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Economics Unit 2

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madison1252's version from 2016-12-15 23:28

Section 1

Question Answer
Benefits of creating a budgetHelps control spending habits, set financial goals
3 main things to consider when you are looking to save/investWill it be safe, rate of return, liquidity(how easy is it to get money out)
Savings depositsSafe/very liquid/low rate of return
CD (certificate of deposit)Safe/not as liquid/high rate of return
Money market accounts are _______ deposits, and are _______, and you can________Money market accounts are insured deposit therefore very safe and are liquid and you can write checks for
TSATax shelter annuity
IRAIndividual retirement account
Compare mutual funds and index fundsBoth diversified ownership of stock. 2-3 days not that liquid. Safer than regular stocks
Contrast mutual funds and index fundsMutual-offered through broker, pay more fees, broker will say safer b/c been in business longer. Index-on your own, less fees
401K is a plan offered through employer in which...You put part of your paycheck into it say $10,000 and if you work for a private industry they'll sometimes match the sum you put in. Public doesn't really match it
Most pensions and retirement funds offer a tax deferment--what is that?A tax deferment (tax deferred) means you don't have to pay taxes on the sum of money you put into your account until later. Tax deferment is a characteristic of an IRA
Explain difference between savings bond and corporate bondCorporate bond-if city wants to borrow $1000 from 500 people, they will pay you back the money in 20 years with interest. Savings-grandma gives $100 savings bond @ birth (she pay $50 for it) its worth $100 in 7 years, $105 in 10 years
With property people are hoping toBuy low and sell high
Sub-prime mortgage mess This was when the government lowered qualifications for buying houses, and we're offering interest only loans on houses that were say $200, 000 young couples immediately jump on that idea that they would be living in a $200,000 house and only have to be paying interest for the first five years. But unfortunately they did not have the high-paying jobs to support themselves so when five years were up and the monthly payment increased from $900-$2200 they could not afford it and many houses for post
Pros of owning propertyTo rent it out, real estate generally goes up (b/c only so many beach houses on water)
Cons of owning propertyPay taxes, maintenance, can't pick neighbors
Pros of rentingNo maintenance, no taxes, cheaper ($500 a month vs $800 a month)
Money you are saving if you rent...Invest it in stock market
memorize

Section 2

Question Answer
List the 3 types of business organizationsSole proprietorships, partnerships, corporations
Sole proprietorship Business owned by one person
Pros Of sole proprietorship Easy to start, all profits go to owner, personal achievement
cons of sole proprietorship Unlimited liability (can be sued!), fragile existence ( if owner dies company dies)
List 3 main strategies used by entrepreneurs to start up a businessChanging market conditions (new health craze, lots of money building a gym), Providing an alternative good or service (bear paw vs uggs), unexpected opportunities (flood/generator)
List advantages of small businesses be your own boss, tax benefits
List disadvantages of small businesses inadequate financing, long hours, unable to hire professional workers (can't afford to pay them benefits)
Why was this past election so historic man elected president that has never been a politician before and has no military experience
2 main reasons why he won people want change, silent majority came out to vote
What percent of small businesses fail within the first two years 33%-55%
Who is Jasmine Lawrence and how was she a successful entrepreneur owner of $1 million company Eden Bodyworks. As a teenager he had a mishap with her hair products and was determined to make her own shampoo that would be chemical free. She definitely is successful today because of hers perseverance all throughout the process. From coming up with the original solution to being able to handle the workload put on her when many orders started coming in, her ambitious nature definitely proved successful. You rarely see teenagers these days that are as ambitions and determined as Lawrence was
Partnership business organization owned by two or more people that share control of business
Pro partnership easy to set up, more knowledge and talents b/c have more owners
Con partnership if one quits/dies business is over, unlimited liability
Corporation managed on behalf of the owners who provide the funds (can be private or public)
Pro Corporationlimited liability, unlimited life
Con corporations more regulations, costly, gov't taxes corporations more
Sole proprietorships outnumber corporations almost_______but corporations account for ______ of total sales 4 to 1, 89%
memorize

Section 3

Question Answer
2 main reasons why people/gov't worried about Google people becoming dependent on them-govt worried about monopoly, Google tracks everything (emails/web searches)
2 founders of Google Sergey Brin, Larry Page
IPO of Google $85
Fed Ex Fred Smith/Federal Express/1971
LLC limited liability company-me
Pros of LLC same protection as corporation, cheaper than corp, limited liability
Cons of LLC more expensive, more regulation than sole proprietorships and partnership
Why does govt offer tax exempt status to non-for-profit corporations Government encourages non-for profit corporation so they do not have to go out of their way to fund money say for cancer research
Define and give example of cooperative preforms business functions for its members, have to be a member to reap benefits Sam's Club
What are two main ways McDonalds is trying to change its image/offerings? Why? iced coffee, fireplace, to keep up with competition especially in coffee industry. Want it to be a desirable location for dinner-comfy seats, fireplaces
Franchise license to operate and individually owned business under another person's name. Expensive to buy into Subway but you get an established name and advertising
"Dairy Doo" compost Brad Morgan
Won time person of year Mark Zuckerburg
2 pros of Walmart one stop shop, lots of jobs
2 cons of Walmart destroys small businesses, not environmentally friendly
McDonalds sells ____of all cups outside home 1/10
This percentage of business through drivethru 2/3
Jere Thompson co-founder of Ambit Energy
memorize
Cartoon paradox of thrift: this cartoon explains the concept of paradox of thrift. Paradox of thrift is basically if a person cuts their spending and increases their savings, the economy goes down. But if a person spends money and don't ever save, they (the consumer) goes into debt. This is clearly represented by the people living in a box. Their spending habits got them in the box and now they are saving to get out of debt, but the economist is berating them to stop saving their money so they can stimulate the economy
Question Answer
Difference between public and private corporations Public-people can invest in stocks of company, therefore less ownership for the company, have to share their profits with shareholders. To increase profits=raise price of stock. (Hershey) Private-get all profits,
Google headquarters Silicon Valley, CA
20th Google employee Melissa Myer
How is Google like big brother Google watching everything you do also a reference to book written by George O'Wall
memorize

Section 4

Question Answer
Collaborative consumption Airbnb, Uber, Craigslist
Push vs pull push-manufacturer is pushing products for retailer to sell, pull-retailer is telling manufacturer what to make
Describe a couple newer ways that companies are at advertsing today...how/why has it changed 3D billboards, product placement. Had to change because technology is changing...we can fast forward commercials so companies now try to get their product out there by including the product in an ACTUAL TV show
Pros of advertising increases competition, pays for info available to public (ads on side of Facebook)
Cons of advertising prices of products may go up because company is spending so much money advertising, forces us to buy things we don't need
Consumerism economic system based on consumers buying goods and services
Lesson of marshmallow video study showed that 2/3 of kids ate marshmallow within 15 minutes. 100% of the 1/3 of kids who didn't eat got the best grades went to college. The lesson of this video was that self-discipline is the most important factor of success. The kids who displined themselves against eating the marshmallow had greater success in life in the long run. Don't buy stuff if you don't have it
Perceived Obsolescence convinces you to throw your old product away, even though it's perfectly useful Madden
Planned Obsolescence designed to break so you have to buy more of the product lightbulb
Advantages of Credit safety, emgergency use, immediate possession, flexibility
Disadvantages of Creditoverspending, impulse buying (rule of thumb wait 2 days), compound interest, debt ($350 people live above their money in bank)
Pros of using cash cash discounts (gas stations), escape retail fees from using credit card
Cons of using cash no credit score, Apple won't give her a phone, money gone if someone steals purse
memorize