Intro to Business

high school business class

Main benefit of a 401K

your employer will match the percentage you put in - free money

Main benefit of a Roth IRA

tax-free capital gains

What is Social Security? How is it funded and when can you access it?

it is government funded, you can access it when you reach 62.

Profit

left over money after a business has paid the cost of providing its goods and services.

Does the competition increase or decrease price?

decrease

Prices

directly affected by supply and demand

What type of economy is the US and why?

Mixed economy - government regulations

credit

an agreement to obtain money, goods, or services now in exchange for a promise to pay in the future.

Debtor

the person or company who borrows money or uses credit

What does over half of the average household expenses go towards?

housing and transportation

interest

a fee for using creditor’s money

3 factors of interest

amount, rate, and time

Credit score

a measure of a person’s ability and willingness to pay debts on time

3 credit bureaus

experian, transunion, Equifax

How much did the stock market decline during the Great Depression?

75%

Bankruptcy

a legal process in which a borrower is relieved to debts after showing an inability to pay

What is a secured loan backed by?

collateral

Biggest factor that affects your credit score

unpayed debts

Gross pay

total earnings before deductions

Net pay

take-home pay

interest

price you pay to borrow money

tithing

10% of your money given to a church

cosigner

someone who agrees to be responsible for a loan if the primary borrower doesnt pay it

what is one deductions you will see on your paycheck

Taxes

Accounting equation

assets - Liabilities = Equity

Business cycle

rise and fall of economic activity over time

Dow Jones

stock index with 30 companies

Bull Market

rise in stocks - good

bear market

stocks go down - bad

Mutual fund

an investment that is made up of a pool of funds collected from many investors

What happens to buying power with inflation?

increases

How is unemployment rate measured?

the number of people who are willing and able to work but cannot find work

What is one of the biggest obstacles in starting your own business

getting a loan

Deflation

a persons buying power increases because it costs less to buy goods and services

What do governments use tax money to pay for

social security and medicare

two ways to fix a budget

make more + spend less

4 stages of the business cycle

prosperity, recovery, recession, depression

What year marked the great depression

1929

How many people does a small business employ

fewer than 500

What does the government do with a budget surplus

gives back to the people and lowers taxes

what is the main source of income for the US government

taxes

GDP is an indicator of what?

health of the economy

what is our current unemployment rate

3.4%

Budget Deficit

when a government spends more money than it collects

why is inflation difficult for retired people?

income comes from social security and retirement funds, if product prices increase they may not be able to afford

Recovery

production starts to increase and there is a rise in business activity

recession

a general drop in the total productions of goods and services, GDP will decline for 2 consecutive quarters

Prosperity

when unemployment is low, production of goods and services is high, and new businesses open

3 indicators of how our economy is performing

GDP, Consumption, Investment

Should you ever be a cosginer

NO

What is an acceptable amount of money to loan a family member?

any amount you are comfortable with not getting back