Economics and Personal Finance Vocabulary

These flashcards cover key terms and definitions from the lecture on Economics and Personal Finance.

Antitrust suits

Used to help encourage competition in a particular industry and break up monopolies.

Barter systems

Direct exchange of goods without the use of money or another medium of exchange.

Capital

Goods and tools used to make products.

Capitalism

Economic system characterized by privately owned businesses engaged in making a profit.

Economic system

A structure within a society that organizes the production, distribution, and consumption of goods and services.

Economics

The study of the ways in which money is created and used in society.

Free enterprise

No governmental presence in economic transactions.

Gift economies

Situations where goods and services are exchanged without an expected or immediate return.

Global trade

Transportation and exchange of goods, services, resources, and money across international borders.

Labor

Human ability to produce goods or services, including physical labor, talent, and skills.

Laissez-faire

A situation with no governmental presence in economic transactions.

Market economies

Economic structures where prices of services and goods are determined through a free system.

Mixed economy

Type of economic structure that combines market-driven business with governmental oversight.

Monopolies

Companies that have complete control over a particular product or industry.

Planned economies

Economic systems in which prices of goods and services are determined by the government.

Resources

Items like land, minerals, forests, and oil used to create goods.

Supply and demand

Economic principle dictating that prices are determined by availability of an item and the desire for it.

Tariffs

Taxes levied on imports and/or exports.

Fiscal policy

Governmental allocation and collection of money within the state.

Open outcry

An auction for stocks where traders verbally submit their offers.

Opportunity cost

The value of what is given up when making a choice.

Stock market

Place where stocks or shares in a company are bought and sold.

Stocks

Shares of ownership in a company.

Trading

The buying and selling of stocks.

Future value

Amount of money multiplied by the interest rate and time it will earn interest.

Income risk

Risk that income will not remain the same despite financial planning.

Inflation risk

The possibility of prices on items rising or falling.

Interest rate risk

Risk that changes in interest rates will affect loans or savings.

Personal financial planning

The process of creating and achieving financial goals.

Personal risk

Challenges to achieving personal financial goals due to health or safety issues.

Shared decision making

Negotiating or compromising to make financial decisions with others.

The value of money

Increases in an amount of money due to earned interest.

401k

Retirement accounts partially funded by employers using pre-tax wages.

403b

Retirement accounts for individuals in nonprofit organizations.

Bonds

Investments promising to pay interest on the principal after time.

Brokerage firm

Manages and facilitates the purchase of stocks and other investments.

Certificate of deposit

Accounts that pay a standard rate of interest but require funds to remain for a set period.

Check cashing businesses

Cash any valid check without requiring account holder status.

Commercial banks

Offer services like mortgages, personal loans, and credit cards funded through deposits.

Credit unions

Nonprofit, member-owned financial institutions.

Demand deposit account

Accounts allowing withdrawal of funds at any time.

Depository institutions

Financial entities that receive money primarily from customer deposits.

Life insurance companies

Sell life insurance paid out upon the death of the insured.

Maturity date

The end date when money can be withdrawn from a certificate of deposit.

Money market mutual funds

Accounts where depositors’ funds are invested in various financial assets.

Mutual fund companies

Sell shares to individuals and pool funds to manage investments.

Mutual savings institutions

Owned by individual depositors.

Nondepository institutions

Receive money from sources other than consumer deposits.

Pawnshops

Offer loans based on the value of possessions.

Payday loan businesses

Provide cash advances and delayed deposit loans.

Rent to own services

Lease items with an option to buy after payments.

Savings and loan institutions

Similar to banks, focusing primarily on home mortgages.

Stock held savings institutions

Owned by stockholders.

Web only financial institutions

Conduct all business online without physical locations.

Adjusted gross income

Gross income minus specific deductions.

Alternative minimum tax

Ensures high-income individuals pay taxes despite high deductions.

Estate taxes

Taxes on an individual's estate after their death.

Excise tax

A tax on specific goods like gasoline and cigarettes.

Gross income

Total income from all sources.

Income tax

Tax on money earned during the year.

Inheritance tax

Tax on assets inherited after someone's death.

IRS

Agency that collects federal income taxes in the U.S.

Progressive tax system

Higher incomes pay a greater proportion of income in taxes.

Regressive tax system

Everyone pays the same percentage of income in taxes.

Tax audit

Examination of a tax return by the IRS.

Contracts

Legal agreements where each party has obligations to the other.

Coverage

Protection that the insurer provides to a policyholder.

Deductible

Amount a policyholder pays before insurance covers a loss.

Estate

All possessions owned by a person, including land and financial accounts.

Estate planning

Creating a plan for distributing possessions after death.

Exclusions

Clauses in insurance contracts specifying non-covered losses.

Executor

Person who carries out the instructions of a will.

Formal wills

Wills created by attorneys with witnessed signatures.

Guardians

Individuals responsible for caring for children if parents die.

Holographic wills

Handwritten wills.

Insurance

Protection against potential financial loss.

Insurer

Company agreeing to reimburse for certain losses.

Life insurance

Insurance that pays a certain amount upon the insured person's death.

Living will

Document detailing desired medical care if incapacitated.

Negligence

Failure to take reasonable actions to prevent harm.

Policy

Contract between insurer and insured individual.

Policyholder

Individual who purchases insurance from an insurer.

Power of attorney

Document granting legal authority to act on another's behalf.

Premium

Fee paid to an insurer for coverage.

Rider

Supplemental insurance for exclusions in the main policy.

Risk

Chance of loss occurring, either financial or physical.

Risk classification

Assessment of characteristics influencing a person's risk of loss.

Statutory wills

Wills using preprinted forms.

Wills

Legal documents detailing wishes for estate distribution upon death.

Asset allocation

Investing in various places to reduce overall investment risk.

Asset classes

Broad types of investments with common characteristics.

Bond indenture

Legal document outlining bond conditions.

Bonds

Investments that promise specific interest payments over time.

Compounding

Process of earning interest on previously earned interest.

Corporate bonds

Agreements by companies to make specific payments at maturity.

Direct stock plans

Stocks purchased directly from a company.

Dividends

Periodic profit distributions to investors.

Government bonds

Debt securities issued by municipalities with repayment agreements.

Investing

Using money to purchase assets with the expectation of profit.

Municipal bonds

Debt issued by local governments for funding projects.