Economics Test Study Guide Flashcards
Define scarcity.
The problem of having an unlimited amount of human wants, with a limited amount of resouces.
What is the difference between needs and wants?
Need are things we NEED for survival while wants are things we would LIKE to have.
Explain what is a trade off.
The choices you don’t pick
Based upon what you value the most you make a choice, but the cost of making that choice means you give up the chance to do something else. This is called ________________________.
Opportunity cost
What are examples of opportunity cost?
Money, time, discomforts, and inconveniences linked to the choices you made
Define income tax.
A tax on your income. Taxed by the federal, state, and local government.
Define Medicare.
Taxes that help people pay for healthcare as they get older.
Define social security.
Taxes collected to aid workers who are retired or disabled.
Define insurance.
Money taken out of your paycheck to pay for your healthcare.
What is debt?
The circumstance of owing someone else money.
Explain the difference about stocks and bonds.
Stock is when you give money to a company and you own part of the company and you lose or gain money as the company does while a bond is just when you loan money to a company or government for a predetermined interest rate. Bonds are like an IOU. Stocks have a higher risk than bonds.
What is economics?
The study of how we make decisions in a world where resources are limited
How are a savings account and a checking account different?
A savings account is an account where you save money and gain interest for keeping your money in their banks and a checking account is where you deposit and withdraw funds with no interest included.
What is the MAIN difference between debit cards and credit cards?
Debit cards are just basically a electronic way to use the money in your checking account while credit cards are basically you owing someone money and you have to pay them at the end of each month.
Define demand.
When consumers wish to buy a product.
