs), etc.

menu costs

processes in which businesses have to periodically update their prices

elastic supply

producers will produce a great deal more or less of the good as the price rises or falls

complements

products that depend on each other in such a way that when the price of one good increases it causes a decrease in demand for the related good

nondurable goods

products that have a relatively short lifespan (three years or less) (food, gas, toothpaste)

entitlements

programs such as Medicare and Social Security that have eligibility requirements

Investment scam

promise high rates of return with little or minimal risks. This defies the laws of finance

junk bond

promise potentially high yields but have been rated as high risk due to the increased likelihood of loan defaults or poor business performance

Better Business Bureau (BBB)

promote trust between buyers and sellers by constructing and distributing public reports of unethical business behavior and notify law enforcement agencies when it finds fraud in the marketplace also helps consumers make more informed decisions

advertising techniques

promotions, appeals, red herrings, arguments from authority figures, false either/or statements, straw-man attacks on competitors

local revenue

property and sales taxes

types of taxes

property, sales, income, payroll, excise, tariffs

trademarks

protect certain kinds of commercial intellectual property any name, word, symbol, sound, or color that signifies a specific product receives property rights protection

copyrights

protect works of authorship Intellectual properties like songs, music, books, movies, and video games are works of art that can all be protected

Fair Credit Billing Act

protects consumers against inaccurate and unfair credit billing and credit card practices

fourth-tier bills to pay

provide healthy food and necessary medicine

Health Maintenance Organizations (HMOs)

provide its members with comprehensive health care benefits. HMOs hire doctors to provide health care to member patients; HMOs emphasize preventive care, such as regular checkups and tests, in hopes that patients will be healthier if they have access to regular and inexpensive medical care. HMO premiums are usually affordable, and there are no deductibles to pay. HMOs do, however, require that patients receive care only from doctors and facilities under their contract, and they must pay copayments at the time a medical service is provided.

Public Pension plan

provided for people employed by the federal, state, or local governments. These include police officers, firefighters, teachers, and other public employees some government employees are not required to pay into the Social Security system. Thus, in exchange for their public pension, they may retire to a lower monthly Social Security check or to none at all.

closed-end credit (installment credit)

provides a fixed amount of money to finance a specific purchase for a set period of time. Monthly payments are required. You know the exact amount of the monthly payment, the number of monthly payments, and the total cost of the loan when you sign the contract and receive the loan. (Ex auto loans)

open-end credit (revolving credit)

provides a line of borrowing that you can use and pay back as you want as long as you pay the minimum balance each month. Credit cards offer a form of revolving credit.

remunerative incentive

provides a material benefit for a consumer or producer to act in a certain way

tracking your spending

provides a number of important benefits, including the ability to see exactly how much you have been charged. You are also more likely to notice right away if someone has used your card fraudulently

floater

provides extra coverage for specific high-value items, such as jewelry or fine art

disability insurance

provides income for people who cannot work because they have been injured in an accident or have become seriously ill; the insurer pays you benefits after you have claimed a disability but only for a certain amount of time; Unlike health insurance, the terms of your policy are based on your income;

National consumer law center

provides legal guidance to low-income and vulnerable consumers.

pawnshops

provides loans based on the value of the item used as collateral. When the loan is repaid, the item is returned. If the loan and interest are not repaid, the shop owns the collateral and will sell it to recover the money loaned

federal government

provides services for the entire country; these duties are outlined in the U.S. Constitution.

Consumer Reports

provides unbiased reviews of products because the research comes from a well-established nonprofit group called the Consumers Union

unemployment benefits and safety-net programs

provides workers with protection in areas with high employment and few employers, which limits the monopsony power of employers helpful when jobs become so scarce for unskilled laborers that many people would otherwise become impoverished

purchasing a home

provides you with a tax break through a deductible mortgage interest, allows you to personalize your home, and builds equity. It, too, has costs, such as property taxes, mortgage costs, and house-and-yard maintenance; it also makes it more difficult to move easily

surplus in market

quantity supplied is greater than quantity demanded

types of deductable taxes

real property taxes, state income taxes, general sales taxes, personal property taxes

National Bureau of Economic Research (NBER)

recognized as the authority responsible for tracking and dating economic fluctuations the most respected authority on business cycle activity

Henry Ford's assembly line

reduced the time of building a car chassis from 12.5 man-hours to 93 man-minutes

contractionary monetary policy

reduces the money supply, normally to combat high inflation

tax breaks/cuts

reductions of taxes; mean that taxpayers get to keep more money in their pockets. Although they reduce government revenues, the hope is that taxpayers will either spend that extra money, which helps the economy grow, or invest it, which increases their assets. So, even though the government actually collects less revenue, many people benefit from consumer spending or investment

conditions

refer to other circumstances that may make it easier, or harder, to obtain credit. One example of a condition is the economic outlook, which affects your ability to borrow money.

durable consumer goods

refer to products that are designed to last for a relatively long period of time (cars, washing machines)

