CHAP 9 KEY TERMS + ECONOMIC XTRA KeyTERMS

Credit

• money made available by a lender (creditor) to a borrower, with the understanding it will be paid back, usually with interest

Interest

the price/fee that one pays for the right to borrow another party’s money

Installment

regular or ’monthly’ payment

Non-installment Credit

will NOT have installments, because it will be paid off completely in the short-term (usually w/in 30 days). The simplest form of consumer credit.

Installment Credit

used for large specific purchases that will be paid back over time with installments (generally monthly)

Principal

Amount borrowed before interest is calculated

Revolving Open-End Credit

Type of credit that permits a consumer to borrow up to a pre-determined maximum amount

Credit Limit

• maximum amt. permitted to be borrowed

Credit History

Record of credit use and payments.

Equal Credit Opportunity Act

Prohibits creditors from denying credit based on gender, age, race, national origin, religion, or marital status.

Creditors

a person or company to whom money is owed

Credit Bureaus

organizations that collect credit information about consumers (Equifax, Experian, Trans Union)

Credit Report

document including one’s credit history, requested by a lender prior to offering credit (Will include → credit score, payment history, bankruptcy, etc.)

Fair Credit Reporting Act

a federal law that limits the sharing of an individual’s financial information to firms that have a legal purpose to evaluate it.

Credit Score

numeric value representing a person’s credit worthiness

Fair Isaac Corporation (FICO)

created a model on which credit scores (FICO scores) are calculated. 300-850 (Higher # = better credit history, lower risk, lower interest rates, most people → 600-800)

Identity Theft

when someone uses your personal information for their gain w/o your permission

Shoulder surfing

• looking over one’s shoulder

Skimming

copying down one’s personal info.

Pretexting

posing as someone else

Phishing

pretexting online

Pharming

Identity theft technique that uses e-mail viruses to redirect someone from a legitimate Web site to an official looking Web site designed to obtain personal information.

Minimum wage

the lowest wage permitted by law

Living wage

a wage that is high enough to maintain a ‘normal’ standard of living

Gig economy

a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.

Cryptocurrency

digital asset/monetary unit created using cryptographic (code solving) techniques that enable people to buy, sell or trade them securely

Economic system

• way in which a government/society is organized for accessing goods and services
  

Capitalism/Market Economy

• an economic system where people and businesses independently decide what goods and services to produce and keep most profits, aside from taxes.
  
  

Supply

• the amount of goods and services that are available (generally → the lower the supply, the higher the price)
  
  
  

Demand

• the desire that the market has for goods and services (generally → the higher the demand, the greater the price)

Socialism

• an economic system which advocates that the production of goods & services should be owned and/or regulated by the ‘community as a whole’

Communism

• an economic system that features the public ownership of all property and means of production, with each person working ‘according to their ability’ and paid ‘according to their needs’