Personal Finance
According to the 50‑20‑30 rule, what percentage of monthly income should go to Savings?
20%
What do we call the price where quantity demanded equals quantity supplied?
Equilibrium
Items wanted but not necessary for survival are called what?
Wants
Name the three types of resources used to produce goods and services (as in the document).
Natural resources, human resources (labor), capital/manufactured resources
Which investment offers the most diversification according to the review?
Mutual Funds
What tool lists expected income and planned spending (needs and wants) for a month?
A Budget
State the Law of Demand in one sentence.
As price increases, quantity demanded decreases (they move in opposite directions).
What is a trade‑off?
Exchanging one thing for another, making choices because resources are scarce.
What is an entrepreneur?
A person who starts a business to produce goods or provide services to make a profit.
Stocks make you a part owner of a company. Name two ways investors can earn money from stocks.
Dividends and selling the stock at a higher price (capital gain).
Which type of budget assigns every dollar of take‑home pay to a category so nothing is left unassigned?
Zero-Based Budget
Name two factors that shift the demand curve (not a movement along it).
1. change in consumer income
2. change in tastes/preferences
3. change in price of substitutes or complements
4. expectations of future prices
5. population changes.
Define opportunity cost.
The value of the next best alternative given up when making a choice.
List one factor that shifts the supply curve and explain its effect.
Example: Technology improvement — increases supply (shifts supply curve right) because firms produce more efficiently.
Why is saving generally recommended for short‑term goals while investing is recommended for long‑term goals like retirement?
Saving (low risk) preserves principal and liquidity for emergencies/short‑term needs; investing (higher risk) offers potential for greater long‑term returns and wealth growth.
Explain why debit card usage immediately changes your checking account balance.
Because debit card transactions withdraw funds directly from your checking account, reducing the balance instantly.
If the price of a close substitute (e.g., Flamin Hot Cheetos) goes down, what happens to the demand for Flamin Hot Doritos? Explain.
Demand for Doritos decreases (consumers switch to the now‑cheaper substitute), shifting the demand curve left.
Explain the income effect in your own words.
When prices rise but income stays the same, consumers can’t buy as much; their purchasing power falls, so quantity demanded often falls.
How does rivalry among firms affect markets? Use the term from the review material.
Competition: rivalry among producers/sellers pushes firms to improve products, reduce prices, or increase efficiency to win customers.
Explain diversification and why it reduces investment risk.
Diversification spreads money across different assets (stocks, bonds, mutual funds) so poor performance in one is offset by others, lowering overall portfolio risk.
Describe two effective strategies for building short‑term emergency savings mentioned in the review material
1) "Pay yourself first": automatically deposit a set percentage of each paycheck into savings.
2) Start with a small, realistic savings goal and deposit a fixed percentage each pay period.
Given an increase in production costs (like gas for shipping), explain and identify the supply curve change and reason.
Supply decreases (leftward shift) because higher input or shipping costs reduce producers’ willingness/ability to supply at previous prices.
Give a classroom example of scarcity, a trade‑off, and its opportunity cost (short scenario, 1–2 sentences).
Example: A student has time to study or play a sport after school (scarcity = limited time). They choose to study (trade‑off = giving up practice). Opportunity cost = the practice, team bonding, or physical exercise they gave up.
If the cost of an important input (like microchips for phones) increases sharply, what happens to supply and producer willingness? Explain using the Law of Supply.
Supply decreases (left shift). Although the Law of Supply says producers supply more at higher prices, a higher input cost reduces their ability/willingness to supply at all price levels, so the supply curve shifts left.
True or False: Making full credit card payments on time every month is the only way to avoid interest charges. Explain.
True — Paying the full statement balance on time avoids interest on purchases; carrying a balance incurs interest.