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Unit 5 and 6

Unit 5 and 6. Financial Markets, Consumer/Personal Finance, Economic Indicators and Measurements. Fiscal Policies. Fiscal Policy - uses taxes and government spending to affect the economy. Expansionary - stimulate economy

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Unit 5 and 6

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  1. Unit 5 and 6 Financial Markets, Consumer/Personal Finance, Economic Indicators and Measurements

  2. Fiscal Policies • Fiscal Policy- uses taxes and government spending to affect the economy. • Expansionary- stimulate economy • Contractionary- plan to reduce aggregate demand and slow economy (addresses inflation: decreases the amount of money in circulation.) • Discretionary- stabilize the economy.

  3. https://www.youtube.com/watch?v=SYFYla1H7KE • Recessions and Fiscal Policy- EconMovies #5: Cars (5:45)

  4. Fiscal Policy and Stimulus: Crash Course Economics #8 • https://www.youtube.com/watch?v=otmgFQHbaDo • 11:53

  5. **Business Cycle • A business cycle is a series of growing and shrinking periods of economic activity, measured by increases or decreases in GDP.

  6. Stages of a Business Cycle • Expansionary: economic growth & low unemployment • Peak: GDP reaches its peak • Recession (Contraction): High levels of unemployment and high levels of inflation • Trough: GDP and employment stop declining

  7. Results in Economic Growth • Increased free trade agreements • Increased productivity • If businesses can decrease the amount of labor needed to increase inventories • Example: the introduction of new manufacturing technologies

  8. Savings & Investment • Spear & Fisherman- 8:44 • https://www.youtube.com/watch?v=Oi9cq7tXkmg

  9. Savings and Investment • 1ststep in creating a savings account: Set financial goals • Financial Institutions- Primary function is provide access to capital for people and businesses. • Banks, stock markets, insurance markets, and bond markets.

  10. Risks of Investments • Higher degree of risk investments include: stocks and corporate bonds. • One risk from investing in stock market is the loss of purchasing power. • Higher risk=Higher return

  11. Insured & Uninsured bank accounts • Insured bank accounts- checking, savings, and certificates of deposit (CDs) -(≥$250k) • Uninsured bank accounts- Investments in mutual funds, stocks, or bonds

  12. Retirement Accounts • Individual retirement account (IRA)- most secure retirement plan. • 401k- offered as a benefit of employment to which eligible employees may make salary reduction contributions toward retirement. • rises and falls with the stock market.

  13. https://www.youtube.com/watch?v=Dugn51K_6WA • Money and Finance: Crash Course Economics #11 (10:35)

  14. 401k Investopedia • https://www.investopedia.com/terms/1/401kplan.asp

  15. Business Cycle Activity • -Individually, colorfully illustrate the stages of the business cycle. Each stage of the business cycle should be drawn out (Expansion, Peak, Contraction (Recession), and Trough). • -Provide at least one sentence explaining what was drawn for each stage of the business cycle.

  16. Different Loans • Secured loans- are protected by an asset or collateral of some sort. • Unsecured loans – ex: credit card purchases or education loans.

  17. Credit • Open-ended credit- allows a borrower to repeatedly use it within a certain monetary amount (Like a credit card.) • Closed-ended-Ex: car loansand mortgages

  18. Credit Card Advice • The most effective way to manage credit card debt is by paying off the balance each month. • The following action would improve a credit score:paying off all debts.

  19. Mortgages & Home Ownership • In order to qualify for a mortgage a loan officer will consider an applicant’s net worth. • Assets – Liabilities = Net Worth • Benefits of home ownership includes building equity

  20. 2008 Financial Crisis • https://www.youtube.com/watch?v=GPOv72Awo68&list=PL8dPuuaLjXtPNZwz5_o_5uirJ8gQXnhEO&index=12 • 11:24

  21. Annual Cost of Owning a Home • Paying property taxes • Keeping up with repairs and maintenance • Making payments on principal, interest, and insurance.

  22. Benefit of Purchasing Insurance • Available when an unexpected need for repair or services arises.

  23. Bankruptcy • Bankruptcy has a negative impact on future credit options. • You lose all credit cards, can’t get a mortgage, and you still have to pay back some debts like student loans and alimony.

  24. OSHA • The Occupational Safety and Health Administration (OSHA) is an example of a government agency that regulates businesses.

  25. Investing in a Market Economy • One effect of an increase in the amount of savings in an economy is- an increase in financial resources for business investment.

  26. *Risk & Return • Risk-the possibility for loss on an investment • Return- is the profit or loss made on an investment • Diversification- distributing investments among different financial assets to maximize return and limit risk.

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