Exam 1 (Chapters 1-2)

Question 1

measurement of happiness

Answer 1

quality of life

Question 2

what can affect the standard of living?

Answer 2

location, education, etc.

Question 3

money carries ______

Answer 3

value

Question 4

what makes the goal more “real?”

Answer 4

having a deadline or date

Question 5

what has a large impact on the ability to live the “good life?”

Answer 5

government (taxes), regulations, businesses, other consumers, economic cycles, and inflation (3-3.5%)

Question 6

when you have more liabilities than assets.

AKA negative net worth

Answer 6

insolvent

Question 7

running total showing you where your money goes

Answer 7

income statement

Question 8

set of goals and limitations

Answer 8

budget

Question 9

what are 3 mistakes when saving for retirement?

Answer 9

1. starting too late
2. saving too little money each money
3. investing too conservatively

Question 10

process that considers elements of your financial affairs in order to fulfill your financial goals

Answer 10

financial planning

Question 11

a medium of exchange that is used as a measure of value in financial transactions

Answer 11

money

Question 12

the amount of satisfaction that is received from purchasing certain quantities of goods and services

Answer 12

utility

Question 13

describes a person’s financial position at a given point in time

Answer 13

balance sheet

Question 14

a financial statement that measures financial performance over expenses

Answer 14

income statement

Question 15

a detailed financial report that looks forward, based on expected income and expenses

Answer 15

budget

Question 16

the ability that an asset has to quickly be turned into cash

Answer 16

liquidity

Question 17

assets that are held in the form of cash or can readily be converted to cash with little or no loss in value

Answer 17

liquid assets

Question 18

assets such as stocks, bonds, mutual funds, and real estate that are acquired in order to earn a return rather than provide a service

Answer 18

investments

Question 19

these are assets that are not very liquid, and that may take some considerable to time to convert into cash. additionally, if you need to quickly get rid of a long-term asset, you can expect that you would have to considerably lower its price to sell it

Answer 19

long-term assets

Question 20

tangible assets that are immovable: land and anything fixed to it, such as a house

Answer 20

real property (fixed assets)

Question 21

tangible assets that are moveable and used in everyday life.
examples: your car, your clothes, electronics, etc.

Answer 21

personal property

Question 22

any debt due within 1 year of the date of the balance sheet

Answer 22

current liabilities (short-term)

Question 23

current liabilities that represent the balances outstanding against established credit lines

Answer 23

open account (credit lines, credit cards)

Question 24

any liability due 1 year or more from the date of the balance sheet

Answer 24

long-term liabilities

Question 25

the actual ownership interest in a specific asset or group of assets

Answer 25

equity

Question 26

an individual's or family's actual wealth

Answer 26

net worth

Question 27

the financial state in which net worth is less than zero

Answer 27

insolvency

Question 28

earnings received as wages, salaries, bonuses, commissions, interest and dividends, and proceeds from the sale of assets

Answer 28

income

Question 29

money spent on living expenses and to pay taxes, purchase assets, or repay debt

Answer 29

expenses

Question 30

contractual, predetermined expenses involving equal payments each period

Answer 30

fixed expenses

Question 31

expenses involving payment amounts that change from one time period to the next

Answer 31

variable expenses

Question 32

an excess amount of income over expenses that results in increased net worth

Answer 32

cash surplus

Question 33

an excess amount of expenses over income, resulting in insufficient funds as well as in decreased net worth

Answer 33

cash deficit

Question 34

a program provided by the federal government that taxes individuals that are currently employed in order to provide retirement income for people who are currently retired, disabled, or unable to work

Answer 34

social security

Question 35

the condition in which a dollar received today is with more than a dollar received sometime in the future

Answer 35

time value of money

Question 36

type of interest that is paid on top of interest

Answer 36

compound interest

Question 37

you can calculate what the value of a certain amount of savings will be in the future by using what equation?

Answer 37

FV=PV(1+i)^N ``` FV= future value of your savings PV= your current savings that you are investing i= the interest rate that your investment will earn over time N= the number of compounding periods ```

Question 38

an investment such as your 401K or retirement account

Answer 38

annuity

Question 39

an organization whose purpose is to generate profits through the sale of goods and services that are desired by customers

Answer 39

business

Question 40

tangible items that are manufactured by businesses

Answer 40

goods

Question 41

intangible offerings that cannot be held, touched, or stored, but that generate satisfaction to their end user

Answer 41

services

Question 42

the proceeds from selling a good or service

Answer 42

revenue

Question 43

when revenues are higher than expenses

Answer 43

profit

Question 44

when revenues are lower than expenses

Answer 44

loss

Question 45

the chance that a business will lose time and money in its pursuit to realize profits

Answer 45

risk

Question 46

exist to achieve goals other than profits

Answer 46

not for profit organizations (non-profit)

Question 47

what are the factors of production?

