Economics Final Exam Enrichment Guided as ACE

A collection of flashcards to review key economic concepts, terms, and definitions for the final exam.

What is a withdrawal in banking?

Taking out money from a bank account.

loans

This is the way most banks make money - interest that is paid on these

What type of account is typically used for regular transactions such as purchases and ATM withdrawals?

Checking account.

public goods

The government provides roads, schools, and other things that help everyone

What does net pay refer to?

The money received in your paycheck after taxes.

What does gross pay refer to?

The money received in your paycheck before taxes.

s.s.s tax

Money taken out of your account that goes into a separate account which in turn is paid out to the elderly:

credit limit

Amount of money that you are allowed to borrow within a certain limit:

credit score

The total number of points that measures your risk of paying lenders back

What is the main purpose of savings accounts?

To store money, typically earning more interest.

What does it mean to overdraw an account?

Spending more money than you have in your account.

What is the definition of a budget plan?

A plan that outlines expected income and how it will be saved or spent.

What are fixed expenses?

Expenses that must be paid each month and generally cost the same amount.

What are discretionary expenses?

Expenses that usually define wants in life, not needs.

What is a bank run?

When customers withdraw funds due to loss of confidence in a financial institution.

What is the role of the FDIC?

An independent agency created to maintain stability and public confidence in the nation's financial system.

What is opportunity cost?

What is given up when making an economic decision.

What is a mortgage?

The loan taken out to buy a home.

Who is an entrepreneur?

A person who takes risks and starts a business.

What does the Law of Supply state?

As a good's price increases, the quantity suppliers are willing and able to supply increases.

What does the Law of Demand state?

If all other factors remain equal, higher prices lead to lower quantity demanded.

What is sales tax?

A tax imposed on sales transactions, varying by state and local governments.

How is property tax defined?

An annual charge levied on real estate owners by local government.

What is an excise tax?

An indirect tax on specific goods, services, and activities.

What is a corporation?

A legal business entity that can own property and enter into contracts.

What is a sole proprietorship?

A business owned by a single person who makes all decisions and keeps all profits.

What is GDP?

Gross Domestic Product; measures the total value of goods and services produced in an economy.

What is inflation?

The decrease in the value of money, resulting in increased prices of goods and services.

What is the IRS?

The government agency responsible for collecting and enforcing tax laws.

What is diversification in investing?

Spreading investments into different companies to reduce risk.

What does the Dow Jones Industrial Average measure?

The stock of top companies, serving as a barometer for the health of the US stock market.

What is a mutual fund?

A pool of money that creates diverse investments such as stocks and bonds.

What is a blue chip stock?

Stock in large, well-known companies.