"bricks-and-mortar"

refers to an actual building—or, in the context of this module, an act Getting to know the people who work at a bank or credit union is one of the benefits; On the other hand, if the bank is not open, a customer cannot talk directly to a teller to get information, and may feel uncomfortable using the electronic services

exempt property

refers to assets that cannot be sold for cash and distributed to creditors

managed care

refers to health care plans, like HMOs and PPOs, that try to reduce costs by setting up rules for doctors and patients to follow.

statutory law

refers to legislation passed by Congress

shoe-leather costs

refers to people wearing out the bottoms of their shoes walking back and forth to the bank to take out a little bit of cash at a time

Capital

refers to savings and other assets. You can develop capital by increasing your cash reserves in a savings account, money market account, or certificate of deposit

globalization

refers to the close relationships and communications among national governments, corporations, and individuals on a worldwide scale most often used to describe the impact of trade, direct foreign investment, capital flows, migration, the spread of technology, and military presence on national economies promotes the voluntary free trade of goods and ideas; made countries more dependent on one another

monetary policy

refers to the control of the country's money supply by the central bank for the purpose of promoting economic growth policy that aims to regulate the money supply and interest rates, is carried out under the direction of the Board of Governors of the Federal Reserve System

capital gain

refers to the money earned from selling an investment at a higher price than for which it was bought

exchange rate

refers to the price of a currency compared to another currency

liquidation

refers to the sale of a debtor's nonexempt property

money supply

refers to the specific amount of money circulating in a country's economy at a particular period of time. Decreasing the money supply's growth rate is associated with low spending levels throughout the economy, while increasing is associated with higher spending levels

aggregate demand (AD)

refers to the total demand for final goods and services demanded in an economy at a given time and different price levels It depicts the quantity of goods and services that all consumers want to buy at each price level In macroeconomics, the aggregate demand describes the economy as a whole Consumption + Investment + Gov. Spending + (Total exports − Total imports)

potential output

refers to the total output (or gross domestic product) that could be produced in an economy if all resources (like labor and machinery) were fully employed

fiscal policy

refers to the use of a national government's budget to affect that country's total level of spending

external balance

refers to trade deficits that are not too large to finance

primary market

refers to when an investment bank sells a corporation's stock to investors and transfers the funds to the corporation

liability

refers to your legal responsibility for others' safety. If someone gets hurt while on your property or while in your care, you might be liable. This means you are responsible for paying for the injured person's medical bills. Sometimes, people are sued over liability issues.

tax burden

reflects not the actual taxes you pay but the overall impact of paying those taxes. People who pay a larger percentage of their incomes in taxes bear greater tax burdens

trade secrets

regarded as protected intellectual property allow firms and individuals to protect legitimate competitive advantages

Fair Credit Reporting Act

regulates consumer reporting agencies and the use of consumer credit information

FINRA

regulates security firms in the US

OSHA

regulates workplace safety

consumption spending

relates to personal consumption by people like you and your family members

investment spending

relates to private domestic investment, such as factories, machinery, residential construction, and increases in inventory

Dow Jones Industrial Average and the S&P 500

report the values of stocks

long-run aggregate supply (LAS)

represents the potential output level for the economy without overusing any of the economy's resources the curve is vertical because supply is limited by available resources (such as labor, capital, and natural resources) and technology. So beyond a certain point, even if the price keeps increasing, the supply cannot increase any more

claims

requests by policyholders for the insurer to pay for a loss.

skill-intensive products

require more knowledge to produce. Computer equipment and pharmaceutical products are examples

property damage liabilty

required by nearly every state, is one of the most important kinds of car insurance. It covers damages caused to another vehicle if you are responsible for an accident—if you have adequate property damage liability coverage, you will not have to pay for the other vehicle's damages from your own pocket

regulatory agencies

required to write new regulations, solicit comments from the public, and consider this feedback in drafting the final regulations

spendings and savings planning

requires you to anticipate how much you will spend or save over a certain period of time

secured loan

requires you to put up property to guarantee the loan. This property is referred to as collateral. If you do not pay back the loan, the lender can take ownership of the property you put up as collateral

how to be an informed consumer

research government web sites, age, size, funding

market economy

resources ideally are allocated to uses that bring or generate the highest profits

Federal Open Market Committee (FOMC)

responsible for conducting the country's decisions concerning monetary policy Their primary objective is to choose policies that will generate economic growth and stability based on national, international, and regional information. includes all members of the Board of Governors and the 12 presidents from the regional Federal Reserve Systems

trade barriers

restrictions that governments impose on trade. The most common include tariffs and quotas, also non-tariff barriers lead to higher prices for U.S. consumers, lower the quantity of imports, and create higher demand for domestic substitutes. may be justifiable, at least in the short run because of Industries involved with national defense, "Infant industries", When a government wants to put pressure on a foreign government.

financial benefit

results in a monetary gain—more money or higher returns on an investment

rule of 72

reveals how long it will take for an investment to double in value: 72 ÷ interest rate = the number of years it will take for the money to double.

