Personal Finance Economics Study Guide
SSEPF1 The student will apply rational decision making to personal spending and saving choices
a. Explain that people respond to positive and negative incentives in predictable ways.
1. Define incentive. What is a positive incentive? What is a negative incentive?
2. Give an example of a positive incentive and a negative incentive
b. Use a rational decision making model to select one option over another.
1. Define rational decision making.
2. What are two rational decisions making models we use?
3. Define marginal costs and marginal benefits.
c. Create a savings or financial investment plan for future goals.
1. Define saving. Define investment. What is the difference between saving and investment?
SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from
savers to investors.
a. Compare services offered by different financial institutions.
1. What is a savings account? What is a checking account?
2. What are the types of financial institution? List the services each offers.
b. Explain reasons for the spread between interest charged and interest earned.
1. Define interest charged. Define interest earned.
2. Which will be higher and why?
c. Give examples of the direct relationship between risk and return.
1. How does risk relate to return and why? (as risk goes up and down, what does return do?)
2. Draw the pyramid of risk and return. Which investments offer the most risk and most return.
d. Evaluate a variety of saving and investment options; include stocks, bonds, and mutual funds.
a. Define each of the following: Stock, Bond, Mutual Fund, Real Estate, and Certificate of Deposit (CD’s)
b. List the costs and benefits of each type of investment. (listed above)
SSEPF3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s
spending a saving choices.
a. Give examples of who benefits and who loses from inflation.
1. Define inflation. Who is hurt by inflation and why?
2. In what situation might a person benefit from inflation?
b. Define progressive, regressive, and proportional taxes.
1. Define and give an example of Progressive tax.
2. Define and give an example of regressive tax.
3. Define and give an example of proportional tax.
c. Explain how an increase in sales tax affects different income groups.
1. How does an increase in sales tax affect higher income families compared to lower income families?
SSEPF4 The student will evaluate the costs and benefits of using credit.
a. List factors that affect credit worthiness.
1. List the three C’s of credit and explain what each is.
b. Compare interest rates on loans and credit cards from different institutions.
1. Rate the following from 1-3, with 1 being the highest interest rate charged and 3 being the lowest.
Credit card, Mortgage , Auto Loan
c. Explain the difference between simple and compound interest rates.
1. Define compound interest. Define Simple interest.
2. What is the difference between simple and compound interest?
SSEPF5 The student will describe how insurance and other risk-management strategies protect against financial loss.
a. List various types of insurance such as automobile, health, life, disability, and property.
1. What is automobile insurance?
2. What is health insurance?
3. What is life insurance?
4. What is disability insurance?
b. Explain that costs and benefits associated with different types of insurance; include deductibles, premiums,
shared liability, and asset protection.
1. What is a deductable?
2. What is a premium?
3. What are the different ways people deal with risk?
4. What is the benefit of purchasing insurance?
5. How is purchasing insurance considered sharing risk?
SSEPF6 The student will describe how the earnings of workers are determined in the marketplace.
a. Identify skills that are required to be successful in the workplace.
1. How do things like education, training, and experience affect income and job security?
b. Explain the significance of investment in education, training, and skill development.
1. How/why is education considered an investment?
2. If a company were to pay for its employees to be trained, how would their benefits outweigh their
costs?
3. How does an increase in education personally benefit a person?