Scarcity
What is the definition of Scarcity
What is a budget?
A plan for how to spend and save money.
What is the main difference between a credit card and a debit card?
A credit card borrows money, a debit card uses your own money.
What is a checking account used for?
Everyday spending like bills, debit card use, and withdrawals.
What is compound interest?
Interest earned on both the original money and on the interest already earned.
What is "opportunity cost"
what you are losing or missing by not choosing the other option
What does "zero-based budgeting" mean?
Every dollar is assigned a job until you reach $0 left unbudgeted.
Which card type can help build your credit score?
Credit card.
What is a savings account used for?
Storing money and earning interest over time.
What does the formula I = PRT stand for?
interest = Principal × Rate × Time (for simple interest).
What is an example of a scarce resource?
Time, money, oil, clean water, etc.
What are fixed expenses?
Expenses that stay the same each month like rent or car payment.
What happens if you only pay the minimum on a credit card?
You pay interest and stay in debt longer.
What is the main difference between checking and savings accounts?
Checking is for spending; savings is for storing and growing money.
Why is compound interest better than simple interest for saving money?
Because your interest earns more interest, growing faster over time.
How does scarcity affect decision-making?
People must make choices and give up something (opportunity cost).
What is the "envelope method"?
Putting cash into envelopes for each spending category to limit overspending.
Which card pulls directly from your checking account?
Debit card.
What is an overdraft fee?
A charge when you spend more money than you have in your checking account.
If you leave $1,000 in a bank account at 5% annual compound interest, what happens after one
You earn $50 interest, and next year you earn interest on $1,050.
How can scarcity lead to opportunity cost?
Because choosing one thing means missing out on the next best alternative.
Why is tracking expenses important for budgeting?
It helps identify overspending and adjust your plan.
Why might someone use a credit card instead of a debit card (wisely)?
To build credit, earn rewards, or for emergency purchases—but only if paid off in full.
Why should you not use your savings account like a checking account?
It can reduce your interest earnings and defeat the purpose of saving.
How does time impact compound interest?
The longer money compounds, the more it grows due to exponential growth.