earned income

salary, tips, commission, bonus, overtime, piece rate,

state revenue

sales and income taxes

sources of state/local government tax revenue

sales taxes, excise taxes, and property taxes

savings bonds

saving bonds are registered to a single person or group who are not allowed to resell them. At some point in your life, you may have received a savings bond as a birthday gift. After a given amount of time, you can redeem it (or "cash it in") for a certain amount of money

certificates of deposits

savings certificates with fixed interest rates

International Monetary Fund

says to promote economic development when resources are limited by : Send more children to school, Build infrastructure (such as roads, bridges, and running water), Inform the public about health risks such as malaria, HIV, and parasites, Control corruption, Enable local entrepreneurs to start their own small businesses goals include alleviating world poverty by providing financial assistance and encouraging investment by allowing countries to borrow money

advocacy groups

seek to level the playing field among the interests of consumers, labor, and business. Early advocacy groups sought to educate consumers and laborers and were at the forefront of lobbying Congress to pass regulatory laws. Since the 1970s, they have used lawsuits and the courts to help ensure that existing regulations are properly enforced.

Private insurance companies

sell health insurance policies to individuals

insurance policies

sell insurance policies to consumers. With an insurance policy, the consumer pays a fee (premium) for someone else to take on the risk of a potentially expensive disaster (e.g., illness, death, fire, flood). In return for the premiums paid, the insurance company promises to pay some or all of the expenses should one of these disasters occur

performance-based standard

set target outcomes that firms must achieve

stocks

shares in a corporation or company. When a person buys a share, he or she becomes a stockholder People invest in, or buy, stocks in corporations and companies with the hope that the value of the business and the value of its stock will increase over time. Stocks are not a fail-safe investment. Stock values fluctuate, and investors can lose money

budget constraint

shows a set of product bundles that a consumer can purchase with a limited budget

payoff matrix

shows all possible moves in this situation (or game) and their outcomes (revenue) in millions of dollars

W-2 form

shows exactly how much money was withheld from one's paycheck during the previous year. The amount withheld is based on the information you fills out on your W-4. use the information on the W-2 when preparing to file income tax. also details the amount of money withheld from his paycheck to support his future Social Security benefits should compare your W-2 with your last pay stub of the year

circular flow model

shows how resources, goods, services, and money move around an economy

production possibilities curve

shows the maximum combinations for two goods or services that can be produced in an economy when all resources are used efficiently

aggregate supply curve

shows the relationship between overall price level (P) and national output (Y) from the supply side How are production decisions influenced when the overall price level changes?

aggregate demand curvre

shows the relationship between the overall price level (P) and national output (Y) slopes downward, which suggests a negative relationship between overall price level and quantity of goods and services demanded

aggregate supply and aggregate demand model (AS/AD model)

shows what can happen to the price level and output when aggregate supply and aggregate demand are examined together can be used to find the equilibrium in the aggregate economy.

items included in a contract

signatures, copies, dates, duration, location, fee, complaint, cancellation, refund

credit union

similar to a bank in that it accepts deposits and makes loans; however, unlike a bank, it is operated on a not-for-profit basis and is owned by its members. A credit union typically offers higher interest rates on savings accounts and charges lower interest rates on loans than a traditional bank

inheritance tax

similar to a property tax. It is collected by states based on the value of the property the deceased person passed down to his or her heirs; the heirs must pay an inheritance tax based on the value of this property.

Ponzi scheme

similar to a pyramid scheme in that scammers get money from new investors to pay back people who invested earlier.1 It is named after Charles Ponzi, a clerk from Boston, who perpetrated one of these schemes in 1920.

currency revaluation

similar to currency appreciation. The difference is that under a fixed exchange rate, the authorities set the exchange rate rather than letting it be determined by market forces

currency devaluation

similar to depreciation. The difference is that under a fixed exchange rate, the authorities set the exchange rate rather than letting it be determined by market forces

returns on investments

similar to interest. They are earnings that financial institutions pay to investors for investing—or loaning—their money. The return is usually a percentage of the amount invested.

output velocity of money

similar to the equation you used during the previous activity, but "total expenditures" is replaced with "nominal GDP" nominal GDP / money supply

types of IRAs

simple, traditional, SEP, Roth, and others

Short-run Aggregate supply (SAS)

slopes upward in the short run, which indicates the overall quantity of goods and services will increase as the overall price level increases

stockbroker

someone who buys and sells stock

pro se

someone who files a lawsuit without an attorney

tenant

someone who pays rent in exchange for the right to live in a rental unit

bond

sort of loan from you to a company or a government. When you purchase a bond, you are lending money to that entity for a defined period of time and at a fixed interest rate

Excise Tax

specialized tax levied on specific goods/services such as gas local/state/federal governments can levy these taxes

limit order

specifies an upper price or a lower price when the broker should buy or sell. It usually specifies an expiration date—in case the share price never meets either limit price.

