Consumer Economics Final Exam Review – Flashcards

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Securities Exchange Commission (SEC)
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A federal government agency responsible for enforcing the laws concerning the trading of stocks and bonds
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NASDAQ
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An electronic stock-trading system that links brokerage firms
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return
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income earned on an investment
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stockholder
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investors who own a corporation because they own its stock
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Individual retirement account (IRA)
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A retirement savings plan that has special tax benefits but is not employer-sponsored
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Diversification
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Distributing funds among a variety of investments to minimize overall risk
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Opportunity Costs
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The value of your next best alternative whenever you make a choice
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Central Processing Unit (CPU)
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The heart of a computer that converts data into electronic codes and uses these codes to complete calculations, transfer information or images, or create sound
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Spam
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Unwanted advertising distributed through e-mail
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Random Access Memory (RAM)
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The computer's main workspace
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Depreciation
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A decline in a product's value
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HyperText Markup Language (HTML)
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Computer coding system that was developed and used to create documents for display on the Internet
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technological obsolescence
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The process of new technology making products based on old technology out of date
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Bait and switch
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The practice of "baiting" consumers with an advertised but nonexistent bargain and then "switching" them to a more expensive product when they arrive at the store
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Environmental Protection Agency (EPA)
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Federal agency responsible for enforcing laws that protect the environment
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Federal Trade Commission (FTC)
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Federal agency responsible for protecting consumers from unfair or deceptive business practices, such as misleading information in advertising or on product labels
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full warranty
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a written promise that the company will repair or replace a defective product within a specified time period at no charge
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implied warranty
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an unwritten guarantee that the product is of sufficient quality to fulfill the purpose for which it was designed
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limited warranty
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a written warranty that does not meet the standards of a full warranty because of specified limitations
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Loss leader
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a product priced below cost to attract customers to the store
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trading up
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the practice of pressuring consumers to buy a more expensive product than they intended
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monopoly
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a company that has an unfair advantage over competitors in an area of business
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arbitration
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an impartial third-party will hear both sides of a dispute and will make a decision
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aptitude
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a natural talent for learning some skills over others
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references
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people the employer can contact to verify your training, experience, or chharacter
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severance pay
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a sum of money for which an employee is eligible upon termination
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cover letter
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a letter of introduction that you send with your resume to a potential employer
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downsizing
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terminating employees to cut expenses
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referral (job)
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a recommendation of a person for a job given to an employer by someone the employer knows
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allowance
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a number that you can calculate on a Form W-4 that reduces the amount withheld from your pay
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taxable income
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all the wages, tips, and interest on which you pay taxes
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Federal Insurance Contributions Act (FICA)
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Federal law that requires workers and their employers to contribute to Social Security and Medicare
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Form W-4
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A form that you fill out to provide the information your employer needs to determine the proper amount to withhold from your paycheck
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Form W-2
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A summary of your earnings and withholdings for the year for a job
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income taxes
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taxes you pay on most types of income you receive
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estate tax
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tax on property received by the legal heirs when someone dies
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excise tax
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tax included in the price of certain goods and services
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gift tax
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tax paid by the giver of gifts worth more than $12,000
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payroll taxes
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a share of workers' earnings paid to the government by workers and their employees
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property tax
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tax on the value of real estate owned
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sales tax
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tax added to the price of goods and services at the time of purchase
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fixed expenses
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amounts you have already committed to spend
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flexible expenses
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amounts that you can choose to spend or not spend
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bartering
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trading goods and services without using money
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canceled check
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a check with the bank's stamp on it, indicating that it has been paid
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cashier's check
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a bank's own personal check, signed by the bank's cashier. Payment of this check comes from the bank's own funds.
