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Net Pay

The income received after all taxes and deductions are subtracted from gross pay.

Disposable Income

Income remaining after taxes, used for basic living expenses.

Discretionary Income

The income left after covering necessities, available for non-essential spending or savings.

Payroll Deductions

Amounts taken out of an employee's gross pay for taxes, benefits, and retirement contributions.

Income Tax

A government levy on individual or corporate earnings.

FICA Tax

A payroll tax funding Social Security and Medicare, split between employees and employers.

W-2

A form reporting an employee’s yearly wages and tax withholdings.

W-4

A form employees use to indicate tax withholding preferences to employers.

1040

The main form individuals file for federal income taxes.

Rule of 72

A formula estimating how long it takes for an investment to double, dividing 72 by the annual interest rate.

Diversified Investment

A strategy spreading investments across asset types to minimize risk.

Zero-Based Budget

A budgeting approach where every dollar is assigned a purpose, leaving no surplus.

FICO Score

A credit score evaluating creditworthiness, ranging from 300 to 850.

Stocks

Shares representing ownership in a corporation, offering a portion of profits.

Bonds

Debt securities where investors lend money to issuers in exchange for interest payments and repayment.

Federal Trade Commission (FTC)

A U.S. agency protecting consumers and ensuring fair competition.

Securities and Exchange Commission (SEC)

A U.S. agency regulating securities markets to protect investors.

Capitalism

An economic system where private ownership drives production, distribution, and profits with minimal government control.

Communism

A system where the government owns all resources and production, distributing based on need.

Socialism

A system blending private ownership with government control of major industries to promote equality.

Scarcity

The fundamental economic issue of limited resources against unlimited wants.

Supply

The quantity of a good or service producers are willing to offer at different prices.

Demand

The quantity of a good or service consumers are willing and able to purchase at various prices.

Opportunity Cost

The value of the next best alternative foregone when making a decision.

Trade-Off

A compromise made when choosing one option over another.

4 Factors of Production

Resources required to produce goods and services—land, labor, capital, and entrepreneurship.

Monopoly

A market dominated by a single supplier, eliminating competition.

Inflation

The rise in prices over time, decreasing purchasing power.

GDP (Gross Domestic Product)

The total value of goods and services produced within a country during a specific time.

4 Parts of the Business Cycle

Expansion (growth), peak (highest point), contraction (decline), and trough (lowest point).

Sole Proprietor

A business owned and run by one person, bearing all profits and risks.

Strike

Employees' refusal to work as a protest, often over pay or conditions.

Injunction

A legal order compelling or preventing specific actions.

Embargo

A government-imposed ban on trade with a particular country.

Lockout

When employers prevent workers from entering the workplace during a labor dispute.

Federal Reserve

The central bank of the U.S., managing monetary policy and regulating banks.

Patent

A legal right granting exclusive use of an invention for a set period.

Tariff

A tax on imported goods to protect domestic industries or raise revenue.

NAFTA (North American Free Trade Agreement)

A trade pact between the U.S., Canada, and Mexico reducing trade barriers.

Balance of Trade

The difference between a country’s exports and imports.

Exchange Rate

The value of one currency relative to another.

Debtors

Individuals or entities that owe money.

Creditors

Individuals or entities to whom money is owed.