expressly written contract

spells out all the terms of the agreement; an example is a deed to a house or a rental agreement for an apartment

estate plan

spells out various legal actions that should occur after you die, including how your assets should be distributed

Public Interest Research Groups (PIRGs)

started as student-run groups that lobbied the government for changes in social and environmental policies. The national organization, U.S. PIRG, supports many of the state PIRGs and also raises funds for PIRGs and other advocacy groups

Law of Diminishing Returns

states that by adding units of one resource, such as labor, there will be a point where adding additional units of that resource will add less to the output—or even reduce the total output

Fair Credit Reporting Act (FCRA)

states that consumers must be allowed to access the information in their credit reports. The act also allows consumers to correct errors.

law of demand

states that people will buy more of a product at lower prices, and less at higher prices, if everything else remains the same

Blue Cross and Blue Shield

statewide insurance companies in the Commonwealth of Virginia. Blue Cross and Blue Shield are nonprofit organizations that provide only health insurance. Blue Cross provides hospital care benefits, while Blue Shield provides surgical and medical benefits. A combination of Blue Cross and Blue Shield policies can provide a basic health insurance package.

actuaries

statistical experts who collect and compile data about life expectancy for different population groups

getting insurance

step 1: Think about your life situation, identify your insurance needs, and gather your information step 2: Meet with an insurance agent to discuss your insurance options and to choose an appropriate policy. step 3: pay your premiums step 4: When necessary, submit claims to the insurer to pay bills. step 5: Periodically, re-evaluate your insurance

Goods from the Far East

such as exotic spices, salt, and silk, were highly valued in Western Europe during the Middle Ages

Consumer Federation of America

suggests people carry credit lines no greater than 20% of their gross income

producers

supply more goods or services as prices increase and supply fewer goods and services as prices decrease

real property taxes

tax on buildings and land that are levied annually Only real property owners benefit from this tax deduction. Real property is expensive and requires insurance, maintenance, and a constant investment of time and money, which for some taxpayers can be a reason not to purchase property reduce taxable income. The real value of the property tax deduction depends on a person's income tax bracket

tariffs

taxes on imports; have a negative impact on consumer welfare; lead to higher prices and lower quantity demanded for imported goods

estimated taxes

taxes payed to the government four times per year by people who are self employed Instead of having payroll taxes deducted and income taxes withheld, self-employed people pay these

dumping

temporarily slashing prices

conservative investors

tend to prefer bonds and fixed-income investments.

cosigning

that person agrees to pay the bills if you default. You can establish character by paying your monthly bills on time.

strong/strengthening dollar

the U.S. dollar is appreciating compared to a specific group of foreign currencies can negatively impact companies in the United States that export their goods abroad.

Free Trade Agreements

the United States has removed or reduced tariffs and quotas on other countries if they agree to do the same for U.S. products

capacity

the ability to repay a loan. To do this, you must develop capital; refers to a person's ability to repay debt.

voluntary exchange

the act of buyers and sellers freely and willingly engaging in market transactions

marginal benefits

the additional benefits of consuming one—or one more—of something

marginal costs

the additional costs (i.e., what one must give up) that result from getting one more of something

utility

the advantage/fulfillment a person receives from consuming a good/service

real interest rate

the amount charged/paid for the use of money after adjustment for inflation

nominal interest rate

the amount charged/paid for the use of money before adjustment for inflation

debit card

the amount is deducted immediately from your checking account; Your debit card is also your ATM card. It is sometimes called a "bank card" or "check card."

equilibrium quantity

the amount of a good/service at the price at which the amount supplied equals the amount demanded

principal

the amount of money borrowed when taking out a loan; the money you deposit in the bank

compounded interest

the amount of money earned on the principal of an investment plus any interest earned previously

price

the amount of money that consumers pay for a good or a service in the market

deductible

the amount of money you pay before the insurer will pay a claim; Your deductible affects the price of your policy. If you agree to a higher deductible, your policy often will cost less

coverage

the amount of protection the insurer will provide. Different kinds of insurance provide different kinds of coverage

marginal tax rate

the amount of tax paid on the last dollar of taxable income

deficit

the amount that the government overspends during a certain period of time, such as the amounts spent within a year

gross pay

the amount you earn before paying any income taxes

net pay

the amount you receive after all income taxes are deducted

purchasing power

the amounts of goods/services that can be acquired per unit of currency

average cost

the average amount of money spent on producing each unit of the product

federal reserve

the central banking system of the United States plays many roles, such as conducting monetary policy, which influences consumer spending, employment, and prices

net change

the change in the stock's price from the previous day's closing price. A stock is considered "up" if the net change was positive and "down" if it was negative

privatization

the changing of something from government control/ownership to private control/ownership

investment portfolio

the collection of all the different types of investments that belong to you

optimal choice

the combination of a budget constraint and consumer preferences the highest point on the indifference curve that is still within the consumer's budget constraint

merger

the combination of two or more companies, whether through the creation of a new entity or by one concern absorbing another often classified as horizontal, vertical, or conglomerate

secondary market

the corporation is no longer receiving money from the sale. The stock is changing hands between only a buyer and a seller.

