Economic Decision Making
Someone is using this if they are using a limited supply of materials or time.
Resources
This is the money coming in over a period of time.
Income
a risk
Someone might use this to make a large purchase that they can't afford all at once but can pay off over time.
Loan and/or credit
This is the general rise in prices over time
inflation
These are the decisions and options people have available to them when making an economic decision.
Opportunity
This is the value of someone's money and assets minus liabilities (like a loan) at a certain point in time.
Wealth
This is a commitment of money to purchase an asset with the goal of profiting off of it later.
an investment
This is what must be paid back to a lender in addition to the original amount borrowed in a loan or credit.
Interest
This is the price it costs sustaining a certain standard of living
cost of living
Someone valuing cost over name brand is an example of this.
Preferences
This is the income earned from a wage or salary at a job.
Earned/Active Income
This is the time horizon that is best for a high risk investment since it allows for plenty of time to recoup any losses experienced.
Long term
This is the measurement of how responsible someone is financially and how likely they are to pay back a loan.
Credit Score
This is the amount of goods or services you can purchase with a certain amount of money.
Purchasing Power
A company choosing to responsibly dispose of waste even though it is more expensive.
Ethics
This is the income earned from an asset such as an investment.
Passive Income
This is what people should build in their savings to prepare for risk.
an emergency fund
This could be your interest rate if you have a low credit score.
high
This has decreased if someone does not receive more income, but inflation raises prices.
purchasing power
This is the process of comparing costs to benefits to determine whether a decision is worth while.
Cost-benefit analysis
If someone has a home, a savings account, and a yearly income, what is a part of their wealth?
The home and savings account
This is if someone chooses not to invest and then loses out on profits by not taking that opportunity.
Opportunity Cost
Interest rates are how lenders secure against this either using collateral (secured) or raising interest rates (unsecured)
risk of not paying back the loan
If someone invested their money into the stock market 20 years ago and experienced 25% nominal returns from that investment, but inflation rose 22% in the same period of time, what is the persons real return on investment?
3%