Unit Two Vocabulary List

Economics and Personal Finance Class

Budget

A detailed financial PLAN that tracks income. It also estimates expenses over a specific time period.

Comparison Shopping

When we compare prices, features, and the quality of different brands and products before we decide what to buy.

Lease

A legal contract that lets you RENT something (like a car, storage unit, apartment, etc.) for a specific period of time. You must make the PAYMENTS to rent it.

Principal

When discussing money, this is the ORIGINAL SUM of money borrowed. This can be a loan or can be the money that was invested in an asset.

Interest Rate

The percentage (%) charged by a lender for borrowing money. This is expressed as an annual (or yearly) rate.

Down Payment

This is the up-front (very first) partial-payment made in CASH when purchasing something expensive on credit (like a car).

Mortgage

A specific type of long-term loan used to purchase real estate (like a house, land, or condo). This is typically paid in monthly payments.

Annual Percentage Rate (APR)

The TOTAL yearly cost of borrowing money INCLUDING interest rates and fees.

Amortization

The schedule of paying off a debt over time. This is done through monthly payments.

Depreciation

The decrease in an asset’s monetary value ($$) over time. (For example, an older car is worth less than a newer car.)

Examples, other than retail shopping, of Comaprison Shopping

Some other examples of comparison shopping are comparing colleges, trade schools. Comparing investment accounts such as a Roth IRA compared to a Traditional IRA.

Warranty

A written guarantee froma manufacturer of a good that promises to repair or replace the item if it becomes defective during a specific period of time. (For example, a 2 year guarantee on a cell phone)

Consumer Protection Laws

Government regulations (rules) designed to prevent unfair business. Protects the customers from “scammers”.

Consumer Rights

Legal rules that protect customers from “scammers”. These protect the customers money but also their safety.

Consumer Responsibilities

This is the obligation of buyers to make good decisions. They should research and collect information before buying something, follow the guidelines, and report fraud (scammers).

Financing

Money or loans provided so someone can purchase a major item. The consumer makes monthly payments to pay it off.

Total Cost of Ownership

The total amound of buying AND MAINTAINING an item over the life of the item. This includes the price, the insurance, and the maintenance (ex: a car).

Repossession

The bank that gave a loan, or the “lender”, can take back the item if the person who bought it does not make the monthly payments (ex: a car, a truck, a business)

Impulse Buying

Purchasing items on the spur of a moment, withought planning, research, or budgeting. People do this when they are excited sometimes and sometimes regret it later.

Consumer Awareness

A buyer’s knowledge regarding product safety, available choices, fair prices, and legal protections as a consumer.