Price-to-Earnings Ratio

the current stock price divided by the earnings per share for the last four quarters. P/E ratios are one way to evaluate how a company has performed in the past

balance of trade

the difference in the monetary value of a country's exports and imports for a specific period

inheritance

the distribution of wealth among descendants after a family member dies.

weak/weakening dollar

the dollar is depreciating, or losing value compared to a group of foreign currencies makes it more expensive to import goods from abroad since the dollar has less purchasing power than before makes U.S. firms more competitive on the international market because U.S. goods cost less. This increases the demand for U.S. goods in other countries. makes it more expensive for consumers to travel abroad and import foreign goods but makes it easier for U.S. companies to export goods to other countries

overtime

the extra pay employees can earn for working more than their regular hours, which, for most workers, would be more than 40 hours per week

negligence

the failure to take proper actions or precautions

closing price

the final price of the day. The stock listing is shown in bold type if the closing price changed by more than 5% compared to the previous day's closing price.

budget surplus

the government collects more taxes than it spends in a given year

daily high

the highest price paid for the stock that day

diminishing returns

the idea that for every added unit of capital, productivity increases less and less

discount rate

the interest rate charged by a Federal Reserve System to depository institutions, such as your local bank, to borrow short-term funds determined by the Board of Governors

annual percentage rate (APR)

the interest rate, compounded over one year and expressed as a percentage, charged for borrowing money

eviction

the landlord cannot remove you or your property from the unit without filing a lawsuit and getting a judgment from the court to do so

bankruptcy

the last option for consumers who are in deep financial debt. It has long-term ramifications for those who file. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13 stays on your credit report for 10 years and makes it difficult to get a loan, a credit card, a job, or even life insurance.

income potential

the level of compensation for work that a person might achieve based on their skills and training

daily low

the lowest price paid for the stock that day

product market

the market where products are sold

credit line (limit)

the maximum amount of available credit a cardholder may access

bourgeoisie

the middle class—who usually owned property and were professionals, businesspeople, and merchants. Though they were not rich, they were financially comfortable.

leakage

the money that escapes from the circular flow

Discretionary income

the money you have left over after paying for the essentials, such as food, clothing, utilities, insurance, and shelter. used to pay for nonessentials—dinners at restaurants, movie tickets, music downloads, gifts, computer gadgets, video games, and so on. usually spent on "fun stuff"; however, it can also cover emergencies or unexpected expenses or be saved.

velocity of money

the number of times, on average, that a unit of money—for instance, a dollar—gets spent in one year total expenditures / money supply

Marketing

the overall plan businesses use to sell their goods or services

landlord

the owner of the rental unit

Annual Percentage Rate (APR)

the percentage at which interest is calculated for one year. To get the percentage at which interest is calculated for one month, simply enter the APR as a decimal and then divide by 12 months.

yield

the percentage return on investments provided by dividends over the last year.

springing power of attorney

the person authorized to take over your decision making must first prove you are incapacitated

durable power of attorney

the person you select does not have to prove you are incapacitated and can act on your behalf at any time.

risk

the possibility of danger or the chance of loss. Life is inherently risky

market value

the price a seller can expect to receive for a product in a competitive marketplace often change in response to supply and demand

piece rate

the price paid for the production of an object or good. For example, garment workers generally receive a salary as well as a piece rate (based on the number of garments made)

open market operation

the principal monetary tool used by the Federal Reserve System consists of the purchase and sale of government bonds

underwriting

the process by which An investment bank helps the corporation sell the stock for a fee

consumption

the process by which people use goods or services to maximize satisfaction

e-commerce

the purchase of goods and services online

deductions

the reductions of a person's income that will be taxed and paid to the IRS

salary

the regular compensation people receive for their work.

economic freedom

the rights of individuals to make their own economic choices, such as where to work, what to consume, and how much to invest

cost-push inflation

the rise in prices that occurs when, as supply decreases, prices increase

1040EZ

the simpler (or "EZ-ier") version of the 1040 tax form, which most Americans use if... you earned less than 100,000 during the previous year, you earned less than 1,500 in interest during the previous year, you have no dependents, your only sources of income were wages, salary, tips, taxable scholarships, or unemployment compensation

workplace skills

the skills a worker must possess to get the job done

Black Tuesday

the stock market crashed on October 29, 1929

public debt

the sum of all federal budget surpluses and deficits to date, meaning that it is the total amount of money the U.S. government still owes

perfect information

the theory that all consumers and producers know everything about all products in the market at all times

expenses

the things on which you spend money, such as food, clothing, rent, and transportation

labor productivity

the total amount of a country's output (its gross domestic product or GDP) divided by the amount of labor needed to produce it is usually measured as a country's total number of workers or the total number of hours worked

total expenditures

the total amount of money spent on all goods/services in a country in one year

finance charges

the total dollar amount paid to use credit--could include interest, service charges, application fees, and other costs for using credit instead of cash to purchase goods and services; can include transaction fees

aggregate supply (AS)

the total supply of goods and services that businesses plan to sell during a specific time period

investment

the use of money in the hope of making more money

intrinsic value

the worth of something in and of itself, instead of having a worth based on what that thing represents

price stability

there is no inflation, where the general level of prices increases, or deflation, where the general level of prices decreases. provides a favorable economic climate for consumers and businesses.

