Resource Management Comprehensive Final Review

Unit 1: Decisions, Economic Systems, and Consumers

  • Consumer Sovereignty (Dollar Vote): The idea that consumer choices directly determine which goods and services are produced within an economy.

  • Values: These are your personal principles and the standards you use to judge what is right and wrong, what is good and bad, and what is important or unimportant to you.

  • The Decision-Making Process:

    • Specify: Determine your specific goals.

    • Search: Gather necessary information.

    • Sift: Look at all available options.

    • Select: Make a choice and act on it.

    • Study: Evaluate the end result.

  • Opportunity Cost: The value of your next best alternative that is given up whenever you make a choice.

  • Law of Scarcity:

    • Scarcity: A limited supply of a resource.

    • The Law: The way a company answers specific questions regarding how they will deal with limited resources determines its economic system.

  • Supply and Demand:

    • Supply: The quantity of a product that producers are willing and able to make available for sale at various prices over a given time period.

    • Demand: The quantity of a good or service that consumers are willing and able to buy at various prices during a given time period.

  • Economic Indicators:

    • GDP (Gross Domestic Product): The total dollar value of all goods and services produced within the country in one year.

    • CPI (Consumer Price Index): A measure of the average change in prices selected for goods and services across seven specific categories.

  • 4 Types of Economies:

    1. Traditional Economy: Ways to produce products are passed down from one generation to the next.

    2. Command Economy: The government owns most resources and makes most economic decisions.

    3. Market Economy: People, rather than the government, own the resources and run the businesses.

    4. Mixed Economy: A mixture of a command economy (government control) and market elements; this is the most dominant economic system in the United States.

  • Inflation vs. Recession:

    • Inflation: A general increase in the average level of prices in a nation’s economy.

    • Recession: A period of general decline in a nation’s economy.

  • Economic Management Policies:

    • Monetary Policy: The government’s efforts to stabilize the economy by managing interest rates, the availability of loans, and the supply of money.

    • Fiscal Policy: The government’s taxing and spending decisions.

  • Types of Laws:

    • Antitrust Laws: Designed to prevent monopolies, price-fixing, and other trade restraints.

    • Public Safety Laws: Include equal opportunity, fair labor practices, industrial safety standards, product safety, and labeling.

  • Free Enterprise: Competition between companies.

  • Discount Rate: The rate at which products are discounted by a company.

  • Profit Motive: The desire for profit that motivates an individual or entity to engage in business ventures.

Rights, Responsibilities, and Resolution

  • Complaint Letters:

    • Purpose: To resolve issues with a product or service.

    • Components: Must include specific parts and be formatted and addressed properly.

  • Warranties:

    • Written Warranties:

      • Limited: Covers only specific parts or types of defects.

      • Full: Covers the entire product for a set period.

      • Extended: Additional coverage purchased separately.

    • Express Warranties:

      • Merchantability: A promise that the product is fit for its ordinary use.

      • Fitness: A promise that the product is fit for a specific purpose defined by the consumer.

  • Magnuson Moss Warranty Act: A federal law governing consumer product warranties.

  • The Consumer Movement Founders:

    • Ellen Richards

    • Thorstien Veblin

    • Herbert Hoover

    • Upton Sinclair

Consumer Agencies and Regulatory Bodies

  • CPSC (Consumer Product Safety Commission): Protects consumers from dangerous products; it was the first federal agency granted power over all consumer products.

  • FDA (Food & Drug Administration): Deals with foods, drugs, and cosmetics. It protects consumers from unhealthy and unsafe food, drugs, cosmetics, and medical devices.

  • EPA (Environmental Protection Agency): Ensures businesses safely dispose of hazardous waste produced during manufacturing; sets standards for air and water quality.

  • GRAS (Generally Recognized as Safe): A designation indicating that a substance added to a food is a food additive and is considered safe for consumption.

  • FTC (Federal Trade Commission): Created in 1914. Its enforcement tools include:

    • Consent Agreement

    • Cease & Desist Order

    • Corrective Advertising

    • Ad Substantiation

  • USDA (United States Department of Agriculture):

    • Purpose: To improve housing, utilities, and infrastructure in rural America.

