nit 1: Families and the Economy
Anti-trust suits
Used to help encourage competition in a particular industry
and break up monopolies.
Barter systems
Those that feature a direct exchange of goods without the use
of money or another medium of exchange.
Capital
Refers to the goods and tools used to make products.
Capitalism
Characterized by privately owned businesses (or means of
production) engaged in making a profit.
Economics
The study of the ways in which money is created and used
in society.
Economic system
A structure within a society that organizes the production,
distribution, and consumption of goods and services.
Economy
“The range of economic activity in a country, region, or
community.”
Free enterprise
No governmental presence in economic transactions.
Gift economies
Consist of situations where goods and services are exchanged
without an expected or immediate return.
Global trade
The transportation and exchange of goods, services, resources,
and money across international borders.
Labor
Refers to the human ability to produce goods or services and
includes physical labor, talent, and skills.
Laissez-faire
There is no governmental presence in economic transactions.
Market economies
The prices of services and goods are determined through a free
system.
Monopolies
Companies that have complete control over a particular
product
or industry.
Planned economies
Those in which the prices of goods and services are determined
by the government or state.
Resources
Things like land, minerals, forests, oil, and so on that exist in
the world and can be used to create goods.
Socialist economy
The government operates as the central authority, guiding the
economy and controlling (owning) many of the businesses.
nit Module 1 Questions to Review:
1. What is an economy?
2. What are some different types of economies? How do the different types affect individuals?
3. How are the government, the economy, and individuals linked? How do they influence each
other?
4. How does capitalism influence individuals? How do individuals influence capitalism?
5. How do the financial choices of individuals affect the economy?
6. What is a barter system?
7. What is the principle of supply and demand?
8. What are tariffs? How do they impact the economy?
2: Our Economic World
Economic resources
Includes natural and manufactured resources that go into
products and services.
Fiscal policy
Refers to the governmental allocation and collection of money
within the state.
Open outcry
A sort of auction for stocks in which traders verbally submit
their offers.
Opportunity costs
Economic choices where resources could have been used to
create another item or used for another purpose.
Stocks
Shares of ownership in a company.
Stock market
A place (physical or virtual) where stocks or shares in a
company are bought and sold.
Trading
The buying and selling of stocks.
Module 2: Questions to Review
1. What societal level economic factors influence personal finances?
2. What are the economic principles regarding scarce resources? How do scarce resources
influence individuals?
3. What are the costs of “free” items?
4. How do fiscal policies impact personal finances?
5. What are stock markets? How do stock markets influence individuals?
nit 3: Financial Responsibility
Future value
An amount of money multiplied by the interest rate and the
amount of time that the money will be earning interest.
Income risks
While individuals make goals and strategies based on their
current income, few individuals have guarantees that their
income will stay the same.
Inflation risk
Prices on an item or service may rise or fall.
Interest rate risks
When we borrow money in the form of a loan or save money,
interest rates will affect these activities.
Opportunity costs
The things that you give up when you make a choice.
Personal financial planning
The process of creating and achieving financial goals.
Personal risks
Individuals may encounter situations due to health, safety, and
so on that can create challenges to meeting personal financial
goals.
Shared decision-making
Involves having two or more people negotiate or compromise
to make financial decisions.
Time value of money
Refers to the increases in an amount of money because of the
interest earned on the money.
Module 3: Questions to Review
1. What are the steps in creating a personal financial plan?
2. What are the risks that individuals face in making financial decisions?
3. What resources do families have in reaching their financial goals?
4. What are some strategies that individuals and families can use to make responsible financial
decisions?
5. What is shared decision-making? What are the advantages? Disadvantages?
4: Financial Institutions
401k
Retirement accounts that are partially funded by employers
using a portion of wages before tax.
403(b)
Retirement accounts for individuals working in nonprofit
organizations, such as schools or the government.
Bonds
Investments that promise to pay a certain amount of interest
on the principle amount after a given time period (normally
more than one year).
Brokerage firms
Manage and facilitate the purchase of stocks, bonds, and other
types of investments.
Certificate of deposit (CD)
These accounts pay a standard rate of interest on the balance,
but the money must be left in the account for a specified period
of time.
Check cashing businesses
Do not require that an individual be an account holder; they
will cash any valid check.
Commercial banks
Funded through deposits into checking and savings accounts
and they provide services such as mortgages, personal loans,
and bank-issued credit cards.
Credit unions
Nonprofit, member-owned institutions.
Demand deposit accounts
Accounts where you have the right to “demand” a withdrawal
of the funds from the account at any time.
Depository institutions
Those that receive their money from customer deposits.
Life insurance companies
These companies sell life insurance, which is paid out by the
company upon the death of the insured individual.
Maturity date
The end of the CD account time when the money can be
withdrawn.
Money market mutual funds
Accounts in which a mutual fund company pools depositors’
funds and invests the money in different financial assets.
Mutual fund companies
Investment companies; they sell shares to individuals and pool
funds to buy financial securities.
Mutual savings institutions
Owned by the individuals who deposit their money in the
institution.
Nondepository institutions
Receive their money from other sources than consumer
deposits.
Pawnshops
Offer individuals a loan based on the value of the person’s
possessions, such as jewelry or other items.
Payday loan businesses
May offer cash advances, delayed deposit loans, and postdated
check loans.
Rent-to-own services
Lease furniture, electronics, and other items to consumers who
can own the items if they make a certain number of payments
(usually weekly or monthly).
Savings and loans institutions
Receive money from households like commercial banks, but
use over 70 percent of their money on home mortgages.
Stock-held savings institutions
Owned by stockholders.
Web-only financial institutions
These depository institutions do not have physical locations,
and conduct all business with customers online.
Module 4: Questions to Review
1. What are some considerations in choosing a financial institution? Which one do you think
would be the most important consideration for you in choosing a financial institution?
2. What are the pros and cons of U.S. savings bonds?
3. What are some of the problems that individuals might face if they use one of the
“problematic” financial institutions?
4. What are some of the consumer protections available? What can individuals do to protect
themselves?
5. What are some of the advantages and disadvantages of choosing a federally-insured
account?
nit 5: Personal Taxation
Adjusted gross income
Gross income minus specific deductions.
Alternative minimum tax
Designed to make sure that those with high incomes pay their
fair share of taxes, even if they have a high number of
deductions that brings their adjusted gross income into a lower
tax bracket.
Estate taxes
Taxes on a person’s estate when that person dies.
Excise tax
A federal and/or state tax on specific goods such as gasoline,
tires, airfare, and cigarettes.
Gross income
All sources of income.
Income tax
Tax imposed on the amount of money that each person earns
during the year.
Inheritance tax
Property or assets inherited after someone has died and
bequeathed the asset to another.
Internal Revenue Service (IRS)
Collects federal income taxes in the United States.
Progressive tax systems
Require those with higher incomes to pay a greater proportion
of their income in taxes.
Regressive tax systems
Charges everyone the exact same percentage, amount, or
proportion in taxes.
Tax audit
A detailed examination of a return by the IRS.
Module 5: Questions to Review
1. What are the benefits of taxes? What is the relationship between taxes and the government?
2. What are some of the different types of taxes that we pay?
3. What are the basics of the US tax system?
4. What are some of the options for filing and paying taxes?
5. What are some of the penalties and consequences for not paying taxes or giving false
information for taxes?