fixed expenses

they must be paid yearly or monthly

dumpster diving

thieves go through your garbage to find documents with your personal information

medical payments coverage

this pays the medical bills you and your passengers incur after a car accident. Your own policy's coverage for medical payments also applies to you even if you are riding in another person's car.

reason companies are in foreign countries

to avoid tariffs/quotas, to avoid political pressure, to gain access to natural resources, to find low-cost labor, to create competition

consumer vigilance

to be "on the lookout." Protecting personal information is one way to safeguard against fraud can reduce the possibility of identity theft

Relationship Management

to build long-term relationships with customers. If you are satisfied with a particular good or service, you might like some of that same business's other goods and services and inform your family and friends about the company

Primary roles of FDIC

to increase people's confidence in the country's banking system and to eliminate bank runs makes sure that if a bank closes or goes bankrupt, all of the bank's customers will receive their deposits and interest earnings—up to a maximum limit for each person. In addition to providing insurance to bank customers, the FDIC also helps supervise financial institutions and their business practices, takes over and manages failed banks, and carries out other consumer-protection tasks

economic goal of government policies

to respond to the ups and downs of business cycles and influence economic growth

default

to stop making your mortgage payments; the lender likely will foreclose on and repossess the house, which means the lender will evict you and most or all of the money you have invested will be lost People default for all sorts of legitimate reasons, including the loss of your job or other financial calamities

total productivity

total output divided by total input

OTC stocks

traded directly between two parties rather than through a broker or other third party

Testamentary trusts

transfer assets into a trust when a person dies. This trust must go through probate because the transfer occurs after death. The main purpose of this type of trust is to control how assets are distributed to beneficiaries

death benefits

two different types of Social Security death benefits. There is a one-time, lump-sum payment of $255 provided to a family member after the death of a Social Security recipient. Only the spouse or minor child of the deceased is eligible for this payment under certain circumstances. There are also survivor benefits in the form of monthly financial support. These are sometimes available to family members left behind after the death of a Social Security recipient

non-tariff barriers

ultimately limit imports of foreign-made products (Ex. embargo)

early termination

under certain conditions, you can leave before the lease ends

Convention on International Trade in Endangered Species (CITIES)

under its leadership, governments around the world, including the United States, agreed to ban trade in elephant ivory tusks

Great Depression

unemployment soared, and people cut back dramatically on buying goods and services as they struggled to make ends meet. When thousands of banks closed, many customers lost their savings deposits. Many people were suddenly poor and struggling unemployment rate soared to 24.75%.2 In addition, many workers were underemployed and did not have enough money to support themselves and their families

economic indicators

unemployment, gross domestic product (GDP), inflation

unanticipated inflation

unexpected inflation challenging because expected rates may not match actual ones causes people to lose confidence in economists' ability to predict inflation; As a result, they may be more hesitant to enter into long-term loans and other contracts

slander

untrue statements about your character expressed in public or in print, respectively

externalities

unwarranted costs or benefits of a product or service that affect a third party. They can be positive or negative and both are sources of market failures

ATM

used for electronic monetary transactions; Typically, if the ATM transaction is with your bank or credit union, there is no charge. But, if the ATM transaction is with a different bank or credit union other than your own, there typically will be a charge ranging between $1.50 and $3.00

Capital goods

used to make other goods (such as machinery), increase production (like a saw), or provide a service (like a computer)

chapter 15

used with insolvent cases of debtors/property. it is subject to laws of the US and the laws of one or more foreign countries

commission

usually depends on sales and is based on a percentage of the sales price. So, a salesperson might earn a commission for each item sold

adjustable-rate mortgage (ARM)

varies, depending on the current interest rate—also known as the prime rate. This means the rate will increase or decrease based on the current prime rate, which, in turn, means you could end up paying more or less interest over the course of the loan. you might initially get a good interest rate, but your payments would go up if the overall interest rates increase

consumer responsibilities

verify statements from their credit card companies and banks, among other accounts; They also have a responsibility to verify their receipts; reporting the fraud and seeking remedy

poverty trap

very low-income countries sometimes find themselves stuck in a perpetual state of poverty

checking account

very similar to a savings account except that it is easier to withdraw money in the form of a check or an ATM transaction. The money in a checking account usually earns a lower interest rate than the money in a savings account because the balance tends to be less steady

stock markets

viewed as indicators of overall economic performance

major contributors to the national debt

wars, economic downturns, reduction of tax rates

historical cost

what you paid for an asset

operating costs

what you pay to keep the asset working, in good condition, and in compliance with the law

