Notesale: Turn your study into money

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CONSUMER FINAL STUDY GUIDE
Scarcity
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land, labor, capital and entrepreneurship
Opportunity cost
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traditional (those who produce will share),
command (whatever gov’t decides), market (individuals, private companies)
3 economic questions
...
private property, freedom of choice, profit motive
Profit motive
...
to provide public goods and services, redistribute
income, regulate economic activity, and ensure economic stability
Public goods
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it would be unprofitable for private businesses to do
so
3 benefits of SS
...
pays some of the hospital and medical expenses of
people who are either over the age of 65 or under the age of 65 and disabled
Medicaid
...
help people with income, nutrition, health, and
housing based on need
How gov’t regulates economy
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to fund public goods and services, to influence
behavior, to stabilize the economy, and to redistribute income
Principles of tax fairness
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same percentage out of everyone’s income (state
income tax)

Progressive tax
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larger percentage taken from low-income people
than high-income people (food tax)
W2
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(Jan
...
A form completed by an employee to indicate his or
her tax situation (exemptions, status, etc
...
The W-4 form tells the employer the
correct amount of tax to withhold from an employee's paycheck
...
income tax form and offers a faster and easier way
to file taxes, meant for taxpayers with rudimentary tax situations
...
the Illinois individual income tax imposed on every
individual earning or receiving income in Illinois (April 15)
Blank Endorsement
...
The
effect of this is that it is payable only to the bearer
Restrictive endorsement
...
The most common restrictive endorsement is the phrase For
Deposit Only written along with the payee's signature on the back of a check
...
is used when the payee wants to give their check to
a person not named by the remitter
...

Factors effecting business cycle
...
the total income from all the goods and services the
country produces that year
GDP per capita
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the percentage of our labor work force that does not
have a job but is looking for one (work force laborers w/out job ÷ total work force laborers)
Consumer price index
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the fluctuation of prices or devaluing of the dollar;
hurts consumers and/or people who borrow, lend or invest money; helps those who borrow
money on a fixed interest rate

Fiscal policy
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the discount rate, reserve requirements, and open
market operations
Budget surplus
...
the amount by which spending exceeds revenue
National debt
...
an individual retirement account allowing a person
to set aside after-tax income up to a specified amount each year
...

Traditional IRA
...

403 plan
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Generally, retirement income accounts
can invest in either annuities or mutual funds
...
a defined contribution plan where an employee can
make contributions from his or her paycheck either before or after-tax, depending on the options
offered in the plan
...
charged by credit card companies for use of card
APR
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charged to transfer bank balance from account to
account
Cash advance
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$ pledged as security for repayment of a loan
Creditor
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the maximum amount you are allowed to borrow
Grace period
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lowest amount you are required to pay monthly
Principal
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temporary expansion of income; convenience;
financial responsibility

Disadvantages of credit
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has varying balance
Closed-end/charge card accounts
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fixed payment for fixed amount of time
Secured credit card/loans
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not connected to collateral
Service credit
...
ex
...
ex
...
ex
...
Susan G
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Air travel miles, cashback, discounts, insurance on
rental cars
Credit card loans
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giving up your car title in exchange for a loan; must
be paid back or they take your car
How to build credit
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your income stability and history of payments
Capacity
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the value of what is owned (assets minus liabilities)
Credit evaluation process
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Experian, TransUnion, Equifax
FICA score
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overspending, overextending (too many credit
accounts), carelessness

Ways to avoid credit problems
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creditor takes back property
Cut-off
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court ordered credit payments made directly from
your paycheck
Lien
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Call creditors to ask for time, lower payments and/or reduced interest
2
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Get a debt consolidation loan
Bankruptcy
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all costs of credit stated, discloses terms and costs,
protects consumers home, prohibits the mailing of unwanted credit cards
Equal credit opportunity act
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collectors can’t harass, false statements or threaten
Credit Card act of 2009
1
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45 days before increasing your rate
b
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New rules
a
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Introductory rate is limited
ii
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Interest rate increase after 1 year applied to only new charges
c
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Consumers under 21
a
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Can’t receive free gifts for applying on college campus
c
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Must use these billing rules

a
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Due dates must be consistent
c
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Reasonable fees
a
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No inactivity fee and no fee greater than minimum payment
c
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Property
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Personal
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Liability
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2
...

4
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keep 100% to yourself
Avoid
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between avoiding and retaining
Insure
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written statement identifying an insurance policy
stating what is covered as well as costs
Endorsements
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Jewelry, engagement ring
Premiums
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amount insured must pay before insurer provides
benefits
Claim
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the amount the insured must pay after the deductible
Relationship between premium and deductible……higher deductibles = lower premiums
6 types of health insurance coverage
1
...

3
...

5
...


Medical
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multiple surgeries, long hospitalization
Dentist
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exams, eyeglasses
Disability
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helps pay for nursing home

HMO


+ medical care for smaller premiums



- fewer doctors and services to choose from

PPO



+ doctors, hospitals, and services extended at reduced rates
- higher premiums, deductibles and co-pays

Homeowners insurance
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covers fires, storms, losses and theft
Replacement
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current value of each item
Term life insurance
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insures your whole life while you pay premiums,
most expensive
5 types of auto coverage
1
...

3
...

5
...
bodily injuries or property damage
Collision
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damage due to non-collision causes
Uninsured motorist
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treatment for you and your family

6 coverages required by Illinois
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age, gender, driving record, past violations, type
and age of vehicle
Advantages of leasing auto
1
...
Driving better car than you can afford
3
...

2
...

4
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Low interest rates

2
...
Latest tech
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Depreciation
2
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Return on investment
Advantages of buying used auto
1
...
Certified as good
3
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“broken in”
2
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Pay for inspection
2 important factors of choosing car
1
...
Where you live
Base price
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estimated value of a car
Invoice price
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manufacturer’s suggested retail
Sticker price
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price customer pays
Down payment
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a reduction in the price of a new item when an old
item is given as part of the deal
Loan amount
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The amount of points included and various other costs make the
loan amount different from the quantity of cash distributed by the lender
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time allotment to pay back loan
# of payments
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adding all interest payments over the entire life of
the loan or the interest payments up-to-date
Advantages of renting
1
...
Living in an area you couldn’t afford to buy in
3
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Bound by leasing agreement
2
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No guarantee of renewal
Advantages of owning home
1
...
Value appreciates
3
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Financial responsibility
2
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Less mobility
Factors when choosing apartment
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location, cost, condition, lease duration
Landlord’s responsibilities
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clean, dispose of garbage, repairs
Costs of buying
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Fixed
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Adjustable
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provision for unforeseen circumstances
Earnest money

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