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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
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