Economics and Personal Finance Honors Final Exam

Command Economy

Total government control (ie: North Korea)

Traditional Economy

Based on customs and what has been done in the past (ie: Uncontacted Tribes in the Amazon)

Market Economy

Individual buyers and sellers have control (ie: Japan)

Mixed Economy

Individuals carry on their economic affairs freely, but the government does also have a bit of control (ie: US)

Factors that affect demand

Change in income, weather, complimentary good price changes, substitute good price changes

Factors that affect supply

Cost of inputs, number of suppliers change, weather

Which way do supply and demand go on a graph?

Supply goes up, demand goes down

What direction is an increase and decrease on a supply & demand graph?

Increase shifts right, decrease shifts left

What is GDP?

Gross Domestic Product, all that is produced in a country in one year

Why does the FED raise interest rates?

Lower demand and raise price stability

What tools does the Fiscal Policy have?

Government spending and taxes

What are the benefits of worker unions?

Better job safety, better paid leave, easier to protest things

What is done to protect intellectual property and why?

Copyrights, trademarks, and patents, to increase innovation

Why are monopolies illegal?

They decrease competition, are unfair, and usually harm consumers

What agency is responsible for regulating unfair business practices and enforcing Antitrust Laws?

The Federal Trade Commission (FTC)

How does the government raise revenue and what is the primary source of it?

Taxes, Federal Income Tax

Globalizaiton

How trade and technology have made the world more connected

Economic Interdependence

When two or more countries rely on each other to trade for things that they need

How has globalization affected North Carolina?

Made it harder for the textile industry because they now have to compete with foreign manufacturers

Gross Income

Larger amount of money that you are paid before deductions

Net Income

"Take home pay", the remaining amount that you get to keep after deductions are taken off of your gross income

Examples of deductions from our paychecks

Federal/State Income Tax, FICA (Social Security and Medicare), health insurance contribution, retirement/pension contriubition

W-4 Form

Tells your employer how much to withhold for taxation & send to the IRS, filled out when you're first hired

W-2 Form

Displays the amount you have paid out over the year for taxes or FICA, has to be sent out by employers by January 31st

When is the deadline for individual tax filing?

April 15th

Why is diversification important when investing?

To lower/spread out risks

Good or Bad Choice: You should freeze your credit card immediately if it is lost or stolen

Good

Good or Bad Choice: You should switch the balance from one credit card to another

Good

Good or Bad Choice: You should send money to a deposed prince who sent you an email begging for help

Bad

Good or Bad Choice: You should decide to take a personal pause & not pay a bill for one month

Bad

Good or Bad Choice: You should use a credit card to pay for a semester of college

Bad

Good or Bad Choice: You should pay above the minimum balance

Good

Good or Bad Choice: You should shop around to find a low insurance premium & deductible

Good

True or False: Only time can repair your credit score

False

True or False: The insurance company will not pay anything until you have paid the deductible

True

True or False: The income tax is the best example of a progressive type of tax

True

True or False: Your credit score/report is not at all important

False

True or False: Credit card companies are not allowed to charge penalty rates and raise interest rates due to late payments

False

Identify the parts of Auto Insurance coverage

Liability, Collision, Comprehensive, and Personal Injury Protection (PIP)

What are four different situations involving job transitions?

Probationary period, action plan, being fired, or being laid-off