Econ Basics
What is the fundamental problem that economics deals with?
Scarcity
What are three components of a personal budget?
Income, Expenses and Savings
Why do people buy insurance?
To minimize their risk during life's 'challenges'
What are four big ideas that the circular flow diagram illustrates?
An entire economy
Voluntary exchange
Interdependence
HHs need businesses and businesses need HHs
Money is the 'oil' to our economic engine
What is the best measurement of a country's productivity, size and growth?
Real GDP
What is the difference between labor resources and human capital?
Labor resources are the basic skills to do a job and human capital is when the skills and knowledge of the worker/s has been greatly improved
What is the difference between simple and compound interest?
Interest is added to the principle once
Compound interest is added multiple times, including paying interest on interest
What are 4 skills needed in the workplace?
Positive work ethic
Punctuality
Time management
Teamwork
Communication skills
What is demand and what is the law of demand?
Demand is what consumers are willing and able to buy of a product or service
Law of Demand says that consumers will buy more of something as the price goes down and less of it as the price goes up
What part of the Federal Reserve buys and sells government bonds?
Federal Open Market Committee
What is the most common allocation strategy?
Price
How does diversification work with investing?
Invest in multiple companies (or use a mutual fund) to minimize risk and maximize return
What are the three credit reporting bureaus?
TransUnion
Equifax
Experian
What is supply and what is the law of supply?
Supply is how much suppliers are willing and able to make of a good or service
Law of supply says that suppliers will make more of something as the price goes up and make less of it as the price goes down
What are the four tools of monetary policy?
Open market operations/FOMC/buy-sell govt bonds
Reserve requirement
Discount rate
Interest on additional reserves
What is rational decision making?
You'll purchase as long as the marginal benefits are equal or greater than the marginal costs
What is the difference between nominal and real returns on investing?
Nominal returns include inflation
Real returns have inflation taking out
What is the difference between your credit report and your credit score?
Credit report is your full financial history
Credit score is a 3-digit number which indicates how well you manage your money
What do price ceilings and price floors create?
Price ceilings create shortages
Price floors create surpluses
When do we use expansionary monetary policy and contractionary monetary policy?
Expansionary during contractions to help with unemployment
Contractionary during expansions to manage inflation
What are two ways to improve efficiency and productivity?
Division of labor and specialization
What are the three C's of credit worthiness?
Capacity (can you pay it back?)
Character (will you pay it back?)
Collateral (do you have assets to serve as a guarantee of paying it back?)
What are three ways to protect yourself from identity theft?
Shredding important documents
Not opening attachments to unknown emails
Not revealing personal information over the phone, emails, texts or social media
Regularly monitoring your credit report
Changing passwords on accounts
Carefully managing social media
List the four types of market structures?
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
What is the difference between a budget deficit and national debt?
Budget deficit is yearly spending more than tax revenues, which forces us to borrow money
National debt is the cumulative amount of outstanding debt our countries owes