Resource- Anything That People Can Use to Make of Obtain What They Want

Chapters 1 and 2

Chapter 1: Section 1

·  Economics- The study of how individuals and nations make choices about how to use resources to fill their wants.

·  Resource- Anything that people can use to make of obtain what they want.

·  Scarcity- People do not and cannot have enough income, time, or resources to satisfy their desire.

·  Wants- Everything other than basic needs.

·  Land- Refers to natural resources.

·  Labor- Work that people do.

·  Capital- All property people use to make goods and services.

·  Productivity- Ability to produce greater quantities of goods and services in better and faster ways.

·  Entrepreneurship- Ability to individuals to start new businesses.

·  Factors of Production- resources of land, labor, capital, and entrepreneurships.

·  Goods and Services- Goods are items that people buy; Services are an activity done for others for a fee.

·  Technology- The use of Science to develop new products and new methods for producing and distributing goods and services.

Chapter 1: Section 2

·  Trade-off- Exchanging one thing for another.

·  Opportunity cost- The value of the next bestseller alternative that had to be given up for the alternative that was chosen.

·  Production Possibilities- All the combinations of goods and services that can be produced from a fixed amount of resources in a given period.

Chapter 1: Section 3

·  Economy- All activity in a nation that affects the production, distribution, and use of goods and services.

·  Economic Model- Simplified representation of the real world, which shows people’s reactions to change, is in the economy.

·  Hypothesis- Educated guess.

·  Values- Beliefs that an individual or group considers important, such as religious freedom, and equal opportunity.

·  Generalization- Statement that pulls together common ideas among fact and is true in most cases.

Economic model is a representation of the real world. Physicists and chemists use models to explain in simple terms the complex workings of the world. An economist has three ways of presenting a model; through an explanation in words, in a graph, or with a mathematic equation. An economist considers the model good if it analyses good how the real world works. Then he has to test the model with a hypothesis. Applying it is showing how people will work in a real situation. Values and economic depends on the beliefs or characteristics of a person or group considers important.

Chapter 2: Section 1

·  Economic System- way in which a nation use its resources to satisfy its peoples needs and wants.

·  Distribution of income- Money payment for work, the amount of health care, distribution of goods and services among all members of the economic system.

·  Traditional Economic System-System in which economic decisions are based on customs, beliefs, and ways of doing things that have been handed down from generation to generation.

Chapter 2: Section 2

·  Inedible hand-an attitude of competition to achieve the reason that is good for society.

·  Free Enterprise- individuals are free to own and control the factor of production.

·  Capitalism- An economic system where individuals are the factors of production and decide how to use them.

·  Private Property- What is owned by an individual or group.

·  Profit- Money left after all expenses has been paid.

·  Profit incentive- the desire to make profit.

·  Competition- the rilvery among producers.

Chapter 2: Section 3

·  Economic efficiency- using resources wisely so that people will be as well off as possible given or available resources.

·  Security- Protecting people against poverty.

·  Equality- that which is fair and just.

·  Growth- An expansion of the economy to involve more goods, jobs, and wealth.

·  Notability- to reduce extreme ups and downs in the standers of living.

·  Individual freedom- Allowing members of society to enjoy the freedom of enterprise, choice, and private property.

Facts about Chapter 2: Section 1

All economic systems must ask:

·  What goods and services must be produced

·  Who should produce them

·  How they should be produced

·  What stores they should be in

The different Economic Systems

·  Traditional- decions are based on customs, beliefs, and family honor.

·  Command- Government controls the factors of production

·  Market- Government will not intervene and individuals are factors of production.

·  Misled- Has Factors of all of the above.

Chapter 2: Section 2

Characteristics of the American economy

·  The governments role in free enterprise is to make the economy an even playing field.

·  Freedom of enterprise is important because people are able to get what they want because they control what is produced.

·  America exercises freedom of choice.

·  The advantages to having private property is it guarantee us the right to buy whatever we want.

·  Profit incentive is the desire to work to receive profit.

Definitions from Chapter 3 Section 3

Consumerism: a movement to educate buyers about the purchases that they make and to demand safer and better products from the manufactures.

Ethical Behavior: in accordance with ones moral and ethical convictions about right and wrong.

Definitions from Chapter 4 Section 1

Credit: is the receiving of money either directly or indirectly to buy goods and services today with the promise to pay for them in the future.

Principal: is the amount originally borrowed.

Interest: is the amount the borrower must pay for the use of someone else’s money.

Installment debt: loan repaid with equal payment or installments, over a specific period of time.

Consumer durables: are manufactures items that people use for long periods of time before replacing them.

Mortgage: is on installment debt owned on real estate.

Chapter 3 Section 3 Outline

Consumers Have rights and responsibilities

1 Consumerism (see definition)

2. Government looks after consumers.

3. Business cannot assume that buyers know whether a product is safe, food is healthful, or whether advertising is accurate.

II Consumer Rights

1. In 1962 John F. Kennedy came up with four rights of consumers.

A.  Right to safety: protection against goods that are dangerous to life or health.

B.  Right to be informed: information for not only as protection against fraud, but also as the basis for reasoned choices.

C.  Right to choose: the need for markets to be competitive and for protection by government in those markets, such as electrical service.

D.  Right to be heard: the guarantee that consumer interest will be listened to when laws are being written.

E.  Right to redress (not one of J.F.K. but a lot of consumers would add): the ability to obtain from manufactures adequate payment in money or goods for financial or physical damage caused by their products.

2. If manufactures or stores unwilling to corporate with consumers you can sue them. Besides courts there are many other agencies that are there to help consumers. A list can be found on page 70 and 71.

