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 Contractionary- plan to reduce aggregate demand and slow economy (addresses inflation: decreases the amount of money in circulation.) Discretionary- stabilize the economy.

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

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

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

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

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

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

Savings and Investment 1st step 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.

Higher degree of risk investments include: stocks and corporate bonds. 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

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

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.

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

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

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.

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

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

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.

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

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

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

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

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.

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

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.

*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.