Random 1
What services do Banks offer?
Checking and savings accounts, personal and business loans, and mortgage services, forming the backbone of the financial system.
Definition of CD
Compact Disc.
Just kidding.....Certificate of Deposit
These demographic groups of individuals are the most likely to experience poverty
Definition of Interest?
The price of borrowing money or the reward for saving it
What is a Bank Run?
A Panic! Account holders become worried about their bank, they rush to withdrawal money before it has a chance to fail.
Definition of Recession
Two or more quarters of declining GDP. Results in mild to moderate economic contraction.
Usually lasts 6-18 months. Most countries experience these periodically.
Definition of Depression
Deep, prolonged economic downturn. GDP typically drops more than 10%, as in the 1930s.
Can last for years. Widespread business failures and high unemployment persist.
Give two of the five factors that affect economies when Interest Rates are high...
Increased Savings Behavior
Delayed Major Purchases
Reduced Business Expansion
Slower Housing Marking
Potential Economic Cooldown
Give two of the five factors that effect economies when Interest Rates are low...
Increased Borrowing Activity
More home purchases and refinancing
Business growth and expansion
Higher consumer spending
Potential economic acceleration
DPI Stands for: _________ ___________ ________
Bonus - How is it calculated?
Disposable Personal Income (DPI)
Bonus - Personal Income after Taxes
Give the definition of Direct Costs and Indirect Costs
Bonus - Example
Direct costs are those directly associated with the production of goods or services. These costs include raw materials, direct labor, and manufacturing overhead directly related to the production process.
Indirect costs, also known as overhead costs, are not directly tied to production but are necessary for business operations. These costs include rent, utilities, and administrative salaries.
Definition of Liquidity - give an example
The availability of funds
Example - Savings account has HIGH liquidity / Real Estate has very LOW liquidity
What is a Progressive Tax System?
Progressive income tax system where tax rates increase as income rises.
For example, in the United States, the top 1% of earners pay approximately 30-35% of federal income taxes, while the bottom 50% contribute about 3%.
The name of the Four (4) Business Cycles
Expansion
Peak
Contraction
Trough
What is the concept of the Lorenz Curve?
A graph comparing cumulative income percentage against population percentage.
What is a Mutual Fund?
Investment vehicles that pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities, managed by a professional.
What are the three (3) functions of Money?
Money consistently has three functions: store of value, unit of account, and medium of exchange
What is the difference between Nominal and Real GDP?
Nominal GDP measures output at current prices, while Real GDP adjusts for inflation.
Definition of Fiat Money?
Fiat money is a type of government issued currency that is not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity.
What are the two (2) main advantages of a Corporation versus other types of business structures?
Limited Liability
Ability to Raise Capital (e.g. stocks)
What are the four (4) factors one should consider when choosing which structure (type) of business you want to operate?
Liability Exposure
Tax Implications
Management Control (Who Makes the Decisions)
Growth Ambitions
Name of four types of Market Structures
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
Bonus - give an example
Large Number of Buyers and Sellers
Homogenous products (identical goods and services)
Firms are price takers
Free entry and exit of firms
Example - Stock Market
GDP is calculated by using this formula - C + I + G + (X − M)
What does it mean?
Represents Consumer spending, Investment, Government spending, and Net exports.
The break-even point is the level of sales at which total revenue equals total cost. This signifies the point where a business begins to generate a profit.