Economic Basics
The basic economic problem that exists because human wants are unlimited but resources are limited.
Because resources are limited, people must make these.
What are choices?
This branch of economics focuses on individual consumers, businesses, and specific markets.
What is microeconomics?
The financial decisions individuals and families make about earning, budgeting, saving, spending, and giving money.
What is personal finance?
A written or organized plan for managing money and reaching financial goals.
What is a financial plan?
A physical object that people can buy or use, such as a phone, bicycle, or backpack.
What is a good?
Giving up one option in order to choose another is called this.
What is a trade-off?
This branch of economics examines the economy as a whole.
What is macroeconomics?
Money owed to another person, business, or organization.
What is debt?
This helps a person plan where money will go and keep track of income and expenses.
What is a budget?
Work performed for someone else, such as tutoring, cutting hair, or repairing a car.
What is a service?
This is the next-best alternative that a person gives up when making a choice.
What is macroeconomics?
Money a person brings home after taxes have been taken out.
What is net income?
A person who spends nearly every dollar of each paycheck and has little or no money left before the next paycheck is living this way.
What is paycheck-to-paycheck?
In economics, this refers to how important or desirable something is.
What is value?
You have $20 and can either buy a new shirt or go out to lunch. You choose the shirt. Going out to lunch is an example of what economic concept?
What is opportunity cost?
"A local restaurant raises the price of its hamburgers." Microeconomics or macroeconomics?
What is microeconomics?
A person owns a car worth $15,000 but owes $8,000 on a car loan. Which is the asset and which is the liability?
Name two of the five financial principles.
What is have a budget, stay out of debt, live on less than you make, save and invest, practice generosity.
This type of value explains why two people might look at the exact same item and disagree about whether it is worth the price.
What is subjective value?
You have three hours after school. You can work, study, or spend time with friends. You choose to study. Name the trade-off and explain what determines the opportunity cost.
The trade-off is giving up the other options. The opportunity cost is whichever alternative - working or spending times with friends - is the next best alternative.
Identify both statements as positive or normative:
A. The price of gasoline increased last month.
B. The government should lower gasoline prices.
A. Positive because it a fact
B. Normative because it is an opinion.
A person has $25,000 in assets and $10,000 in liabilities. Without needing to calculate the exact number, is this person's net worth positive or negative? explain.
Positive net worth, because the person's assets are greater than their liabilities.
Give four of the five characteristics of a solid financial plan.
Specific
Measurable
Time-sensitive
Yours
Written