exam1 Flashcards
what are the 3 credit agency bureau’s?
transunion, experian, and equifax
credit bureaus are not immune from cyber-attacks. Which bureau was hacked in 2017, releasing the personal information of consumers?
experian
what are the 2 main methods of calculating the minimum credit card payment?
percent of balance and percent of balance + finance charge
under the percent of balance method, if you have $1000.00 balance on your card and a minimum percent of 2% of the balance, your minimum payment would be?
$20.00
why might you consider ‘‘freezing your credit’’ through a credit bureau?
if you are concerned about someone fraudulently using your credit
inflation is an economic condition in which prices increase over time. With this in mind, choose the answer which is most correct.
a).Inflation reduces purchasing power in the future.
b). Inflation is when interest rates rise.
c).Inflation increases purchasing power in the future.
d). Inflation was only relevant in the 1970’s.
e). Inflation erodes purchasing power in the past
a).Inflation reduces purchasing power in the future.
CPI (the Consumer Price Index) is a measure of the overall inflation rate in the US. Using the inflation calculatorLinks to an external site., prices are ______higher in 2023 than in 1987.
a. 2.78%
b). 3.65%
c). 168.22%
d). 0%, because prices remained the same.
answer is c). 168.22% (PRICE INCREASE if looking between 2 years not INFLATION RATE)
Using the inflation calculatorLinks to an external site., $100 worth of goods in the year 2002 cost how much in 2023?
a. No change
b. $169.37
c. $304.702
d. $179.90
b. $169.37
Inflation is classified by three different types. Which answer is not one of the types of inflation?
a). Built-in
b. Cost-push
c. Demand- pull
d. Price Bubble
d. price bubble
If the government prints more money, then more money is circulating in the economy. This is________?
a. Inflationary
b. Causes “easy money” effect, meaning interest rates drop.
c. neither inflationary nor deflationary
d. Deflationary
e. Irrelevant to prices
a. inflationary
what is the difference between progressive taxes and regressive taxes?
progressive tax: imposes a higher tax rate on higher income earners, if a person’s income increases, so does the tax rate on their income.
regressive tax: imposes a higher tax burden on lower income earners, is relative to income. it happens because the tax is a fixed amount, and takes a larger % of income from low income earners.
what is a ‘‘flat tax’’
a tax system that is a single constant tax rate applied to all taxpayers regardless of income
explain FICA tax
also known as payroll tax, it is imposed on both employees and employers to fund social security and medicare
define state tax
state tax - taxes imposed by individual states on income, property sales, and other activities that fall under their jurisdiction.
annual = ?
semi annually = ?
quarterly= ?
monthly=?
1
2
4
12
what is before tax deductions?
are amounts subtracted from an individual’s gross income before taxes are calculated. these deductions lower taxable income, and pays income taxes on a lower amount. examples include retirement plan contributions like 401K, and 403b
what are after-tax deductions?
amounts taken from an individual’s paycheck after federal, state, and other taxes have been applied to the gross income.
examples include Roth IRA, disability insurance, and union dues.
what is the net pay formula?
total gross - total taxes - total deductions = net pay
W-4
purpose: to ensure your employer withholds the correct federal income tax from your pay.
*it can be done more than once if you had more than 1 job, a death happened, or a divorce.
*if you claim more children on W-4, less money will be deducted from your paycheck or federal income taxes.
extra witholding
extra-witholding from W-4
it is an additional amount of money that you can choose to have witheld from your paycheck for federal income taxes
*more or less money gets taken out
*multiple jobs changes the tax bracket
W-2
how much money you were paid, and how much you paid for taxes
this form is used by employees to file their federal and state tax returns.
*it is done by employer
*multiple for multiple jobs
*use this to fill out tax form
*company based
*transferred to 1040 form
tax bracket ex. 28%
it’s a stair step, max amount of taxes until you reach your bracket so less than 28%.
FICO scores
referred to as Fair Issac Corporation, it determines an individual’s credit worthiness. scores range from 300 (worst) to 850 (best)
factors affecting FICO score
35% = payment history (paying bills on time)
30% amount owed (how much you owe or how much owed)
15% length of credit history = longer credit histories are better, as it shows more about spending habits
10% types of credit = having a variety of credit like car, credit card, furniture , mortgage
10% new credit = opening up new credit accounts in a short period can negatively affect credit score
credit scores
-500 = poor credit score
+640 = good credit score
+700 - 800 = excellent credit scores
