Federal Reserve
Identify one power of the Federal Reserve
Clear Checks, set the prime rate, influence interest rates, regulate money supply, stabilize the economy
What is the formula to solve for simple interest?
I=P x R x T
What is rule #1?
Get out of debt as fast as you can
Would inflation help or hurt a farmer?
Hurt
What can the Federal Reserve raise or lower to affect inflation?
Interest Rates/Prime Rate
What is the name for the initial amount of money you borrow when taking out a loan?
Principle
The second best alternative you give up when you make a choice
Opportunity Cost
Would inflation help or hurt a bank?
Help- Can charge people more for borrowing money
If the Federal Reserve printed unlimited money, what would happen to inflation?
Inflation would rise
What is the Rule of 72 used to calculate?
How long it will take for an investment to double
True or False: A dollar today is worth more than a dollar tomorrow
True
When inflation increases what will happen to buying power?
Buying power will decrease
What is another name for the Federal Reserve?
The Fed
What does APR (annual percentage rate) tell you about a loan?
The cost of a loan for a full year
If the Federal Reserve lowers interest rates will it be cheaper or more expensive to take out a loan?
Cheaper
If the Fed raises interest rates what should happen to prices?
Prices should decrease
If the Federal Reserve raises interest rates, what will happen to businesses?
Businesses will contract (get smaller)
When using compound interest, interest is calculated and then added back to the ____________
Principle
How long would it take an investment to double if the interest rate is 12%? (72/R)
6 years
Why would inflation hurt an elderly person on a fixed income?
Prices are rising, but their salary stays the same.