Unit 13 Notes

What is the definition of "income" in personal finance?

• Money spent on products

• Money earned by selling products or providing services

• Money saved for the future

• Money used to pay debts

After a person receives income, what are the two main choices they have for what to do with that money?

• Pay taxes or buy gifts

• Spend money or save money

• Invest in stocks or bonds

• Donate to charity or pay bills

What is a "budget" designed to help a person do?

• Predict future income

• Decide how to spend and/or save money

• Understand the stock market

• Calculate their total debt

What does it mean to "invest" money?

• To spend it immediately on needs

• To put it aside to receive a greater benefit in the future

• To donate it to charity

• To use it to pay off all debts at once

One major benefit of investing money is that it often earns what, which can add to your total income?

• Discounts

• Interest

• Taxes

• Wages

In personal finance, what is "credit"?

• The ability to earn interest on savings

• The ability to buy something now and pay for it later

• The total amount of money a person has saved

• The money a business owner makes as profit

What is a potential problem associated with excessive borrowing using credit?

• It increases your savings account

• It guarantees you will get a raise

• The person may not be able to make the payments

• It always results in higher income

What is an "entrepreneur"?

• A person who only saves money

• A person who creates, organizes, and manages a business

• A person who lends money to others

• A person who works a job for a paycheck

What is the main goal of an entrepreneur when creating a business?

• To pay more taxes

• To provide free services

• To make a profit

• To spend all their capital

Which equation correctly shows how a business calculates its profit?

• Total Income + Total Expenses = Profit

• Total Income - Total Expenses = Profit

• Total Expenses - Total Income = Profit

• Total Income x Total Expenses = Profit