Brookwood High School -Net Worth Dropbox- What are some examples of inflows of money into your “wallet” or bank account? Customer payments and return on investments

Net Worth Dropbox Think of your bank account like your wallet. The number of dollars going into your wallet daily are your inflow. The number of dollars going out of your wallet daily are your outfl ow. When the inflow rate exceeds the outflow rate the number of dollars in the wallet grows. When the outflow rate exceeds the inflow rate the number of dollars in the wallet falls. When the inflow and outflow are the same the number of dollars in the wallet are unchanged. This illustrates two economics concepts, stocks and flows. Flows are based on units of time, for example, the number of dollars that flows into your wallet in a day. Stocks are the inventory, or stocks, or dollars in your wallet at any given time. Answer the following questions, when you have completed your Net Worth Assignment submit to the Net Worth Dropbox. For the assignment remember that Net Worth = Assets - Liabilities and Cash Flow = Income - Expenses Part A: 1. What are some examples of inflows of money into your “wallet” or bank account? Customer payments and return on investments 2. What are some examples of outflows of money into your “wallet” or bank account? Money used to purchase any fixed assets and salaries and wages paid to employees 3. The dollars in your bank account represent your wealth, how can you grow your wealth over time? Interest can build your wealth 4. Using the information below, what is this person’s net worth? $71,200 5. Using the same information, what is this person’s cash flow? 80 per month 6. Is this person’s net worth likely to increase or decrease over time? Why? Increase because the persons income exceeds expenses 7. Why would people want to increase their net worth? 8. Sam has a part-time job earning $75 dollars after taxes each week. Sam spends $30 a week on gas, food, and entertainment. Is Sam’s cash flow positive or negative? Its positive 9. What is likely to happen to Sam’s net worth as a result? It will increase