Ramsey Classroom CH 3 Key Terms

Dawson wants to set up an emergency fund. What is the purpose of an emergency fund?

• A savings account set up specifically to be used to cover financial emergencies

• A purchase that requires a significant amount of money

• The percentage of principal charged by the lender for the use of its money

• The amount of interest charged on a debt but not yet collected

Kaiden is planning to buy a new car. What would this purchase be considered as?

• A savings account set up specifically to be used to cover financial emergencies

• A large purchase that requires a significant amount of money

• The percentage of principal charged by the lender for the use of its money

• The amount of interest charged on a debt but not yet collected

Kyler borrowed some money from a bank. What does the bank mean when it talks about an interest rate?

• A savings account set up by Kyler specifically to be used to cover financial emergencies

• A purchase that Kyler made that requires a significant amount of money

• The percentage of principal charged by the bank for the use of its money

• The amount of interest charged on Kyler's debt but not yet collected by the bank

Paisley took a loan from a bank. At the end of the month, she noticed an additional amount on her loan statement. She asked Griffin and Canaan about it. They explained that it is accrued interest. What is accrued interest in this context?

• A savings account that Paisley set up specifically to be used to cover financial emergencies

• A purchase that Paisley made which required a significant amount of money

• The percentage of principal charged by the bank for the use of its money

• The amount of interest charged on Paisley's debt by the bank but not yet collected

Haidyn has invested some money in a business. She is curious about the term 'compound growth'. What does it mean?

• The average rate of growth for Haidyn's investment over time; often expressed as an annual figure

• Interest paid on interest previously earned from Haidyn's investment

• The initial amount of money Haidyn invested in the business

• The measure of Haidyn's investment's profit or loss, usually expressed as a percentage of the initial investment

Rocky, Remy, and Raja went to a grocery store. They noticed that the price of their favorite chocolate bar has increased compared to last month. What economic concept does this scenario illustrate?

• This scenario illustrates that inflation is the decrease in the general price level of goods and services over time.

• This scenario illustrates that inflation is the increase in the general price level of goods and services over time.

• This scenario illustrates that inflation is the exchange rate between two currencies.

• This scenario illustrates that inflation is the interest rate charged by banks on loans.

Judy invests $1000 in a savings account. Over time, she earns interest on her initial investment as well as on the interest she has previously earned. What is this type of interest called?

• compound growth

• compound interest

• interest rate

• rate of return

Riya borrowed some money to buy a new laptop. What is the initial amount of money her borrowed?

• principal

• down payment

• large purchase

• time value of money

Heather invested in a company and wants to calculate the measure of her investment's profit or loss, usually expressed as a percentage. What is this measure called?

• compound interest

• interest rate

• rate of return

• time value of money

Trena has $1000 today and is considering investing it. Heather tells her that the money is worth more today than in the future due to its earning potential. What is this concept called?

• inflation

• time value of money

• rate of return

• Murphy's Law