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Economics Chapter 4
Transcript of Economics Chapter 4
Going into Debt
What is credit?
Reciept of money to buy goods with the promise to pay for them in the future
Amount of money originally borrowed
Deciding to use credit
Do I really require this item? Can I postpone purchasing the item until later?
If I pay cash, what will I be giving up that I could buy with this money? This is an opportunity cost.
If I borrow or use credit, will the satisfaction I get from the item I buy be greater than the interest I must pay? This is also an opportunity cost.
Have I done comparison shopping for credit? In other words, after you have determined that you are not going to pay cash for something, you should look for the best loan or credit deal, including the lowest interest rate and other conditions of repayment
Can I afford to borrow or use credit now?
Lifespan longer than 3 years
Sources of Loans and Credit
2 main types of credit
Is there only one type of bank?
Savings & Loan Association
Credit Cards and
Owns his own business
Owns a house,
Owns a car
Has never missed a
Rents his house
Works for a small
Has missed several debt
Government Regulation of Credit
Turn to page 86 and complete:
Matching - 4, 5, 6, 9, 10, 11 & 12
Multiple Choice - 8, 9, 10, 11, 12, 13, 14, 15, 16, 33 & 35
Complete the short answer and email it to me.