Basic Economic Concepts
What is economics?
The study of how people make choices to satisfy their needs and wants with limited resources
What is net income?
Income after taxes have been deducted
What is income versus expenses?
The amount of money you earn versus the amount you spend
What are stocks?
Financial instrument that represents ownership in a company
What is GDP?
The total value of all goods and services produced in a country in a year, also known as GDP
What is comparative advantage?
The term for the ability to produce goods or services at a lower opportunity cost than others?
What is a 401(k) or IRA (Individual Retirement Account)?
Retirement savings account in the U.S. that allows for tax-deferred growth
What is saving?
The process of setting aside a portion of income for future needs or emergencies
What is a mutual fund?
The term for a pool of money invested in a diverse range of stocks, bonds, or other securities
What is inflation?
The general increase in prices over time called
What is Gross Domestic Product (GDP)?
The total value of all goods and services produced in a country in a year
What is car insurance or home insurance?
Helps protect against financial loss due to accidents or theft
What is 15% (recommended for retirement savings)?
The recommended percentage of your income to save for retirement
What are Treasury bonds?
Type of investment is considered the least risky, typically backed by the government
What is aggregate demand?
The term for the total demand for goods and services in an economy
What is the difference between needs (essential for survival) and wants (desire for non-essentials)?
The difference between needs and wants
What is a budget?
Managing your income and expenses over time
What is a high-yield savings account?
Type of savings account typically offers the highest interest rate
What is investing?
The term for buying an asset with the expectation that its value will increase over time
What is fiscal policy?
A government policy used to control inflation and stabilize the economy
What is opportunity cost?
Cost of choosing one option over another
What is debt?
The amount of money owed to others
What is budgeting?
The term for the process of allocating income to different expenses
What is diversification?
The investment strategy of spreading investments across multiple asset classes to reduce risk
What is monetary policy?
The economic policy used to manage the money supply and interest rates