Economic Fundamentals
Scarcity exists because human wants are unlimited, but these are limited
What are resources?
This organization serves as the central bank of the United States
What is the Federal Reserve (The Fed)?
When budgeting, you should use this amount from your paycheck - the reality of what you actually take home
What is net pay?
Making up 35% of your total credit score, this is the single most important factor in determining your creditworthiness
What is payment history?
This type of investment is a basket of many different stocks, such as the top 500 companies, bought all at once
What is an index fund?
This term describes the value of the "next best thing" you give up, like the book you didn't buy because you went to a movie
What is opportunity cost?
This specific committee within the Fed is responsible for the sale and purchase of government securities
What is the Federal Open Market Committee (FOMC)?
Known as the "FICA Twins," these two specific taxes are deducted from almost every paycheck
What are social security and medicare?
This three-letter acronym represents the annual interest fee you pay for borrowing money on a credit card
What is APR?
This hidden boss of insurance protects you from lifelong debt if you are at fault in a major accident
What is liability insurance?
Along with "what" and "how," this is the third basic economic question every society must answer
What is "for whom will the goods be produced?"
This term refers to the specific percentage of deposits a bank is legally required to keep on hand and not lend out
What are required reserves?
You must fill out this tax form when you first start a job to tell your employer how much tax to withhold
What is a W-4?
This allows a student to build credit early by being added to a parent's account
What is becoming an authorized user?
According to this popular budgeting rule, 20% of your income should be reserved for savings and debt repayment
What is the 50/30/20 rule?
In this specific type of economy, the government - rather than private individuals - owns the factors of production
What is a command economy?
To fight a recession using expansionary monetary policy, the Fed would likely do this with government bonds on the open market
What is buy them?
This type of tax takes a larger percentage of income from low-income earners than from high-income earners
What is a regressive tax?
Buying a $100 item on credit and only paying this each month leads to paying significantly more than the original price
What is the minimum balance?
To avoid the House Poor Trap, your rent should generally stay under this percentage of your income
What is 30%?
According to the Law of Demand, this is what happens to the quantity demanded when the price of a good increases
What is decreases?
This is the interest rate the Fed charges when it lends money directly to other banks
What is the discount rate?
If you earn less than the "Safe Zone" of approximately $15,000 a year, you generally will not owe this specific tax
What is federal income tax?
This financial cheat code allows you to earn interest not just on your original deposit, but on the interest you've already earned
What is compound interest?
In the Armor Stats of Insurance, choosing this will usually result in a lower monthly premium
What is a higher deductible?