UNIT #7 - VOCAB LOG 7.1 – 04/13 Gross income: earnings before taxes are taken out Disposable income: earnings after taxes are taken out, first used to satisfy needs Discretionary income: earnings after taxes are taken out & necessities are bought, used to satisfy wants Consumer: indv who buys a product/service Consumerism: movement to educate buyers about their purchases & demand better, safer products from producers Comparison shop: collect info about product/service to get best value for your money Warranty: promise from a producer/seller to repair/replace a faulty product w/in a certain time period Generic product: version of a product that is usually cheaper & of similar quality to a name-brand version 7.2 – 04/14 Budget: record of all the money you earn & spend Income: money you earn; incl. wages, salaries, tips, & investment returns Expenses: money you spend on everything; incl. needs, wants, savings, & donations Credit: borrowed money to pay for something now while promising to pay it back later Principal: amount of money borrowed Interest: the cost of borrowing money Simple interest / Annual percentage rate (APR): percentage of amount borrowed, paid each term of a loan Lender: person who lends money to another Borrower: person receiving loaned money Collateral: property pledged as security for a loan that can be seized if a borrower is unable to repay a loan Credit rating: evaluation of a borrower’s likelihood that they will be unable to repay a loan Default: inability to repay a loan Down payment: money that a borrower pays up front on a large purchase to reduce the amount of interest they pay 7.3 – 04/15 Surplus / positive balance: when income exceeds expenses Deficit / negative balance: when expenses exceed income Graduated income tax: higher tax rates for higher steps of income Bracket: each step of income taxed at a different rate Marginal tax rate: highest income bracket on which you pay taxes Effective tax rate: taxes owed divided by gross income; less than / equal to marginal tax rate Salary: fixed amount of income earned each year Wages: fixed amount of income earned hourly; NON-FIXED yearly based on hours worked Tips: extra income for providing a service Investment returns: income from dividends, capital gains, & interest from loaning money Dividends: income earned to stockholders Capital gains: income earned from the sale of an investment for price higher than what was originally paid Fixed expenses: items on which same amount is paid month-to-month or year-to-year Non-fixed expenses: items on which diff. amount paid month-to-month or year-to-year 7.4 – 04/18 Deposit: to put money into an account Withdraw: to take money out of an account Transfer: to transfer money from one account to another Direct deposit: when employer puts funds from an employee’s bank account Checking account: account that allows owner to write checks, use a debit car, or withdraw funds from an ATM; earns little or no interest; funds insured by govt “Bounce”/overdraft: when you write a check for a value that exceeds the amount of funds in your account Savings account: account that allows owner to save money w/ low interest rate & where funds can easily be deposited, withdrawn, or transferred; funds insured by govt Money market account: type of savings account that earns higher interest than regular savings, but requires a higher account balance to be maintained at all times Certificate of deposit accounts: type of savings account that earns higher interest than regular savings, but requires you to keep all funds in the account for long-term period 7.5 – 04/19 Stocks: gives investors partial ownership in a company, dividend income, & opportunity to make capital gain if they can sell stock for more than what they paid Corporate bonds: investors loan a company money in return for interest payments Savings bonds: investment where investors loan govt money & repaid at double the amount of what they paid when the bond matures Mature (bonds): when investors are paid face value of bond to whom they loaned the money to purchase it Redemption price: face value of a bond at any given time Rule of 72: time it takes for savings bond to double in value; years = 72 / (% interest) Mutual fund: money pooled from investors & invested in many stocks to spread risk, so that risk of losing entire investment is less than investing in a single stock/bond Risk-return model: investors seek higher returns (interest payments) for riskier investments Impulse buying: purchases made based on feelings/emotions Immediate gratification: putting short-term wants ahead of long-term wants/needs Delayed gratification: putting long-term wants/needs ahead of short-term wants
