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Flashcards in Unit 1 Deck (30)
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1
Q

Individual Savings Account (ISA)

A

A savings account on which interest is paid tax-free. There are rules, including limits on how much money you can save.

2
Q

Bank rate

A

the interest rate at which the Bank of England lends money to financial institutions

3
Q

Net Interest

A

the interest paid on savings after income tax has been taken off

4
Q

Annual equivalent rate (AER)

A

the interest that would be charged on a sum borrowed over one full year; used to measure the interest rate on loans, mortgages and credit cards

5
Q

What is inflation?

A

Inflation is the general increase in prices and fall in the purchasing value of money.

6
Q

Why does inflation occur?

A

Inflation occurs when consumers have more money to spend and therefore companies raise prices to gain a larger profit.

7
Q

How do inflation and interest link?

A

As interest rates are lowered, people are able to borrow more money. The result is that consumers have more money to spend, causing the economy to grow and inflation to increase.

8
Q

What is interest?

A

The cost of borrowing someone else’s money. Interest is what we pay to borrow that money.

9
Q

What is personal finance?

A

Personal finance is the management of money and financial decisions for a person or family (including budgeting,retirement planning and investments)

10
Q

What is a bank loan?

A

The lending of money by one or more individuals/organizations to an individual, who owes that money back as debt.

11
Q

What is a bank overdraft?

A

When money is withdrawn from a bank account and the available balance goes below zero.

12
Q

What is a credit card?

A

a card to exchange for goods and services which you pay for monthly.

13
Q

What is insurance?

A

Insurance is a means of protection from financial loss.

14
Q

What is a savings account?

A

A savings account is an account that pays interest but cannot be used directly. These accounts let customers set aside a portion of their earnings while earning interest.

15
Q

What is a Mortgage?

A

A mortgage loan is taken out for those who want to buy property for any reason but cannot afford to pay the total price immediately. Repayments are made monthly over several years (depending on the price) but the property is legally owned by the organisation that loaned the money.

16
Q

What is a PIN?

A

Every time you want to withdraw cash from a cash machine or buy products in a shop using a debit card you will need to key this in. It is usually four numbers of your choice.

17
Q

What is a Debit card?

A

A plastic card that allows you to withdraw money from a cash machine and to also pay for products using the card instead of cash. The money to pay for the product is transferred electronically from your account to the account of the person or business you are buying from.

18
Q

What is a ‘current account’?

A

A ‘general-use’ account with access to a range of services such as receiving salary, pension, paying bills and setting up direct debit.

19
Q

What are the 4 types of tax?

A

Income tax
VAT (value added tax)
Corporation tax
National Insurance Contributions

20
Q

What is Income tax?

A

a tax on the income earned by workers

21
Q

What is VAT?

value added tax

A

a tax on the value of sales. businesses that make more than a certain amount have to pay VAT

22
Q

What is corporation tax?

A

a tax paid by ‘limited’ companies on their profits.

23
Q

What are National Insurance Contributions? (tax)

A

Tax on the earnings of workers and traders linked to state benefits.

24
Q

Define foreign exchange.

A

a system for dealing in the currencies of other countries.

25
Q

What is tax?

A

Tax is a compulsory contribution to the government. It is from worker’s income, business profits etc.

26
Q

What is a citizen?

A

A citizen is someone with the legal right to live in a particular country (someone who lives and works there)

27
Q

What is a Bill?

A

a law that has been passed

28
Q

What is a Constitutional monarchy?

A

a king or queen is the head of state and an elected body makes the laws.

29
Q

What is a emigrant?

A

a person who leaves this country to move to another.

30
Q

What is a democracy?

A

a system of government in which people rule through the power to vote for a representative.