Forms of Financial Exchange
What is the preferred method of payment for making a hotel room reservation?
Credit card
Paper and coin money in circulation used to purchase goods and services in an economy is called:
Currency
What is a personal budget?
Projection of income and a plan to use that income to pay estimated expenses and debt payments.
_______ is the ability to borrow money or access goods/services with the understanding that you'll pay back later.
Credit
Name 1 advantage and disadvantage of debit cards.
Advantage: Accepted widely, ease of use, easy to obtain, spending limits
Disadvantage: No grace period, fraud, fees
1 US Dollar = .7 Euros is an example of the ______ between two currencies.
Exchange rate
In your personal budget, what should be accounted for as "income" when creating your budget?
Net pay / take home pay
If the total amount of your debts are greater than the total amount of your assets, you are experiencing:
Insolvency
The various ways of transferring money from one person or entity to another are called:
Financial exchanges
Rather than negotiating whether 20 apples are an equitable trade for 30 oranges, money serves as a consistent form of trade. This is describing which characteristic of money?
Unit of measure
Wages are different than salaries because wages are:
Paid per hour
Paid for repetitive, task oriented work
What are the 4 C's of Credit?
Character
Credit score
Capacity
Collateral
Cash, check, credit card, debit card
A promissory note and legal tender, issued and backed by the government, payable on demand to the bearer is called:
Banknote
What is one of the most important factors in earning a higher level of income?
Education level
What are 2 examples of credit reporting agencies that we discussed in notes?
Equifax, Experian, TransUnion
Susie Saver 123 Main St Anytown, USA 12345
Pay to the Order of: Kip's Gift Shop
Twelve and 18/100 --------- $12.80
Who is the payor and who is the payee in this scenario?
Payor: Susie Saver
Payee: Kip's Gift Shop
Money does not go bad or expire. Which characteristic of money is this describing?
Store of value
What is the difference between passive and earned income? Provide an example of each.
Passive - No work traded for income received (real estate, stocks, retirement accounts, gambling winnings)
Earned - Income earned through wages and salaries for work performed (waged/salaried jobs)
What is the difference between secured and unsecured debt?
Secured - collateral pledged against the loan - leads to lower interest rates from lender "safer for lender"
Unsecured - No collateral pledged against the loan - leads to higher interest rates - as it is "riskier" for lender