Replacement cost

what you would pay if you had to replace the asset right now

offshoring

when a company moves its physical productions and/or services to another country

outsourcing

when a company uses labor from another company.

excludable

when a consumer may not use the good unless the consumer pays for it

imports

when a country buys goods from other countries

comparative advantage

when a country can produce a good or service at a lower opportunity cost than other countries.

disinflation

when a high inflation rate is reduced

single firm

when a pure monopoly has just one firm and the firm tends to become another name for the industry (NFL)

non-excludable

when all people can use it, even if they do not pay for it

trough

when economic output hits its lowest level before beginning to recover and entering an expansionary period again

balanced budget

when income equals expenses

shortage in market

when market price is less than equilibrium price

appreciated dollar

when the dollar becomes more valuable compared to a particular foreign currency

natural monopolies

when the most efficient production can be offered by only one provider can provide club, common, and public goods examples include utilities such as water, gas, and electricity

trade war

when two or more nations create trade barriers to limit the exchange of goods among the involved nations

closing

when you sign the documents related to buying the house

peak

where economic output is at its greatest

stock exchange/market

where stock is bought and sold

long-run equilibrium

where the AD curve and long-run aggregate supply (LAS) curve intersect

Short-run equilibrium

where the Short-run Aggregate Supply (SAS) curve and AD curve intersect

free market society

where the government does not regulate goods and services, although the government can help to promote a healthy economy and governed by market forces such as supply and demand

mortgage

where the lender uses the property—in this case, the house—as collateral even though you can live in or rent the house, you do not actually own it until you have paid off the entire mortgage. Mortgage payments must be made each month. If you fail to make your payments, the lender can take over the property in a process known as a foreclosure.

investment risk tolerance

whether you are better suited to low-risk or high-risk investments. Your risk tolerance will likely change as you grow older, earn more or less income, gain more knowledge, own property, have a family, and so on

late payment fee

will be assessed against your account if the credit card company does not receive your monthly payment by the due date, as shown on the billing statement

loan officers

work for banks and other financial lending institutions. They assist consumers and businesses in applying for and receiving loans and mortgages, verify information on a loan application and determine the applicant's creditworthiness by checking credit reports and other documentation, and take on sales roles

deduction

works best for people who live in a state with no income tax or where the sales tax deduction is larger than their state income tax deduction can be really helpful in reducing a taxpayer's taxable income taxpayers can deduct the costs of property taxes and income taxes when they calculate their taxable income

debt settlement company

works on your behalf to reduce the amount of your unsecured debt. This is a negotiated arrangement with your creditors. The reduction can be anywhere from 40% to 60% of your outstanding debt

Mine Safety and Health Administration (MSHA)

works to ensure safe and healthful workplaces for the nation's miners.

regulations

written by regulatory agencies, sometimes called administrative law

Thorstein Veblen

wrote a book titled The Theory of the Leisure Class; he presented the idea that some goods or services are not consumed or used for their fundamental, or basic, intrinsic value. Instead, they are purchased to improve the purchaser's reputation or status

Uninsured or Underinsured Motorist Protection

you can ask your own insurer to pay if an uninsured or an underinsured driver injures you in a car accident. Keep in mind that this protection covers only injuries, not property damage.

rental housing

you can move easily and will have few maintenance expenses. It has costs, too, including increased costs for the actual rent, no equity, and restrictions on what you can do to your home

renting a home

you have initial costs, such as the security deposit, first and last months' rent, and sometimes a renter's fee. Yearly costs include the monthly rent and can also include renter's insurance.

flexible expenses

you have some control over when and whether you want to spend money on them

extension

you must fill out and submit IRS Form 4868 by the April 15 deadline does not automatically mean that you can pay your taxes later without a penalty. To avoid a penalty and/or interest, estimate how much you owe the federal government and pay that amount when you file Form 4868 on or before April 15 you have six months to file your return; Even with the extension, if you owe taxes that have not already been paid, you will owe the government interest

barter trade economy

you must find someone who wants what you are trading

traditional IRA

you pay taxes on the money you contribute to the plan when you withdraw it. it allows you to save money for your retirement even if your employer does not offer you this option

roth IRA

you pay taxes on the money you save before you deposit it you pay taxes on the money that you contribute to the IRA during that year. For this reason, the Roth IRA does not have an immediate tax advantage. But, in the future, there may be tax savings: when you withdraw the money from a Roth IRA, there are no additional taxes to pay

audit

you will be asked to provide information, documents, and answer questions If all information is accurate and clear on your tax return, you probably will not be audited. If some of the information appears incorrect, you could receive either a phone call or a letter from the IRS stating what is wrong with your tax return, what you need to do to correct it, and contact information for the auditor assigned to you. Sometimes, the IRS computer system flags tax returns simply because something seems incorrect. taxpayers can dispute audits through the US Tax Court

