AP Econ Final Exam Study Guide Flashcards

Flashcards for AP Economics Final Exam Study Guide covering credit, insurance, paychecks, and retirement accounts.

What is APR (Annual Percentage Rate)?

The annual rate charged for borrowing, expressed as a percentage, including interest and other charges.

What are FICO Scores?

A type of credit score used by lenders to assess credit risk, ranging from 300-850.

What are Secured Loans?

Loans backed by collateral.

What are Unsecured Loans?

Loans not backed by collateral.

What is FAFSA (Free Application for Federal Student Aid)?

A form to determine eligibility for federal student aid.

What are Subsidized Loans?

Federal student loans where the government pays the interest during certain periods.

What are Unsubsidized Loans?

Federal student loans where the borrower is responsible for all interest accrued.

What is a Schumer Box?

A table summarizing key credit card terms and costs.

What are Minimum Payments?

The smallest amount required to be paid on a debt each month.

What are the five factors that determine your credit score?

Payment history, amounts owed, length of credit history, new credit, and credit mix.

What is the difference between secured and unsecured loans, and how do interest rates vary?

Secured loans require collateral and generally have lower interest rates, while unsecured loans do not require collateral.

What is credit utilization, and what is the suggested percentage to maintain?

The amount of credit you're using divided by your total available credit; suggested to keep it below 30%.

What is the difference between subsidized and unsubsidized student loans?

The government pays the interest during specific periods for subsidized loans, while interest accrues immediately for unsubsidized loans.

What is a Premium?

The amount paid for an insurance policy.

What is a Deductible?

The amount you pay out-of-pocket before insurance pays for a claim.

What are Co-pays?

A fixed amount paid for a covered health service after meeting the deductible.

What does Personal Liability and Property Damage Insurance cover?

Covers damages and injuries you cause to others (Personal Liability) and damage to another person's property (Property Damage).

What is No-Fault Insurance?

Your own insurance pays for your medical expenses and lost wages, regardless of fault.

What is Collision Insurance?

Covers damage to your vehicle from a collision, regardless of fault.

What is Comprehensive Insurance?

Covers damage to your vehicle from non-collision incidents like theft or natural disasters.

What is Uninsured or Underinsured Coverage?

Covers medical expenses and damages if you're hit by an uninsured (UM) or underinsured (UIM) driver.

What are five factors that can impact your car insurance premium?

Driving record, age and gender, type of car, location, and credit score.

What type of car insurance is required to be a legal driver in almost all states?

Personal Liability and Property Damage (Liability) insurance.

What types of car insurance are required if you lease or finance a car?

Collision and Comprehensive insurance, in addition to liability coverage.

What is a W-2?

A tax form reporting an employee's annual wages and taxes withheld.

What is a W-4?

A tax form informing an employer how much federal income tax to withhold.

What is Gross Pay?

The total amount earned before deductions and taxes.

What is Net Pay?

The amount received after all deductions and taxes.

What are Pensions?

A retirement plan where an employer makes contributions for an employee's future benefit, providing a defined benefit upon retirement.

What is a Roth IRA?

An individual retirement account with after-tax contributions and tax-free qualified distributions.

What is a 401(k)?

An employer-sponsored retirement savings plan where employees contribute, and employers may match.

What does Tax Deferred mean?

Earnings on investments are not taxed until withdrawal.

What are common payroll deductions or taxes?

Federal income tax, state income tax, local income tax, FICA taxes, health insurance premiums, and retirement contributions.

Approximately what percentage is taken from your check?

Somewhere between 25-35% of gross pay.

What problem is facing the Social Security system?

Demographic shifts causing fewer workers contributing for more retirees.

What is the likelihood that you will receive a pension from your future employer?

Low for most private sector employees.

What are some of the characteristics of a 401(k)?

Offered through your workplace, higher contribution limit, pre-tax contributions (tax-deferred), and often includes an employer match.

What are some of the characteristics of a Roth IRA?

Opened by anyone with earned income, lower contribution limit, after-tax contributions (tax-free withdrawals), and no employer match.

In defined benefit vs. defined contribution plans, who bears the risk in each?

Defined Benefit: Employer bears the risk. Defined Contribution: Employee bears the risk.