personal finance economics
Terms in this set (22)
what is the difference between interest charged and interest earned?
charged you lose money, earned you earn money
what is the relationship between risk and return
higher the risk higher the reward
what are examples of a variety of savings and investment options
401K, cd, savings account, stocks, bonds
who benefits from inflation
people with flexible incomes and people that are in debt
who loses stuff from inflation
people with fixed incomes and lenders and savers
why are people with flexible incomes benefitted from inflation
because of colas and social security
why are people with fixed incomes hurt by inflation
because of pensions and annuity
what are progressive taxes
a tax for which the percentage of income paid in taxes increases as income increases
what are regressive taxes
a tax for which the percentage of income paid in taxes decreases as income increases
what are proportional taxes
a tax for which the percentage of income paid in taxes remains the same for al income levels
how does an increase in sales tax affects different income groups
affects the poor people more because they dont have enough disposable income
doesnt affect people with high incomes
what are the costs and benefits of using credit
costs- you can get bad credit and not get loans or be able to make big purchases
benefits- people will loan you more stuff and can finance larger purchases
what are factors that affect credit worthiness?
payment history, amounts owed, length of credit history, new credit, types of credit in use
what are simple interest rates
determined by multiplying the interest rate by the principal by the number of periods. !!!!!
what are compound interest rates
Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. !!!
what are the costs and benefits associated with different types of insurance
costs- sometimes you have to pay for insurance that ou dont need so it wastes money
benefits- if you need the insurance you end up saving money
what is a deductible?
amounts of expenses that must be paid out of pocket before an insurer will cover any expenses
what is a premium?
money paid to an insurance company fo ra policy
what is shared liability?
when two people are liable for a business!!!
what is asset protection
what is the signifigance of investment in education, training, and skill development
less brain drain, smarter people, and those people will then earn more money, and goods and services will be produced more efficiently