Financial Literacy Unit 1

spontaneity

choosing the first option that comes to mind; giving little or no consideration to the consequences of the choice

compliance

going along with family school work or peer expectations

procrastinating

postponing thought and action until options are limited

desire

choosing the option that might achieve the best result, regardless of the risk involved

avoidance

choosing the option that is most likely to avoid the worst possible result

security

choosing the option that will bring some success, offend the least people, and pose the least risk

agonizing

accumulating so much information that analyzing the options becomes overwhelming

intention

choosing an option that will be both intellectually and emotionally satisfying

synthesis

choosing the option that has a good chance of success and which you like the best

consumer prices

changes in the buying power of the dollar; inflation

consumer spending

demand for goods and services

gross domestic product (GDP)

total value of goods and services produced within a country

housing starts

the number of new homes being built

interest rates

the cost of borrowing money

money supply

funds available for spending in the economy

stock market index

indicate general trends in the value of US stocks

Unemployment

the number of people without employment who are willing to work

personal risks

factors that may create a less than desirable situation. May be in the form of inconvenience, embarassment, safety, or health concerns

inflation risk

rising prices cause lower buying power. Buying an item later mean a higher price

interest rate risk

changing interest rates affect your costs (when borrowing) and your benefits (when saving or investing)

income risk

changing jobs or reduced spending by consumers can result in a lower income or loss of one’s employment. Career changes or job loss can result in a lower income and reduced buying power

liquidity risk

certain types of savings (c/d) and investments (real estate) may be difficult to convert to cash quickly