III Consumer Help and Responsibilities

1.Among others Better Business Bureau is an organization that well help consumers by providing information on products as well as selling practices to consumers and to help settle disputes between consumer and seller.

2.Trade association is a group of companies in the same business that work together to promote that specific industry, which sometimes will provide information.

3.Consumers Union of United States publishes a monthly magazine called Consumer Reports. Competing is Consumers Research magazine, both gives details about consumer products.

4.However it is the consumer’s job to do as much as he can in order to learn about a product before he purchases it.

Chapter 4 Section 1 Outline

I Americans use credit to make many purchases

1.For nation as whole, amount of money borrowed and spent is enormous.

2.Nations economy depends on individuals and groups being able to buy and sell on credit.

3. See definitions for credit, principal, and interest.

4. Buying on credit is borrowing which means you are going into debt.

II Installment Debt

1.  Installment Debt-pay back debt over time

2.  Consumer durables such as automobiles, last a long time before having to replace.

3.  Consumer Durables are a good portion of what people buy credit on, although it is not limited to.

4.  Payments determined by length. (Shorter time larger the payment.)

5.  Largest form is on mortgage, which is used for real estate.

III Immediate Need

1.Emergency comes up.

2.Alolt of times it is the simply fact that the purchaser is too impatient to wait for a time in which it would be more convenient.

IIIV Deciding to use credit

1.Is it worth to just wait?

2.Do you need it now?

3.Will you be able to afford it later are some of questions you have to ask yourself when making the decision on whether or not to buy on credit or not.

Chapter 4 Sec. 3

Terms to Know:

Credit bureau: A private business.

Credit check: An investigation on your credit history.

Credit rating: A rating of the risk.

Collateral: Item purchased with loan money.

Secured loan: A loan backed up with collateral.

Unsecured loan: A loan backed up on your credit reputation only.

Cosigner: A person who signs with the borrower and will pay if borrower doesn't.

Past-due notices: Reminders sent by a business to tell you your debt payments are overdue.

Outline

Several Factors Determine a Person's Credit Worthiness

·  The Credit Rating

·  The information supplied by the credit bureau provides the credit bureau provides the creditor with a credit rating for you.

·  Secured Loans

·  Usually when a bank, S&L, or other financial institution makes a loan, it will ask for colllateral from the borrower .

·  Unsecured Loans

·  Usually a young person will have little to offer as collateral. When dealing with a trusted customer, financial institutions will sometimes lend money on the person's reputaion alone.

·  Paying on Time

·  If you do not pay your debts on time, the costs to businesses are higher. At the very least, there will be extra mailing costs to send past-due notices. The business that lends you money may have to hire a collection agency to help get back the money loaned to you.

·  Keeping Records

·  If you applied for a credit card and got one, you have additional responsibilities. You need to keep a complete record of all the charges you made.

Chapter 7

Section 1

·  Saving – nonuse of income for a period of time so that it can be used later.

·  Interest – amount of money the borrower must pay for the use of someone else’s money.

·  Passbook savings account – account for which a depositor receives a booklet in which deposits, withdrawals, and interest are recorded.

·  Statement savings account – account similar to a passbook, except that instead the depositor receives a monthly statement showing all transactions.

·  Money market deposit account – account that pays relatively high rates of interest, requires a minimum balance, and allows immediate access to money.

·  Time deposits – savings plan that require savers to leave their money on deposit for certain periods of time.

·  Maturity – period of time at which time deposits will pay a stated rate of interest.

·  Certificates of deposit – time deposits that state the amount of the deposit, maturity, and rate of interest being paid.

Section 2

·  Stock – share of ownership in the corporation issuing the stock.

·  Stockholders – people who have invested in a corporation and own stock.

·  Dividends – money return a stockholder receives on the amount he or she originally invested in the company by purchasing stock.

·  Bond – certificate issued by a company or the government in exchange for borrowed money.

·  Tax-exempt bonds – bonds sold by local and state governments.

·  Savings bond – bonds issued by the federal government as a way of borrowing money.

·  Treasury bills – certificates issue by the U.S. Treasury in exchange for barrowing money in minimum amounts of $10,000 and maturing during a period ranging from 3 months to one year.

·  Treasury notes – certificates issued by the U.S. Treasury in exchange for borrowed money with minimum amounts of $1000 or $5000 and maturing in 2 to 10 years.

·  Treasury bonds – certificates issued by the U.S. Treasury in exchange for borrowed money in minimum amounts of $1000 or $5000 and maturing in 10 or more years.

·  Over-the-counter market – purchase and sale of stocks and bonds, often of smaller, lesser-know companies, which takes place outside the organized stock exchanges.

·  Capital gain – increase in value of an asset from the time it was bought to the time it was sold.

·  Broker – person who acts as a go-between for buyers and sellers of stocks and bonds.

·  Capital loss – decrease in value of an asset or bond from the time it was bought to the time it was sold.

·  Mutual fund – Investment Company that pools the money of many individuals to buy stocks, bonds, or other investments.

·  Money market fund – type of mutual fund that uses investor’s money to make short-term loans to businesses and banks.

·  Inside information – information available to a broker that no one else has.

Section 3

·  Pension plans – company plans that provide for retirement income.

·  Keogh plan – retirement plan that allows self-employed people to save a maximum of 15% of their income a year.

·  Individual retirement account – private retirement plan for individuals or married couples to save a certain amount of their earnings per year.

·  Diversification – spreading of investment in several different types of accounts to lower overall risk.

Things to know

·  You should save money into banks so that it can grow from bank interest.

·  You should also invest into other things so that if that company with a certain product gets big, you will get some of the profit off of that investment with them you had.

·  A time deposit is also nice even though you have to leave your money in the deposit untouched; it will have a guaranteed extra amount given back to you once the time is over with.