Business & Economics
What is the difference between a public and a private entity?
Public entities are funded by the government, generally through taxes. Private entities are owned by individual people or companies.
Why is it important for a person to budget?
Answers may vary.
Why does debt often end up crippling?
Because most payments are made on interest making it very difficult to pay down the principal balance.
What type of investment is likely best for long term retirement savings?
Mutual Funds
By what day is a person required to file their taxes?
April 15th
Explain the business cycle.
Periods of economic expansion followed by periods of economic contraction.
What does an account number signify?
The specific account of an individual at a bank.
What are likely purchases where taking on debt might not be a bad idea.
Buying a House
Many people take on debt when buying a car, but if you can buy a car outright, that is ideal.
Explain the benefits and drawbacks of stocks and bonds.
Stocks: Risky, can be lucrative.
Bonds: Stable, but interest rates are generally not high.
What advantages does a 15 year mortgage offer over a 30 year mortgage.
You pay less interest on a 15 year loan.
A person who combines the factors of production to create a product or start a business.
Entrepreneur
What is a routing number used for?
To identify a specific bank within the banking system.
What are advantages and disadvantages of credit cards?
Advantages: You can earn rewards.
Ramsey Answer: (No advantages of Credit Cards)
Growth on previous interest earned in an investment account.
Compound Growth
What is the purpose of a W-4?
To estimate how much tax should be withheld from your paycheck.
What are the four main types of economies?
Market
Traditional
Command or Centrally Planned
Mixed
What should checking and savings accounts be used for?
Checking: Money that is liquid for daily use.
Savings: Money not for daily use but that could potentially need to be accessed. Not a good option for growth.
What are credit scores used for?
To determine how responsible a person is with money.
What is the difference between a Traditional IRA and a Roth IRA? What are both of them used for?
Roth IRA - Money is taken out post-tax
Both are Individual Retirement Accounts
What information does a W-2 provide?
The amount of wages earned and taxes withheld for the previous year.
What are the factors of production?
Land, Labor, and Capital
What is a net zero budget? Why might this be a good budgeting strategy?
A budget that accounts for every dollar. It can show what investments your excess dollars go to.
What is a perfect credit score.
850
What is the goal of diversification when it comes to investing?
Diversifying accounts provides a safety net. If one account doesn't do well, another account can prop up the value of a person's investments.
What are the advantages and disadvantages of renting/buying a home?
Answers may vary.