Unit 7 Review

Interest Rates The amount of money you deposit into a savings account or borrow from a financial institution is called the principal Interest represents earnings on savings or money paid to financial institution to borrow money

Compound Interest and Simple Interest Compound interest is when interest is earned on both principal and previously earned interest. Simple Interest is when one interest payment will be made at the end of the saving period.

Inflation – Causes and Effects Who would benefit and who would be hurt by inflation? Savers would be hurt – How? Borrowers would be helped (providing they borrowed money at a fixed interest rate prior to inflation occurring).

Insurance The cost you pay for insurance coverage is called a premium. Liability Coverage on car insurance pays for any personal injuries or property damage in the event of a car accident Health Insurance pays your medical bills when you are sick or injured Disability Insurance – pays if you suffer an illness or injury that keeps your from working for an extended period of time (providing you purchase this type of insurance)

How Insurance Works The higher the deductible, the lower the insurance premium The lower the deductible, the higher the premium Deductible- The amount of money you, the insured, agree to pay in the event of a loss, prior to the insurer paying the rest of the claim amount.

Whole Life Insurance vs. Term Life Insurance Advantages of Whole Life insurance include guaranteed lifetime coverage Premium that doesn’t increase as much as term life insurance over time Accumulate cash value Term life is a life insurance policy limited to a specific period of time. If you die during the term, the death benefits are paid to your beneficiaries.

Determining Workers Earnings The demand for specialty jobs that require skilled training (doctors, engineers, pilots, etc.) pay more because the demand for those positions is high compared to the supply of those qualified to fill the jobs.

Spending, Saving and Investing Bonds are historically a safer investment than investing in the stock market. When investment risks are high, the rate of return is usually high. When investment risks are safe, the rate of return is usually lower.

Earnings A person’s level of education, training, and skills are the best predictors of financial and career success.

Skills Your Need to Be Successful The skills listed below are skills that apply to many different kinds of work. Analytical (problem solving) skills Computer skills Flexibility and adaptability Interpersonal (“people”) skills Motivation and initiative Self-confidence Teamwork Communication skills