    • Protections: Protects consumers regarding foods, agriculture, natural resources, rural development, and nutrition.

  • BBB (Better Business Bureau): A nonprofit agency with offices across the country sponsored by local businesses; it can be accessed at any time.

  • SEC (Securities & Exchange Commission): Regulates securities and financial markets.

The Consumer Bill of Rights

  • Origins: Created in 1962 by John F. Kennedy.

  • Evolution: Originally began with 4 rights; currently includes a total of 8 rights.

  • Definition: Mandatory requirements set by a governing body that determine what a food product must contain to be marked under a certain name in allowable commerce.

  • Standard of Identity: Determines mandatory requirements for naming food products.

  • 8 Consumer Rights (Rights and Responsibilities):

    1. Safety: Products cannot endanger life or health.

    2. Information: Proper labeling and facts.

    3. Choice: Access to variety and ability to compare.

    4. Representation (To be Heard): Influence in laws and protection of innovation.

    5. Basic Needs: Access to clothing, food, shelter, health care, and public education.

    6. Redress: Access to fair remedies.

    7. Education: Learning how to make rational decisions.

    8. Healthy Environment: Avoiding pollution.

  • Steps in the Complaint System:

    1. The local business.

    2. The manufacturer.

    3. Self-regulatory organizations.

    4. Consumer action agencies (media, government, private consumer activists).

    5. Small claims or civil court.

Unit 2: Banking, Savings, and Checking

  • Reconciling Your Bank Account: Making one account consistent with another, especially to account for transactions that have begun but are not yet completed.

  • Regulatory Insurance Agencies:

    • FDIC (Federal Deposit Insurance Corporation)

    • SAIF (Savings Association Insurance Fund)

    • NCUA (National Credit Union Administration)

  • Account Types:

    • Money Market Accounts

    • NOW Accounts (Negotiable Order of Withdrawal)

    • Cost per Check: Fees associated with processing individual checks.

  • Interest Types:

    • Simple Interest: Interest paid one time per year at the end of the year on the average balance in the savings account.

    • Compound Interest: Interest paid on interest previously earned.

  • Types of Checks:

    • Traveler’s Checks: Checks paid for in advance; if lost or stolen, the issuing company replaces them.

    • Money Order: A check that draws on the money of the bank or financial business that issued it.

    • Cashier’s Check: A bank’s own personal check signed by the bank’s cashier.

    • Certified Check: A personal check that has been stamped and signed by a bank officer.

  • Types of Banks:

    • Savings & Loans: These specialize in real estate financing and can be organized as corporations or mutuals.

    • Credit Unions: Non-profit financial cooperatives owned by their members and governed by a board of directors.

    • Commercial Banks: Feature tellers, safe deposit boxes, vaults, and ATMs; they emphasize business and consumer accounts and may provide trust services.

Unit 3: Credit and Debt

  • The 4 C’s of Credit Granting:

    1. Capacity: Your financial ability to pay back the debt.

    2. Character: Your credit history and stability.

    3. Capital: The assets you currently possess.

    4. Collateral: Assets that can be obtained in place of payment if you fail to repay the debt.

  • 4 Types of Credit:

    1. Sales Credit: Goods or services provided in exchange for a promise to pay later.

      • Regular Charge Account: Promise to pay in full within 30 days. No finance charges if paid as agreed; no credit limit (Closed Ended).

      • Revolving Account: Ability to charge up to a limit during a 30-day period. Can pay in full, partial, or minimum. Balance carries over and interest accrues if not paid in full (Open Ended).

    2. Installment Loans: Used for larger items; repaid in regular intervals.

    3. Cash Credit: Money given in exchange for a promise to pay later.

      • Unsecured Loans.

      • Secured Loans.

    4. Repayment Plans: Specific structured plans for debt satisfaction (refer to presentations for full details).

  • Legislative Acts Governing Credit:

    • Equal Opportunity Act

    • Fair Credit Billing Act

    • Fair Credit Reporting Act

    • Fair Debt Collection Practices Act

    • Truth in Lending Act

  • Interest Metrics:

    • APR (Annual Percentage Rate)

    • APY (Annual Percentage Yield)

Unit 4: Career Choices

  • Interviews: A face-to-face meeting with a potential employer to discuss your job qualifications.

