Georgia Economics EOC 2016 pt. 5 Personal Finance
Terms in this set (30)
a unit of ownership in a company. People that own stock own the corporation (or a part of the corporation)
corporations and governments can issue bonds. They are like IOUs to raise money. Bonds are paid back to the purchaser with interest at a later time. A way to raise instant money for the corporation or gov't.
companies buy a group of stocks and bonds-people can invest in the 'group' (mutual fund) instead of investing alone. Helps to diversify personal risk. Spreads out risk if one individual stock doesn't do well.
the amount a bank or finance company charges for people to buy money
Risk and Return
the greater the risk the greater the potential for return (to make more money), but also the greater chance to lose money.
retirees, social security benefits. A set amount of income. Loss occurs with inflation, because income doesn't increase as the cost of living increases
Cost of living adjustment
income increases (can decrease) as inflation increases/decreases
the way a government raises revenue
3 types of taxes
Proportional, Progressive, Regressive
everyone pays the same percentage of their income in tax
the more you make, the higher % of income paid in taxes. Takes bigger portion from rich than poor (example-federal income tax)
the higher your income, the less you pay in taxes. Hurts the poor more than the wealthy. (Example sales tax)
interest on the principle of the loan only or of savings
the amount your borrow(loan) or the amount you put in the bank (savings)
Calculating simple interest
$100.00 x .05% interest = $5 per year
interest paid or received on the principle and the earned interest. Higher cost in loan payback, but higher earning in savings
Calculating compound interest
Borrow 100$ for 2 years. $100 x .05% = 105$ year one.
105$ x .05%= 5.25$ so 110.25$ in year two.
used to protect against financial loss by spreading the liability over many people
5 Types of Insurance
Auto, Health, Life, Disability, Property
protects autos against accident or theft
protects health, dental, medical issues
provides benefits to beneficiary (people you decide to give the $ to) in case of death
provides payments in case you become incapacitated or injured and cannot work
protects against loss of property (homeowners insurance)
Factors that influence cost of insurance
Premiums and Deductibles
How much you pay each month to maintain insurance
how much you pay before your insurance pays the claim. High deductible makes monthly payments lower.
Factors that affect credit worthiness
credit score, capacity to repay loan, character, length of credit history
Production possibilities curve
Shows the given amount a country can produce with a given set of resources. Producing on the line your maximum. Outside the line X you have to increase productivity. Inside the line A, you're being inefficient, not using all resources
Number one way to increase productivity
TECHNOLOGY (update, new machines, add technology, etc)