Personal Finance Final Review 1-5
Competition
A characteristic of Market Economies. In market economies, businesses can compete with other businesses who are offering similar products or services.
Economic Freedom
A characteristic of Market Economies. In market economies, individuals and businesses have the ability to make their own choices.
Limited Government Influence
A characteristic of Market Economies. In market economies, the government plays a limited role. This encourages economic freedom on the part of individuals and businesses.
Private Ownership
A characteristic of Market Economies. Individuals and companies (as opposed to the government or state) own the means to make products or deliver services.
Economic Incentives
A characteristic of Market Economies. We can think of economic incentives as the positive and negative effects of an economic decision.
Financial Services
A common financial service offered today; Financial institutions also offer other financial services to help individuals manger their money such as financial planning and tax assistance.
Payment Services
A common financial service offered today; Financial institutions often offer payment services to businesses and individuals.
Savings
A common financial service offered today; Many financial institutions offer accounts in which individuals can safely store their money for a period of time.
Loans
A common financial service offered today; Many financial institutions provide credit to individuals who wish to borrow money.
Excise Tax
A federal and/or state tax on specific goods such as gasoline, tires, airfare, and cigarettes.
Inheritance Tax
A government tax on property or assets that are passed on after someone has died and bequeathed the assets to another.
Check Cashing Business
A potentially problematic Financial Institution. These do not require that an individual be an account holder: they will cash any valid check. However, in order to cash the check, they take a percentage of the amount of the check.
Rent-to-own Services
A potentially problematic Financial Institution. These lease furniture, electronics, and other items to consumers who can own the item if they make a certain number of payments (usually weekly or monthly). These services often target low income individuals, offering them higher end products than they might be able to afford using other payment options.
Payday Loan Businesses
A potentially problematic Financial Institution. These may offer cash advances, delayed deposit loans, and postdated check loans.
Pawnshops
A potentially problematic Financial Institution. These offer individuals a loan based on the value of the person's possessions, such as jewelry or other items of some value. Items use these to obtain cash quickly.
Market Economies
A type of economy in which the prices of services and goods are determined through a free system.
Gift Economies
A type of economy that consists of situations where goods and services are exchanged without an expected or immediate return.
Barter Systems
A type of economy that features a direct exchange of goods without the use of money or another medium of exchange.
Socialist Economy
A type of economy where the government operates as the central authority, guiding the economy and controlling (owning) many of the businesses.
Planned Economies
A type of economy where the prices of goods and services are determine by the government or state.
Depository Institutions
A type of institution that receives its money from customer deposits. In other words, they are what we typically think of when we hear the word "bank." Their profit is largely created through the interest paid on loans made to customers
Nondepository Institutions
A type of institution that receives its money from other sources. They are institutions like mortgage companies, finance companies, and insurance companies.
Life Insurance Companies
A type of non-depository financial institution. These companies sell life insurance, which is paid out by the company on the death of an insured individual.
Brokerage Firms
A type of non-depository financial institution. These manage and facilitate the purchase of stocks, bonds, and other types of investments.
Mutual Fund Companies
A type of non-depository financial institution. They are investment companies; they sell shares to individuals and pool funds to buy financial securities. As with other non-depository institutions, monies deposited into these institutions are not insured.
Gross Income
All sources of income.
Certificate of Deposit (CD)
Another type of account commonly offered at commercial banks as well as other institutions. These accounts pay a standard rate of interest on the balance, but the money must be left in the account for a specified period of time.
Personal Risk
Financial Risks; Individuals may also encounter situations due to health, safety, and so on that can create challenges in meeting personal financial goals.
Interest Rate Risk
Financial Risks; when we borrow money in the form of a loan or save money, interest rates will affect these activities.
Inflation Risk
Financial risks; Prices on an item or service may rise or fall. Deciding to buy at a particular time runs the risk that a price may fall after the purchase, or rise before the purchase.
Income Risk
Financial risks; While individuals make goals and strategies based on their current income, few individuals have guarantees that their income will stay the same.
Supply and Demand
Market economies operate on the principle of this.
Head of Household
One of the five different categories for filing a tax return; This includes a single individual who maintains a household for one or more dependents (paying more than half of their support).
Qualifying Widow(er)
One of the five different categories for filing a tax return; This includes individuals whose spouse has died within the past two years and the individual is supporting at least one dependent.
Married, Filing Jointly
One of the five different categories for filing a tax return; This includes married individuals (with or without dependents) who combine their income on one tax return.
Married, Filing Separately
One of the five different categories for filing a tax return; This includes married individuals (with or without dependents) who each file a separate tax return on only their own income.
Single
One of the five different categories for filing a tax return; This includes never-married, divorced, or legally separated persons who do not have any dependents during the tax year.
Place
One of the four "Ps" to look for when deciding which financial institution to use; Another important when choosing are the locations and other access points.
Price
One of the four "Ps" to look for when deciding which financial institution to use; When comparing financial institutions, price can be an important factor such as with interest.
Products
One of the four "Ps" to look for when deciding which financial institution to use; While many financial institutions offer similar products you may find that some fit your needs better than others.
People
One of the four "Ps" to look for when deciding which financial institution to use; While more and more of our banking takes place electronically, customer service is still important when we experience problems or need help with some aspect of our banking.
Land
One of the four different categories of limited economic resources. In the study of economics, this refers not only to physical land, but also to the natural resources that we use, including lumber, minerals, oil, and so on.