  • Resumes: A brief summary of your job qualifications, including your education, training, job skills, and work experience.

  • Correspondence:

    • Cover Letter: A letter of introduction sent with your resume to a potential employer.

    • Thank You Letter: A letter sent to employers thanking them for their time following an interview.

  • Interview Do’s:

    • Be on time.

    • Know your resume.

    • Know the company.

    • Anticipate questions.

    • Dress appropriately (dressing nicely makes the employer think highly of your care for appearance).

    • Be polite.

    • Prepare questions.

  • Interview Don'ts:

    • Saying negative things about previous companies.

    • Leading the conversation instead of letting the interviewer lead.

    • Forgetting to mention special skills and experience.

Unit 5: Getting Paid and Budgeting

  • Ways of Getting Paid:

    1. Paycheck

    2. Direct Deposit

    3. Payroll Card

  • Income Definitions:

    • Gross Income: The amount of money you earn before taxes are withheld.

    • Net Income: The amount you receive after all withholdings are subtracted from your gross pay.

  • FICA: Federal Insurance Contributions Act; identifies where specific tax money is allocated.

  • Budgeting Basics:

    • Budget: A plan for providing income among spending and saving options.

    • Net Worth Formula: Assets−Liability=Net Worth\text{Assets} - \text{Liability} = \text{Net Worth}

  • The Spending Plan:

    1. Paying yourself first.

    2. Paying bills on time.

    3. Spending no more than what is left.

  • Types of Expenses:

    • Fixed Expenses: Amounts you have already committed to spend.

    • Variable (Flexible) Expenses: Amounts you can choose or not choose to spend; usually, you already have the item.

    • Occasional Expenses: Happen every so often; can be unexpected and lead to debt.

  • The Budgeting Process Steps:

    1. Choose financial goals.

    2. Track income and expenses.

    3. Prepare budget worksheets.

    4. Review and adjust budget worksheets.

    5. Create a budget for the year.

  • Emergency Goal Saving:

    • Aim to save 10%10\% per paycheck.

    • Maintain a reserve of 3−6 months3 - 6 \text{ months} worth of salary.

  • Keeping Budgeting Simple:

    • Pay bills on time.

    • Pay yourself first.

    • Regularly fill out the budget worksheet.

Unit 6: Taxes and Financial Obligations

  • Tax Forms:

    • W-4: Tells the employer the correct amount of tax to withhold based on marital status, number of exemptions, and dependents.

    • W-2: A summary of your job earnings and withholdings for a full year.

    • 1099-INT: Interest statement.

    • 1099-DIV: Dividend statement.

    • Form 1040: The standard individual income tax return form.

  • Types of Taxes:

    • Progressive Tax: Tax rate increases as the taxable amount increases (e.g., luxury goods).

    • Regressive Tax: Tax rate decreases as the amount subject to taxation increases (e.g., Social Security).

    • Proportional Tax: Imposed so that the tax rate is fixed with no change as the taxable base amount increases or decreases (e.g., Social Security).

    • Local/Federal Tax Categories: Property, Excise, Gift, and Estate Taxes.

  • IRS (International Revenue Services): The federal agency responsible for collecting income taxes.

  • Social Security Number: A unique number used by the government throughout your life to identify you as a taxpayer and track earnings and tax records.

  • Tax Terminology:

    • Tax Return: A statement of your earnings, tax liability, details of tax paid, and any refunds owed to/from the government.

    • Tax Refund: The difference between tax paid and tax owed (the amount you paid more than you owed).

    • Allowance: A number that reduces the amount of money withheld from your pay.

    • Deduction: Expenses you can legally subtract from your income when figuring out taxes.

      • Standard Deduction: A set amount taxpayers may subtract from adjusted gross income.

      • Itemized Deduction: Specifically listed amounts with receipts/proof for expenses like medical costs or tuition.

    • Tax Avoidance: Reducing taxes by claiming legitimate adjustments, deductions, and credits.

    • Tax Evasion: Failing to declare all income and falsifying deductions, adjustments, or credits.

    • Tax Audit: A detailed examination of your tax return by the IRS.

  • Important Dates: The final date for filing federal taxes is April 15th.