Foundations: Personal Finance Test 1

Foundations: Personal Finance Test 1 Consumer - correct answers A person or organization that uses a product or service credit - correct answers the granting of a loan and the creation of debt; any form of deferred payment debt - correct answers an obligation of repayment owed by one party (the debtor/borrower) to a secondary party (the creditor/lender); in most cases this includes repayment of the original loan amount plus interest economy - correct answers a system by which goods and services are produced and distributed financial literacy - correct answers the knowledge and skillset necessary to to be an informed consumer and manage finances effectively interest - correct answers a fee paid by a borrower to the lender for the use of borrowed money; typically interest is calculated as a percentage of the principal (original loan amount) loan - correct answers a debt evidenced by a "note,," which specifies the principal amount interest rate and date of repayment personal finance - correct answers all of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. compound interest - correct answers interest paid on interest previously earned; credited daily, monthly, quarterly, or semianually emergency fund - correct answers five hundred dollars in readily available cash to be used only in the event of an emergency; the goal of the First Foundation Interest rate - correct answers percentage paid to a lender for the use of borrowed money (in debt);