Unit 7 Study Tool

If Marie spends $15 a month on movie tickets and $5 a week on soda and candy in the vending machines at school her annual budget for these two items will be __________________. (7.4)

$440.00

__________________ are the things on which you spend money, such as food, clothing, rent, and transportation. (7.2)

Expenses

__________ which includes government tax policies, can affect tax-deductible expenses and, as a result, influence financial planning. (7.1)

Fiscal policy

Carlos is a senior and is looking forward to taking his girlfriend, Rachel, to the prom this spring, but he needs to save his money to rent a tux. Carlos works part-time and brings home $150 each week. He bought a used car last month and his payment is $200 per month. His parents cover his insurance, but he must cover his gas to and from work and school. Carlos also has a cellphone, which costs $85 per month. He hopes to attend college this fall and plans to live at home, but he needs to save up to pay for his tuition and books. In order to afford the fall semester, he needs to contribute $200 each month to his college savings account. What can Carlos do to decrease his monthly spending? (7.4)

Lower his cellphone bill by changing to a cheaper plan.

True or False: A budget is a plan for expenses and income. (7.4)

True

True or False: A grant doesn't have to be repaid unless the obligations associated with grant are not met. (7.5)

True

True or False: A net worth statement is a snapshot of your financial situation at a specific point in time (7.3)

True

True or False: Assets can include antiques, fine art, and other collectibles. Their value can increase or decrease, depending on factors in the market. (7.3)

True

True or False: Money management is the process of organizing and controlling financial resources in order to achieve short- and long-term goals (7.1)

True

True or False: People on fixed incomes are hurt by inflation because their incomes can now buy fewer goods and services and their purchasing power is reduced. (7.1)

True

True or False: Post-secondary educational institutions include not only colleges and universities, but also junior colleges and technical schools. (7.5)

True

True or False: The best way to start the budgeting process is to start tracking all of the money spent for a period of time, usually a month, to understand where money is going. (7.4)

True

True or False: Unanticipated events can result from emergencies—like a flat tire. (7.2)

True

True or False: Unanticipated income are payments received that are not foreseen or may happen at irregular intervals. These can include bonuses and gifts. (7.2)

True

Credit card bills, phone and utility bills, rent, insurance are examples of ____________ (7.2)

anticipated expenses

Generally speaking, a car is a ______________ asset. (7.3)

depreciating

As compared to private student loans, federal student loans: (7.5)

have lower interest rates and more flexible terms

Joe sold stock for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 2 percent return on the $1,000 if he had deposited the money in a savings account instead of buying the stock. The economist's analysis in this case incorporates the idea of: (7.1)

opportunity cost

The Federal Work-Study Program allows students to earn money to pay for school by working ______________. (7.5)

part-time

A ____________ is a regular payment, often at monthly or biweekly intervals, made by an employer to an employee, especially in the case of professional or white-collar employees (7.2)

salary

The money you have left over after you have deducted all expenses from your income during a budgetary period is called _______________. (7.4)

savings

Saving money means giving up the opportunity cost to: (7.4)

spend in the present

Your liabilities are what you owe. These can include: (7.3)

student loans

To make an economic decision about selecting post-secondary education, the potential earnings of the career should be compared to: (7.5)

the cost of the training or education for the career

Your house is valued at $89,000 with a mortgage balance of $80,000. Your minivan is worth $20,000. You owe $16,000 on this auto loan. Related only to the house and mini-van purchase, what is true of the value of your assets, liabilities, and net worth? (7.3)

-Your total liabilities equal $96,000 -Your net worth equals $13,000 -Your total assets equal $109,000

Your entertainment expenses are $100.00 a month. You decide to make one Saturday each month a "game night" with your friends at home, saving you $25.00 a month. Your short-term goal is a $75.00 concert ticket. It will take ______ months to reach your goal. (7.1)

3

College graduates with a bachelor's degree earn on average _____% more than high school graduates. (7.5)

66%

Depreciating assets are possessions that decrease in value over time. Examples include __________________________. (7.3)

computer equipment