Money & Banking
How will demand for loans change when interest rates go up and down?
Demand will go up when interest rates drop
Demand will go down when interest rates rise
What does a "share" of a stock represent?
A portion of ownership in a company
What is inflation?
A general increase in prices across an economy
What is fiscal policy?
What is the main job of the Federal Reserve?
Regulate the nation's money supply & interest rates
What does "diversifying" your Investments mean?
Not investing in just one company, but spreading those Investments across multiple companies/sectors.
What is the poverty threshold?
What is the main source of revenue for the federal government?
Name the main cause of the Great Recession in 2008
Collapse of the housing market
What does GDP measure?
The value of all goods and services produced in a country
How do we define those that are unemployed?
The percentage of people that are jobless, but are available to work and are actively looking to work.
What is the main source of revenue for local governments?
Property taxes
What is monetary policy?
The actions a central bank would take to manage the nation's money supply to achieve economic goals
What is the equation for calculating interest?
A=P(1+rt)
Name a low & high-risk investment
Low: savings account, creative projects (YouTube, etc)
High: Cryptocurrency, stocks
How is the poverty threshold decided?
Based on the average cost of basic goods and needs
Describe mandatory vs. discretionary spending
Discretionary spending: Money that the government is allowed to spend where they please each year
Higher interest payments
Limited spending for the government in the future
DAILY DOUBLE: Calculate the amount of interest paid on the following loan:
200,000 at 3.5% interest for 15 years
105,000 in interest
Name the 4 components of GDP
C: Consumption
I: Investments
G: Government spending
N: Net exports
Name and describe the 4 types of unemployment
Seasonal: Due to changing of seasons (temporary job)
Frictional: Choose to leave for various reasons
Structural: Skills don't align with those needed for that job
Describe how all of the following work:
Proportional tax
Progressive tax
Regressive tax
Progressive tax: A higher tax rate is applied to higher income levels
Regressive tax: A higher tax rate is applied to lower income levels
What actions could a government take if a country is in a recession?
Increase spending
Cut taxes
Lower interest rates
Create jobs