Capital
One of the four different categories of limited economic resources. This refers to all the manufactured tools and aids used to produce consumer goods.
Entrepreneurial Ability
One of the four different categories of limited economic resources. This refers to the human abilities to find resources, make business decisions, and create new products.
Labor
One of the four different categories of limited economic resources. This refers to the physical and mental work necessary to create goods and services.
Neutral
One of the three different stances that a government can take in regards to fiscal policy. A stance that indicates a balanced economy. In most cases, this stance leads to more tax revenue for the government.
Contractionary
One of the three different stances that a government can take in regards to fiscal policy. This stance implies that the government is collecting more money than it spends or allocates.
Expansionary
One of the three different stances that a government can take in regards to fiscal policy. This stance implies that the government is spending or allocation more money than it collects.
Stock-Held Savings Institutions
One of the ways that savings institutions are organized; these are owned by stockholders.
Mutual Savings Institutions
One of the ways that savings institutions are organized; these are owned by the individuals who deposit their money in the institutions.
Economy
Scholars define this as "the range of economic activity in a country, region, or community."
Stocks
Shares of ownership in a company.
Estate Taxes
Taxes levied on a person's estate when that person dies. To do this, the government takes the market value of the person's property, investments, and other parts of the estate and imposes a tax on the overall estate value.
Income Taxes
Taxes that are imposed on the amount of money that each person earns during a calendar year.
Trading
The buying and selling of stocks.
Opportunity Costs
The sacrifices of when resources are given away for "free" when they could have been used to create another item or used for another purpose.
401k
These accounts are those that are partially funded by employers using a portion of wages before tax.
Money Market Mutual Funds
These are accounts in which a mutual fund company pools the accounts of depositors and invests the money in different financial assets.
Bonds
These are investments that promise to pay a certain amount of interest on the principle amount after a given time period (normally more than one year).
Commercial Banks
These are probably the most well-known depository institution. They are funded through deposits into checking and savings accounts and they provide services such as mortgages, personal loans, and bank-issued credit cards.
Tariffs
These are taxes that are levied on imports and/or exports.
Opportunity Costs
These are the things that you give up when you make a choice.
Resources
These are things like land, minerals, forests, oil, and so on that exist in the world and can be used to create goods.
Savings and Loans Institutions
These are those that receive money from households like commercial banks, but they use over 70 percent of their money on home mortgages. The deposit accounts are insured up to $100,000, similar to commercial banks.
Anti-trust Suits
These are used to encourage competition in a particular industry and to break up monopolies.
Regressive Tax Systems
These charge everyone the exact same percentage, amount, or proportion in taxes.
Web-Only Financial Institutions
These depository institutions do not have physical locations, and conduct all business with customers online. Because these financial institutions have a lower overhead, they can sometimes offer higher interest rates on savings accounts.
Monopolies
These happen when one company has complete control over a particular product or industry.
Economic Resources
These include natural and manufactured resources that go into products and services.
Progressive Tax Systems
These require those with higher Incomes to pay a greater proportion of their income in taxes. In other words, the more income people make, the greater the proportion of their income will go toward taxes relative to those with lower incomes.
Internal Revenue Service (IRS)
This collects federal income taxes.
Shared Decision-Making
This involves having two or more people negotiate or compromise to make financial decisions.
Tax Audit
This is a detailed examination of a return by the IRs.
Free Enterprise
This is a pure market economy, also called a Laissez-Faire economy. It has no government presence.
Laissez-Faire
This is a pure market economy, which means that there is no governmental presence in economic transactions.
Open Outcry
This is a sort of auction for stocks in which traders verbally submit their offers.
Economic System
This is a structure within a society that organizes the production, distribution, and consumption of goods and services.
Credit Unions
This is a type of depository institution that are nonprofit, member-owned institutions. Like banks, they are able to provide loans through deposits to checking and saving accounts. However, loans are typically only given to members of the credit union, who are also partial owners of the credit union.
Federal Deposit Insurance Corporation (FDIC)
This is an insurance agency that is supported by the government. It insures a personal account in a commercial bank for up to $100,000. However, these same accounts are not insured or protected if they are provided by a mutual fund company, insurance company, or brokerage firm.
Capitalism
This is characterized by privately owned businesses (or means of production) that are engaged in making a profit.
Alternative Minimum Tax (AMT)
This is designed to make sure that those with higher incomes pay their fair share of taxes, even fi they have a large number of deductions that take their adjusted gross income into a lower tax bracket.
Stock Market
This is simply a place (physical or virtual) where stocks or shares in a company are bought and sold.
Income
This is simply monetary payment that we receive in exchange for our labor, goods, or services. Three types are earned, investment, and passive.
Maturity Date
This is the end of a CD account time whe n the money can be withdrawn. The interest rate on a CD depends on the amount of the deposit and the duration of the CD.
Economics
This is the study of the ways in which money is created and used in society.
Global Trade
This is the transportation and exchange of goods, services, resources, and money across international borders.
Adjusted Gross Income
This is your gross income minus specific deductions.
Capital
This refers to the goods and tools used to make products.
Fiscal Policy
This refers to the governmental allocation and collection of money within the state.
Labor
This refers to the human ability to produce goods and services, and includes not only physical labor but also talent and skills.
Time Value of Money
This refers to the increases in an amount of money because of the interest earned on the money.