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certified check
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a personal check that has been stamped and signed by a bank officer as a guarantee that your account has the funds to cover the check
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Federal Deposit Insurance Corporation (FDIC)
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A federal government agency that insures deposits in banks
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inflation
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general increase in the average level of prices in a nation's economy
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third party checks
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checks made out to you that you sign over to someone else
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traveler's checks
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checks that you pay for in advance, and if they are lost or stolen, the issuing company replaces them
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bond
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a written promise to pay a debt by a specified date
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certificate of deposit (CD)
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a deposit in a savings instiution that earns a fixed interest rate for a specified period of time
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dividend
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portion of a company's profits paid to the owners
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money market account
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a deposit for which the interest rate changes over time as interest rates in the economy change
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savings bonds
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U.S. government bonds issued for amounts of $50 to $10,000
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principal (savings)
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money on deposit
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common stock
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a voting share of ownership in a corporation for which the dividend varies, as determined by the corporation's board of directors
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corporate bond
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bonds sold by corporations to finance business activites, which usually pay a fixed rate of interest and are paid off after a specific term
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corporate stock
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a unit of ownership in a corporation that you can buy
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load
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a sales fee that you pay when you invest in a mutual fund
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net income
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amount you receive after withholdings are subtracted from your gross pay
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gross income
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amount you earn before taxes are withheld
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stockbroker
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a person who handles the transfer of stocks and bonds between buyer and seller
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Annual Percentage Rate (APR)
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The finance charge calculated as a percentage of the amount borrowed
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preferred stock
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a nonvoting share of ownership in a corporation that pays a fixed dividend
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credit limit
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the maximum account that you may charge on your credit account
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credit rating
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a measure of your creditworthiness, often completed as a numerical score, using the FICO scoring system to analyze your credit history
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capital
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the value of what you own, including savings, investments, and property
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equity
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the difference between the amount owed on a home and the home's value
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grace period
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the time between the billing date and the payment due date when no interest is charged
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secured loan
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a loan backed by something of value pledged to ensure payment
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unsecured loan
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a loan not backed by any collateral
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lemon laws
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laws that require car manufacturers to replace or buy back a car that cannot be fixed after repeated tries, has multiple major defects, or has defects that kept it out of service for 30 days
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invoice price
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amount the dealer paid to buy the car from the manufacturer
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sticker price
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manufacturer's suggested retail price listed on a sticker in a new car's window
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lease (vehicle)
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renting use of a vehicle by making specified payments over a stated period of time
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appreciation
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increase in value over time
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closing costs
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a collection of fees you must pay when you sign mortgage paperwork to cover tasks the lender must do related to your loan
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compound interest
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interest paid on the principal and also on previously earned interest, assuming that the interest is left in the account
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simple interest
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interest paid one time per year at the end of the year on the average balance in the savings account
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down payment
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percentage of the purchase price that the borrower pays up front
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escrow account
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a holding account used by a mortgage lender to accumulate the borrower's funds for taxes and insurance until these payments are due
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lease (housing)
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legal contract that gives you the right to occupy property for a specified period of time as long as you pay the rent and follow the rules specified in the contract
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landlord
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owner of rental property
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tenant
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someone who rents an apartment or other home
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principal (loan)
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the amount borrowed
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security deposit
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money the landlord holds to cover any damages to rental property
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appraisal
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an expert's determination of the value of a piece of property
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bodily injury liability coverage
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Insurance that protects you against financial loss, including the cost of your legal defense, when you are legally responsible for injuring other people in an automobile accident
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homeowners insurance
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Insurance that provides personal property and liability protection for your home
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liability insurance
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Insurance that protects you from losses that you cause others
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premium
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regular payment required to purchase insurance
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rider
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special addition to an insurance policy that covers a specific loss not covered in the standard policy
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policy
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insurance contract
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mortgage
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loan to buy real estate, such as land or a home
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fee-for-service plan
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Type of health insurance in which you pay for health services as you receive them and submit a claim to the insurance company for reimbursement of covered expenses
