HS 300 Flashcards – Module 9
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[h] HS300 – Module 9
[q] Macroeconomics
[a] The study of economic factors that are reflective of the entire economy.
[q] Microeconomics
[a] The study of factors that impact small or individual economies.
[q] Gross Domestic Product (GDP)
[a] The monetary value of all the finished goods and services produced in a specific time period. Represents goods and services that are produced from both labor and capital located within a country’s borders.
[q] Gross National Product (GNP)
[a] A measure of the economic output of a country’s citizens.
[q] Recession
[a] A situation in which real GDP declines for at least two quarters or six months.
[q] Inflation
[a] A sustained increase in the price level of goods and services over time.
[q] Deflation
[a] Decline in general price levels.
[q] Disinflation
[a] Decline in the rate of inflation. A reduction in the rate at which prices rise.
[q] Consumer Price Index (CPI)
[a] A measure of the general retail price level. Measures weighted average of prices of a basket of consumer goods and services.
[q] Frictional Unemployment
[a] A type of unemployment in which individuals haven’t found their desired employment opportunity yet and are still seeking other opportunities.
[q] Structural Unemployment
[a] A type of unemployment in which there is an imbalance between the supply of and demand for adequately skilled workers.
[q] Cyclical Unemployment
[a] A type of unemployment in which an economic downturn results in a decrease in the demand for labor.
[q] Business Cycle
[a] The downward and upward fluctuations of the productivity level of the economy, along with its natural growth rate over a long period.
[q] Expansion phase
[a] A phase of the business cycle in which:
Economy is growing.
GDP is increasing.
Unemployment declines.
Stock market is in bull market.
[q] Peak phase
[a] A phase of the business cycle in which:
GDP is at its highest point.
Employment peaks.
Contraction phase begins.
[q] Contraction phase
[a] A phase of the business cycle in which:
Economic growth weakens.
GDP falls.
Unemployment increases.
Stock market is in bear market.
[q] Trough phase
[a] A phase of the business cycle in which:
Unemployment peaks.
Growth is low or negative.
[q] Leading Indicator
[a] A category of economic indicator that tends to point to the economy’s future. Includes the yield curve and stock market.
[q] Lagging Indicator
[a] A category of economic indicator that is only seen after a specific economic activity occurs. Includes the unemployment rate and interest rates.
[q] Coincident Indicator
[a] A category of economic indicator that reflects the current status of the economy.
[q] Monetary policy
[a] Methods used by the Federal Reserve to control the economy.
[q] Types of monetary policy
[a] Monetary policy includes:
Open market operations.
Reserve requirements.
Discount rate.
[q] Ways the economy can be stimulated through monetary policy
[a] The economy can be stimulated through:
Purchase of government bonds.
Decrease of reserve requirements.
Decrease of discount rate.
[q] Fiscal policy
[a] Methods used by Congress to control the economy.
[q] Types of fiscal policy
[a] Fiscal policy includes:
Deficit spending
Taxation
Debt management
[q] Ways the economy can be stimulated through fiscal policy
[a] The economy can be stimulated through:
Increased deficit spending by Congress.
Lower tax rates.
Lower short-term interest rates on government debt.
[q] Demand
[a] The quantity of a good or service consumers are willing to purchase at a given price. Decreases as prices increase.
[q] Demand Curve
[a] A graphical representation of the relationship between price and quantity demanded.
[q] Complements
[a] Products that are consumed jointly and increase demand, such as automobiles and gas.
[q] Substitutes
[a] Products that serve a similar purpose and suppress demand, such as butter and margarine.
[q] Supply
[a] The quantity of goods or services organizations are willing to sell.
[q] Supply Curve
[a] A graphical representation of the relationship between price and quantity of product a seller is willing to supply.
[q] FICO Score
[a] A credit score determined by Fair Isaac Credit Organization. Components:
Payment history (35%).
Amount owed (30%).
Length of credit history (15%).
Short-term debt (10%).
Type of debt (10%).
[q] Ways to Increase a FICO Score
[a] Strategies include:
Pay bills timely.
Maintain low balances on revolving credit accounts.
Leave old unused credit cards open.
Take on new credit obligations only when needed.
Be aware of the types of debt on the credit report.
[q] Fair Credit Reporting Act
[a] A federal law that protects consumer’s information collected by the major credit bureaus.
[q] Equal Credit Opportunity
[a] A federal law that prohibits credit denial based on race, sex, marital status, religion, age, national origin, or receipt of public assistance.
[q] Fair Credit Billing Act
[a] A federal law that limits a consumer’s liability for lost or stolen credit cards to $50 per card per incident.
[q] Consumer Credit Reporting Act
[a] A federal law that requires credit bureaus to furnish correct information to lenders and other businesses.
[q] Fair Debt Collection Practices Act
[a] A federal law that prevents debt collectors from using deceptive or abusive methods. Under the law, a debtor can only be contacted between the hours of 8am – 9pm.
[q] Chapter 7 Bankruptcy
[a] A type of bankruptcy in which most debt is eliminated through the liquidation of assets.
[q] Chapter 11 Bankruptcy
[a] A type of bankruptcy available to corporations. Debts are adjusted and reorganized.
[q] Chapter 13 Bankruptcy
[a] A type of bankruptcy in which debts are repaid over a period of 36-60 months.
[q] Debts that Cannot be Discharged in Bankruptcy
[a] Debts that are not discharged in bankruptcy:
Alimony.
Child support.
Back taxes (three years).
Student loans.
Property liens.
Debts obtained through fraud.
[q] Federal Deposit Insurance Corporation (FDIC)
[a] An independent agency created by Congress to maintain stability and public confidence in the nation’s financial system.
[q] FDIC Insurance
[a] The FDIC insures up to $250,000 per depositor, per legal account ownership, per financial institution.
[q] Securities Investor Protection Corporation (SIPC)
[a] A nonprofit corporation created by an act of Congress to protect the clients of brokerage firms that are forced into bankruptcy.
[q] SIPC Insurance
[a] The overall coverage limit is $500,000, of which cash coverage is limited to $250,000.
[q] Securities Act of 1933
[a] A federal law that requires that investors receive financial information concerning securities being offered for public sale, and also prohibits misrepresentations and other fraud in the sale of securities.
[q] Securities Exchange Act of 1934
[a] A federal law that regulates securities sold in the secondary market. This Act created the Securities and Exchange Commission.
[q] Investment Advisers Act of 1940
[a] A federal law that represents the primary source of regulation of investment advisers.
[q] Three tests for determining if a person is an Investment Adviser
[a] Individual provides advice about securities.
Individual is in the business of providing securities advice.
Individual receives compensation (fee or commission) for services rendered.
[q] Financial Industry Regulatory Authority (FINRA)
[a] A private corporation that regulates member brokerage firms and exchange markets.
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