The lowdown
A sustained increase in the average price level over time.
Inflation
Giving up current consumption so that you can consume something in the future
Saving
If you lend $500.00 to your brother, what is your opportunity cost?
What you want most costing $500
Cover losses in purchasing power due to inflation, to reward the saver or lender for forgoing current spending, and to reward the lender for taking a risk that the money may not be repaid.
Interest on savings or loans.
You want to avoid maintenance costs.
Rent rather than buy
Any informed consumer, if offered $1,000 now vs, $1,000 payable in 10 years would take the $1,000 now. No exceptions. Why?
Money buys less over time due to inflation.
is a government program that pays monthly benefits to workers in the United States who pay the Social Security tax, know as FICA.
Social Security
Number 2 on the Handy Dandy Guide
All choices have costs
There aren't enough resources to produce everyone's wants.
The reason scarcity exists
Lower monthly payments
Leasing a vehicle
The price level of many things you buy increases over time.
Inflation
The amount of money paid to a landlord by the renter for use of the rented property.
Monthly Payment
Allows you to know what amounts of money you must save today to retain your purchasing power in the future
understanding of future value
the value of the next-best alternative when a decision is made.
Opportunity Cost
Good warranty protection
Leasing a vehicle
Taxes paid to a governmental unit, based on the value of piece of real or personal property
Property Taxes
Electricity, gas, water, sewer, waste disposal and other services.
Utilities
A legally binding document that both landlords and tenants agree to and sign
A lease addendum
Consumption today is valued more than consumption in the future.
Why people are impatient to make a purchase?
Credit score and criminal background
The top two ways landlords evaluate applicants
Tati made an impulse purchase by buying a $1,000 handbag. An impulse purchase means that she most likely did not think of the ____________ alternatives for the $1,000.
implicit
is the current value of a future sum of money, given a specified rate of return.
Present value
religion, race and national origin
It is illegal for landlords to discriminate on the basis of...
The information, alternatives, and opportunity costs present at the time of making a decision are known as
trade-offs.
Provides more flexibility
Renting