Fundamentals of
Economics
Economics
The study of how people, businesses, and governments make choices when faced with limited resources.
What is Economics
This term describes the general rise in prices across the economy over time.
What is Inflation?
Rent, car payments, and insurance premiums are examples of this type of expense that stays the same every month.
If you buy a $1,000 laptop and choose to pay only this small monthly amount, you may end up paying double the original price due to interest.
What is the Minimum Payment?
This is the name for the federal form that 12th graders must fill out to determine their eligibility for financial aid for college.
What is the FAFSA?
The basic problem of unlimited wants vs. limited resources.
What is Scarcity?
When inflation goes up, this two-word phrase describes what happens to the value of your $1.00—essentially, it buys fewer goods than before.
What is Purchasing Power?
Groceries, dining out, and entertainment are examples of these expenses that change based on your choices and needs.
What are variable expenses? (Subject to change)
This is the specific percentage a credit card company charges you for borrowing their money.
What is the Interest Rate (or APR)?
This is the country that Mr. T traveled to over February break
What is Iceland?
This is the specific "next best thing" you give up when you make a choice, such as the video game you didn't buy because you chose pizza.
What is Opportunity Cost?
Often called "interest on interest," this is when you earn interest on both your original principal and the interest you've already accumulated.
What is Compound Interest?
This number on your credit card bill represents the total amount you owed at the end of the last billing cycle.
What is the statement balance?
If your statement is $1,000 and you buy a $5 coffee the next day, this is your new Current Balance.
What is $1,005?
This is the actual scientific name for the Northern Lights that can be seen in countries located toward the North Pole
What is Aurora Borealis?
This decision-making process involves weighing the pros and cons of a choice to see if the "positives" outweigh the "negatives."
What is a Cost-Benefit Analysis?
If the Federal Reserve (the central bank) decides to print and circulate a massive amount of new money very quickly, this is the most likely result for the value of each individual dollar currently in your pocket.
What is Depreciation
This number includes your statement balance plus any new purchases you’ve made since your last bill was printed.
What is the current balance?
If you have a $1,000 balance on your credit card and you only pay the Minimum Payment, most of that $25 payment goes toward this first, before it ever touches the $1,000 you actually borrowed.
What is Interest?
These are the 3 words that make up IRA
What is Individual Retirement Account?
In a cost-benefit analysis, if the "marginal cost" of buying one more slice of pizza is $3.00, but the "marginal benefit" (your hunger/satisfaction) is only worth $1.00 to you, this is the logical choice you should make.
What is "Don't buy the pizza"? (The costs outweigh the benefits)
This three-digit number, usually ranging from 300 to 850, is a "grade" of how likely you are to pay back borrowed money; it determines whether you get approved for a loan and what interest rate you'll pay.
What is Credit Score?
Unlike "being rich" (having a high income), this specific term describes having enough passive income or savings to cover all your living expenses without needing to work.
What is Financial Freedom?
If you consistently carry a high balance and only make minimum payments, this "percentage-based" metric on your credit report will increase, likely causing your Credit Score to drop even if you are never late on a payment
What is Credit Utilization?
This is the name given to a group of Pandas
What is an Embarrassment?