Free Enterprise Basics
A free enterprise system allows people to make their own _________ and own their own _________.
Choices; property
What does it mean to be “fiscally responsible”?
To manage your money wisely and avoid unnecessary debt
What is the main purpose of a savings account?
To store money safely while earning small interest
What is credit?
Borrowing money now and repaying it later, often with interest
What is the main purpose of insurance?
To protect against financial loss
In a free enterprise system, who decides what products are made?
Consumers and producers (through supply and demand)
What is the first step in managing your money?
Making a budget
Which type of savings plan locks in your money for a set time in exchange for higher interest?
Certificate of Deposit (CD)
What is one advantage of using credit responsibly?
It helps build a strong credit score
The amount you pay each month for insurance coverage is called the _________.
Premium
What is one main goal of businesses in a free enterprise system?
To make a profit
Name one sign of poor fiscal responsibility.
Overspending, missing payments, or not saving
Why is saving money regularly important?
It prepares you for emergencies and future goals
What happens if you only make minimum payments on a credit card?
ou pay more interest and stay in debt longer
The amount you must pay out of pocket before insurance pays the rest is called the _________.
Deductible
Name two ways individuals participate in a free enterprise system.
As consumers, workers, and entrepreneurs
What is the difference between personal and fiscal responsibility?
Personal responsibility = making good life choices; fiscal responsibility = managing money wisely
Which savings plan allows easy access but offers the lowest interest rate?
Regular savings account
Name two ways to use credit wisely.
Pay bills on time and don’t borrow more than you can repay
Which type of insurance helps pay medical bills from illness or injury?
Health insurance
Why is competition important in a free enterprise system?
It encourages better products, lower prices, and innovation
Why is fiscal responsibility important for the economy as a whole?
When individuals manage money wisely, it leads to economic stability and growth
If you wanted to buy a car in two years, which savings option would make the most sense — checking, CD, or under your mattress — and why?
CD — it earns higher interest and keeps the money secure until needed
Explain why having a good credit score is important.
It helps you qualify for loans, rent apartments, or buy cars/houses with better interest rates
Why is insurance an important part of financial planning?
It prevents large unexpected expenses from causing financial hardship and protects long-term stability