UNIT #8 VOCAB LOG 8.1 - 04/22 IMPORT: goods produced in one country & sold in another EXPORT: goods produced from one country by another COMPARATIVE ADVANTAGE: ability of a country to produce a good at a lower opportunity cost that another country DOMESTIC: relating to within your country TARIFF: taxes on imported goods to protect domestic industries QUOTA: limits on amount of imported goods to protect domestic industries FREE TRADE: removal of barriers to trade like quotas & tariffs EXCHANGE RATE: price of one nation’s currency in terms of another nation’s BALANCE OF TRADE: difference b/w value nation’s exports & what they import TRADE SURPLUS: when the value of a nation’s exports is greater than it’s imports TRADE DEFICIT: when the value of a nation’s imports is greater than it’s exports GLOBAL INTERDEPENDENCE: people & nations rely on one another for goods, services, & natural resources PROTECTIONISM: when nations try to protect their industries from foreign competition, usually w/ tariffs & quotas 8.2 - 04/25 DEMAND: desire, willingness, & ability to buy a product DEMAND SCHEDULE: table listing various quantities demanded of a good for any given price DEMAND CURVE: graph showing quantity demanded of a good at any given price LAW OF DEMAND: all things equal, as price of a good increases, quantity demanded of that good decreases UTILITY: usefulness or satisfaction we get from using a good MARGINAL UTILITY: the additional satisfaction we get from consuming one more unit of a good SUBSTITUTE: a good that is bought in place of another good COMPLEMENT: a good that is bought together w/ another good DEMAND ELASTICITY: extent to which a change in price of a good results in a change of the quantity demanded for that good 8.3 - 04/26 SUPPLY: the various quantities of a good/service producers/suppliers are willing to sell at all possible market prices SUPPLY CURVE: graph that shows the amount of good/service that would be supplied at all possible market prices SUPPLY SCHEDULE: table that shows amount of good/service that would be supplied at various market prices LAW OF SUPPLY: principle that producers are willing to offer more for sale at higher prices & less at lower prices (prices & quantity supplied change in same direction) PROFIT MOTIVE: main incentive for producers is to earn over & beyond what they spend making a good/service (that their revenues will exceed their costs) MARKET SUPPLY: total combined supply schedules for all producers/suppliers of a good/service PRODUCTIVITY: when workers are more efficient (greater output at a lower cost) SUBSIDY: a govt payment to an indv or business for certain actions SUPPLY ELASTICITY: measure of how quantity supplied of a good/service changes in response to changes in price 8.4 - 04/27 SURPLUS: situation in which quantity supplied exceeds quantity demanded; signals that prices are too high SHORTAGE: situation in which quantity demanded exceeds quantity supplied; signals that prices are too low EQUILIBRIUM PRICE: price at which amount producers are willing to sell equals amount consumers are willing to buy PRICE CEILING: maximum price that can be charged for a good/service, set by govt, usually below equilibrium price & often resulting in shortages PRICE FLOOR: minimum price that can be charged for a good/service, set by govt, usually above equilibrium price & often resulting in surpluses MINIMUM WAGE: lowest legal wage that can be paid to workers; price floor set for workers who supply their labor to employers 8.5 - 04/28 GROSS DOMESTIC PRODUCT (GDP): total dollar value of all final goods/services produced in a year in a country REAL GDP: GDP adjusted for inflation BUSINESS CYCLE: alternating periods of growth & decline that the economy goes through RECESSION: six consecutive months of economic contraction (or decrease in real GDP) DEPRESSION: economic state w/ high unemployment, declining incomes, & business failures PEAK: highest point of a business cycle EXPANSION: when real GDP increases & the economy grows CONTRACTION: when real GDP decreases TROUGH: lowest point of a business cycle CIVILIAN LABOR FORCE: non-military persons 16 years old & above that are working or looking for a job UNEMPLOYMENT: percentage of civilian labor force that is looking for a job but does not have one INFLATION: general increase in prices CONSUMER PRICE INDEX: measure of inflation based on sample of prices of consumer goods 8.6 - 04/29 CURRENCY: paper money & coins COMMERICAL BANKS: financial institutions offering full banking services to businesses & indvs CREDIT UNIONS: financial institutions operating on a not-for-profit basis that are only open to members who are part of groups that sponsor them FEDERAL RESERVE (the Fed): central bank of USA; bank from which other financial institutions borrow funds MONETARY POLICY: controlling the supply of money & the cost of borrowing DISCOUNT RATE: rate at which Fed loans money to member financial institutions RESERVE REQUIREMENT: percentage of financial institutions’ money required to be held in Federal Reserve Banks as a back-up against their deposits OPEN-MARKET OPERATIONS: purchase/sale of govt bonds & Treasury bills 8.7 - 05/02 BALANCED BUDGET: govt revenues equal to govt expenditures APPROPRIATIONS BILL: law to approve spending for a specific activity; starts in the House of Representatives INCOME TAX: taxes on individual earnings & business profits PAYROLL TAX: deducted from paycheck for Social Security & Medicare benefits EXCISE TAX: taxes on specific goods, such as gasoline ESTATE TAX: taxes on wealth inherited by a deceased person’s heirs PROGRESSIVE TAXATION: taxes that take a higher rate from higher income levels REGRESSIVE TAXATION: taxes that take a higher rate from lower income levels PROPORTIONAL TAXATION: taxes that take same rate from all income levels MANDATORY SPENDING: spending by the federal govt that doesn’t need to be approved annually DISCRETIONARY SPENDING: spending by the federal govt that needs to be approved annually AUTOMATIC STABILIZERS: programs that begin to stimulate the economy as soon as they are needed