Comprehensive Physical Damage

your insurer pays the repair costs without considering whether someone was at fault. This insurance covers damage not caused by a collision; involves a deductible

adjusted gross income

your total, or gross, income minus any adjustments. These adjustments include IRAs, student loan interest, and tuition and fees.

lifestyle

your way of living, and your decisions about how to spend money

Electronic banking

—also known as e-banking, virtual banking, and online banking—refers to services that allow customers to access bank information, conduct financial transactions, make deposits and withdrawals, and pay bills electronically without visiting a bank

trade

a commercial transaction involving the sale and purchase of a good, service, or information

sunk cost

a cost that is already incurred in the production process and cannot be recovered

limited liability company

a cross between the limited liability feature of a corporation and the taxation and operational features of a partnership.

capital resources

a factor of production used by entrepreneurs to bring goods and services to market

determinant of supply

a factor that increases or decreases the market supply of a good or service (Resource prices, Technology, Price of related goods, Producers' expectations, Number of suppliers)

why interdependence is beneficial

Countries that are interdependent will not want to conflict with each other in the interest of their economic interests.

production function

Explains how much production is possible if the number of workers and equipment remains the same. Measured in three different ways: by the total product, average product, and marginal product.

accounting profits

Profits that do not account for opportunity cost in their calculation

Interest rate

amount charged or paid for the use of money

change in demand

a shift in market demand as a whole that is based on factors other than price represented by a shift in the demand curve

perfectly competitive market

a type of trade characterized by Products are homogeneous. There are many buyers and sellers. Buyers and sellers have perfect information. There are few or no barriers to entry and exit. Businesses are price takers.

price floors

a way the government tries to influence the economy to protect businesses and workers from prices and wages dropping too low

determinants of PED

availability of substitute goods; whether the good is a necessity or a luxury good; the length of time after a price change; the portion of the buyer's income the good absorbs; brand loyalty; and who is the payer

fixed costs

costs that remain fixed no matter how many units of goods or services you produce

consumers

demand more of a good or service as the price drops and demand less of a good or service as the price increases

market structure

describes the relationship between buyers and sellers; types include perfect competition, monopoly, and oligopolies

law of supply

everything else being equal, producers will increase the quantity supplied when price increases, and decrease the quantity supplied when price decreases

determinants of PES

excess capacity; factor substitution; and the length of the production process

laws of supply and demand

explain the relationship between prices and quantities

determinants

factors other than price that influence supply or demand and cause shifts in supply and demand curves

determinants of demand

factors that increase or decrease people's demand for a good or service (income, tastes and preferences, prices of related goods and services, consumer expectations, number of buyers)

consumer market

households purchasing and selling goods and services for their own good

demand

how much of a particular good/service a consumer is both willing and able to buy at different prices in a specific time period, all things remaining the same rules for it are from viewpoint of consumer

factors of production

human resources, natural resources, capital resources, entrepreneurship

economic profit

includes opportunity costs as a part of the total costs when calculating profit

firms

make choices regarding the resources they ought to buy and the goods and services they ought to produce

physical capital

manmade goods, such as tools, which are used to produce other goods

involuntary exchanges

not preferred because they do not happen at agreed upon prices

benefits of sole proprietorship

taxes, healthcare, efficiency, independence, home office

quantity supplied

the amount of a product or service released on the market at a given price when all other variables remain the same changes are caused by a change in the price of a good or service

quantity demand

the amount of a product/service consumers are willing to buy at a given price, when all other variables are the same decreases as price increases represented by movement along the demand curve as price changes

cost

the amount of money that is spent on the inputs used in the production process

marginal cost

the cost of producing one more unit of the good

consumer surplus

the difference between a buyer's willingness to pay and the market price Graphically, it's the area of the triangle that is formed between the demand curve and the equilibrium price line

market price

the economic price for which a good/service is offered in the marketplace

consumer goods

the end result of production and manufacturing that customers see on store shelves

marginal product

the extra product as a result of an additional unit of input

buyer's willingness to pay

the maximum price at which an individual is still willing to buy a good or a service affected mainly by three factors: how much the consumer values the good, the consumer's income, and the existence of substitutes

injection

the money that is added to the circular flow (ex. private investments and gov. spending on goods/services)

equilibrium price

the one price at which quantity supplied equals quantity demanded

elasticity

the response of consumers and suppliers to changes in price equal to the percentage change in quantity divided by the percentage change in price if less than one, the good is inelastic and changes in price lead to little or no changes in the quantity demanded If greater than one, the good is elastic and the quantity demanded is very sensitive to price changes If equal to one, it is unit elastic and a change in price causes an equal, but opposite, change in the quantity demanded

marginal revenue

the revenue that was gained from the sale of one more unit of a good

supply

the varying amount of a good or service that producers are willing and able to make available at different prices in a particular time period rules for it are from viewpoint of producer

absolute advantage

when a country can produce a good or service using fewer resources than other countries.

consumer sovereignty

when consumers tell businesses what they want through their spending habits