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managed care plan
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health insurance coverage that you pay for in advance instead of paying for services as you use them
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beneficiary
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person specified in a life insurance policy to receive payment upon the death of the insured person
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coinsurance
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Under fee-for-service health insurance, the portion of covered medical expenses you must pay after meeting the deductible
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copayment
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Under managed care health insurance, the specific amount you pay for particular services, regardless of the cost of those services
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workers' compensation
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Employer-paid insurance program that covers expenses for work-related injuries, illnesses, and death
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Medicaid
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Government-sponsored health insurance designed for people with low incomes or disabilities, regardless of age
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Medicare
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A federal government program that is designed to provide low-cost medical insurance for Americans who are 65 or older or have certain disabilities
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Medigap
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Private health insurance designed to pay for services that Medicare doesn't cover
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Health maintenance organization (HMO)
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Managed care health insurance plan that charges a set amount for each member each year in exchange for providing medical services at no extra cost or for a small copayment, no matter how often you see your doctor
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COBRA
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Federal law that requires your employer to offer to continue your health coverage for up to 18 months after you leave your job, although you must pay the entire premium
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referral (medical)
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A request from your primary care physician for services from a particular specialist
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multinational corporation (MNC)
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a business that is based in one country but has branches or plants in other countries
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NAFTA
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Agreement among the U.S., Canada, and Mexico to gradually eliminate tariffs on most goods produced and sold in North America
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exchange rate
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the price of one currency in terms of another currency
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depression
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a deep, extended decline in a nation's economy
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expansion
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a period of general growth in a nation's economy
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recession
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a period of general decline in a nation's economy
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quota
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a limit on the amount of a product that can be imported
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tariffs
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taxes imposed on imported goods
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trade deficit
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the result when a country spends more on imports than it earns from exports
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trade surplus
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the result when a country earns more from exports than it spends on imports
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absolute advantage
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a country's ability to produce a a product at a lower cost than any other nation
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comparative advantage
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a country's production of a product that makes the most efficient use of the resources it has
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business cycle
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recurring pattern of ups and downs in a nation's business activity
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fiscal policy
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government's taxing and spending decisions
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monetary policy
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Government's efforts to help stabilize the economy by managing interest rates, the availability of loans, and the supply of money
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unemployment rate
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percentage of people who are able and looking for work but don't have jobs
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collision coverage
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insurance that pays for damage to your car caused by colliding with another car or object
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comprehensive coverage
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Insurance that pays for damage to your car caused by something other than a collision, such as damage from storms, vandalism, and theft
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open enrollment
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Specified time each year when employees may sign up for the employer-sponsored health insurance plan
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permanent life insurance
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Life insurance that provides a death benefit plus a savings plan and lasts for the policyholder's lifetime
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deductible
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the amount you pay for a loss before the insurance company pays anything
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market value
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The amount an item is worth now is called its
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replacement value
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The amount it would cost to replace the item that is destroyed is its
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Types of advertising
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Brand, informative, comparative, defensive, persuasive
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Consumer Bill of Rights
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It was created to protect consumers
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Disability income insurance
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Designed to replace your loss income when you can not work because of an accident or illness
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Equal Credit Opportunity Act
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Made it illegal to refuse credit on the basis of race, color, religion, national origin, gender, marital status, or age
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Equal Employment Opportunity Act
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Forbids discrimination by potential employers or their agencies on the basis of race, age, color, religion, gender, or national origin
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Credit unions
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Financial institutions that offer membership to people who share a common bond, such as people in a particular profession, company, church, or labor union
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Savings and loans
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Financial institutions that specialize in lending money to consumers to buy homes
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Gigabyte
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1 billion bytes
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Megabyte
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1 million bytes
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Kilobyte
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1 thousand bytes
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Law of supply and demand
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Demand is the quantity of a good or service that consumers are willing and able to buy at various prices during a given time period. Supply is the quantity of a product that producers are willing and able to make available for sale at various prices over a given time period
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Product pricing
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When an item first comes on the market it is generally higher than when it's been on the market for a while
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The different economies
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Traditional,command, market,mixed
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Basic types of consumer insurance
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Auto, health, home, life
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