- 10.1.1: How is investing money different from saving money?
- 10.1.2: Why are savings accounts often safer than other investments?
- 10.1.3: List three short-term goals that could be reasons for saving.
- 10.1.4: What is an emergency fund, and why should you have one?
- 10.1.5: Why does meeting long-term goals often require saving and investing...
- 10.1.6: What is financial security?
- 10.1.7: When should you begin retirement planning?
Solutions for Chapter 10.1: Reasons for Saving and Investing
Full solutions for Personal Financial Literacy | 1st Edition
a person who is performing an act for another person, called the principal
Arrow’s impossibility theorem
a mathematical result showing that, under certain assumed conditions, there is no scheme for aggregating individual preferences into a valid set of social preferences
average total cost
total cost divided by the quantity of output
the equipment and structures used to produce goods and services
a group of firms acting in unison
the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own
a strategy that is best for a player in a game regardless of the strategies chosen by the other players
a good for which, other things being equal, an increase in income leads to a decrease in demand
internalizing the externality
altering incentives so that people take account of the external effects of their actions
the regular pattern of income variation over a person’s life
a small incremental adjustment to a plan of action
marginal product of labor
the increase in the amount of output from an additional unit of labor
the amount of money the banking system generates with each dollar of reserves
two goods with straight-line indifference curves
an absolute level of income set by the federal government for each family size below which a family is deemed to be in poverty
a legal maximum on the price at which a good can be sold
variables measured in physical units
regulations on the minimum amount of reserves that banks must hold against deposits
tax on goods produced abroad and sold domestically
an excess of exports over imports