Answer 47

``` capital entrepreneurs knowledge labor natural resources ```

Question 48

inputs such as equipment, buildings, and tools that are used to produce goods and services for customers

Answer 48

capital

Question 49

people who combine different inputs and convert such inputs into finished products and services with the intention of generating a profit through the sale of those products and services to consumers

Answer 49

entrepreneurs

Question 50

the combined sills and talents of the labor pool

Answer 50

knowledge

Question 51

the human factor; the people that transform inputs into finished products

Answer 51

labor

Question 52

inputs also known as raw materials that will be transformed into finished products

Answer 52

natural resources

Question 53

businesses do not operate in a _____

Answer 53

vacuum

Question 54

in the external environment you can recognize forces that can dramatically affect the way a business operates. what are those forces?

Answer 54

``` technological global competitive social forces demographic political and legal social forces economic ```

Question 55

the internal environment also affects the way a business operates; however, businesses have more control over the internal than the external environment. what are 4 forces identified as being part of the internal environment?

Answer 55

entrepreneurs managers workers customers

Question 56

how do businesses interact with consumers, retailers, households, and government?

Answer 56

by exchanging resources and capital to generate profits

Question 57

what is one of the most common ways to determine the economic health of any country?

Answer 57

by taking a look at the total value of that nation's output of goods and services

Question 58

measured by the nation's output of goods ands services that people can buy with the money they have

Answer 58

nation's standard of living

Question 59

the total value of all of the goods and services that are produced in a particular country

Answer 59

gross domestic product (GDP)

Question 60

what country is the only country that doesn't use GDP?

Answer 60

China

Question 61

system in which businesses are privately owned with minimal government ownership or interference. individuals own the factors of production

Answer 61

capitalism

Question 62

under this system, a centralized form of government owns most, if not all, enterprises and controls the markets

Answer 62

communism

Question 63

basic industries within the country are government owned. such industries may include oil production, utilities, transportation, etc. taxation is very high as the government tries to redistribute income from successful private business owners and entrepreneurs to the rest of the people in the country

Answer 63

socialism

Question 64

Finland, Venezuela, Bolivia, and Israel are examples of what?

Answer 64

socialist countries

Question 65

Cuba and North Korea are examples of what?

Answer 65

communist countries

Question 66

most countries in the world have what kind of economic system?

Answer 66

mixed economic system

Question 67

represents the number of goods and services that consumers like you are willing to buy at different prices at a specific time

Answer 67

demand

Question 68

the number of products that businesses are willing to sell to consumers at different prices at a specific time

Answer 68

supply

Question 69

what are some economic forces that affect consumption and production of goods and services?

Answer 69

``` consumers' income consumers' tastes and preferences competition expectations of future prices prices of similar products ```

Question 70

what are some factors that affect the supply of a product or service?

Answer 70

prices of inputs (materials and labor) needed to produce it technology available to produce it prices of other goods that can be produced with the inputs ---used or owned by the sellers expectations about future prices the number of sellers serving the market

Question 71

what are the four different market structures?

Answer 71

``` perfect competition pure monopoly monopolistic competition oligopoly markets for factors of production ```

Question 72

under this structure, consumers rule because there are a large number of firms, offering basically the same product or serve ice, competing for your business

Answer 72

perfect competition

Question 73

what sets the price in a perfect competition?

Answer 73

competition

Question 74

under this structure, consumers are at the mercy of one producer of that particular good or service. this structure is characterized for having very high barriers to entry into that particular market; those barriers to entry are factors that make it very difficult for competitors to enter the market.

Answer 74

pure monopoly

Question 75

under this structure, consumers enjoy product and service offerings from many firms. the firms in that market offer products and services that are distinct enough, that people perceive those differences as important, therefore choosing a particular brand of product over a competitor's offering

Answer 75

monopolistic competition

Question 76

restaurants are a good example of what kind of competition?

Answer 76

monopolistic

Question 77

characterized by few firms having a lot of market share of sales in the market. high barriers to entry keep the number of producer limited to just a few. under this structure, producers are constantly watching what their competitors are doing so that they can react quickly to new product offerings

Answer 77

oligopoly