Money Management, Banking, and Investments

Money Management, Banking, and Investments

• The Federal Reserve (Fed) manages inflation and stabilizes the economy by controlling the money supply and interest rates.
• The Fed influences economic conditions using open market operations, the discount rate, and reserve requirements.
• Businesses can finance operations through debt (loans, bonds) or equity (stocks, venture capital).
• Other business funding sources include crowdfunding, grants, or retained earnings.
• Spending/savings plans allocate income between expenses and savings.
• These plans involve evaluating income, setting financial goals, tracking spending, and adjusting as needed.
• Budgets manage money by forecasting income and expenses.
• Budgets ensure funds for expenditures and savings and requires income estimates, expense categorization, and adjustments.
• Managing a checking account includes recording transactions, balancing accounts with bank statements, making deposits, transferring funds electronically, and using debit cards responsibly.
• Banks provide loans, savings accounts, and payment services.
• Credit unions offer lower interest rates and member-based services.
• Other financial institutions offer investments, financial planning, and insurance products.
• Fixed expenses remain constant, e.g., rent and loan payments.
• Variable expenses fluctuate, e.g., groceries and utilities.
• A balance sheet shows assets, liabilities, and equity at a specific point.
• An income and expenditure record tracks revenue and expenses over time to assess profitability.
• Savings accounts or CDs are suitable for short-term goals due to their safety.
• Riskier investments like stocks, bonds, or real estate may be used for long-term goals.
• Securities information comes from financial news, stock exchanges, brokerage firms, and regulatory bodies like the SEC.
• Credit sources are banks, credit unions, online lenders, and peer-to-peer lending, which offer personal loans, credit cards, and lines of credit.
• Credit allows immediate purchases but can lead to debt.
• It can improve liquidity, but high interest rates and fees can be a disadvantage.
• Simple interest is calculated on the principal only: Interest = Principal × Rate × Time.
• Establish and maintain a good credit record by paying bills on time, keeping low credit card balances, and checking credit reports regularly.

Consumerism

• Consumer information comes from product reviews, government websites, consumer protection agencies, and media.
• Consumers have rights to safe products, truthful advertising, and redress.
• Consumers have a responsibility to be informed and make responsible purchasing decisions.
• The BBB helps resolve disputes and promotes ethical practices.
• The FTC protects consumers from deceptive advertising and unfair trade practices.
• Consumer behavior is influenced by psychological, social, and cultural factors, including needs, desires, and price sensitivity.
• Income, interest rates, and credit availability impact spending and saving decisions.
• Advertisements aim to inform, persuade, and influence consumer purchasing decisions.
• Comparative shopping involves evaluating stores, prices, and products for informed decisions.
• Promotional sales increase awareness.
• Clearance sales move old stock.

Characteristics and Organization of Business

• Businesses aim to provide goods or services, generate profits, and create value for customers.
• Key business functions include marketing, operations, and finance.
• Gross profit is sales minus the cost of goods sold.
• Net profit is gross profit minus operating expenses, taxes, and other costs.
• Organizing a business includes selecting a structure, creating a plan, obtaining financing, and setting up operations.
• Sole proprietorships offer control but full liability.
• Partnerships offer shared control and risk.
• Corporations offer limited liability but have complex structures.
• Functions like marketing, operations, and finance work together to achieve business goals.
• Current business trends include digital transformation, sustainability, remote work, and e-commerce.
• A business plan outlines objectives, strategies, market analysis, and financial projections to guide growth.

Economic Systems

• Key economic terms include supply and demand, scarcity, opportunity cost, inflation, and GDP.
• Prices are determined by the relationship between the supply of goods and services and consumer demand.
• Free enterprise allows businesses to operate with minimal interference, driven by competition and profit.
• Businesses satisfy consumer needs through the production of goods and services in a free-market economy.
• Competition lowers prices, improves quality, and drives innovation, benefiting consumers and society.
• Traditional economic systems rely on customs.
• Command economies are government-controlled.
• Market economies are driven by supply and demand.
• Factors affecting profit include production efficiency, market demand, and cost management.
• Higher productivity leads to economic growth and improved living standards.
• Key economic indicators include GDP, inflation rate, unemployment rate, and consumer confidence.
• E-commerce has revolutionized shopping and global trade by increasing accessibility and convenience.

Rights and Responsibilities of Employees, Managers, Owners, and Government

• Businesses can demonstrate responsibility through environmental initiatives, ethical labor practices, and community involvement.
• Positive workplace culture, fair compensation, and responsive customer service can boost satisfaction.
• Non-compliance with rules can lead to legal penalties, fines, or loss of reputation.
• Labor unions advocate for workers' rights, influencing labor laws and government policies.
• EEO laws promote fairness and prevent discrimination in hiring and employment practices.
• Bias and stereotypes can distort business decisions, leading to unfair treatment.
• The government regulates business to ensure fair competition, protect consumers, and uphold labor rights.
• Regulations ensure ethical business conduct, safety, and fairness in the market.

Career Awareness

• Key qualities for business careers include communication skills, adaptability, problem-solving, and leadership.
• Factors like automation, globalization, and demographic shifts affect the job market.
• Career information sources include career websites, job boards, and professional networks.
• Application letters should highlight qualifications, experience, and interest.
• Resumes summarize skills, experience, and education.
• Personal data sheets include more detailed personal information.
• Job applications should be completed accurately, highlighting relevant experience, and following instructions carefully.
• Interview strategies include preparation, company research, appropriate dress, and practicing common questions.

Insurance

• Insurance provides financial protection against loss or damage, ensuring security for individuals and businesses.
• Types of insurance include home, auto, life, health, and liability.
• Policies differ in coverage, premiums, and deductibles and should be chosen based on needs and risk tolerance.
• Safety protocols and preventive maintenance reduce risks and potential losses.

Ethics

• Emerging ethical issues include data privacy, fair labor practices, and environmental impact.
• Unethical practices can damage reputation and lead to legal consequences.
• Ethical behavior in tech involves respecting privacy, ensuring accuracy, and preventing misuse of data.
• A professional code outlines expected behavior, ensuring trust and integrity in the workplace.
• Ethical practices in product management include transparency, safety, and quality control.
• Ethical considerations guide business decisions to balance profit with social responsibility.

Global Business

• Foreign trade involves exchange between nations, while domestic trade occurs within a single country.
• Social, cultural, and political differences affect marketing, business operations, and legal compliance.
• Events like political instability, natural disasters, and trade agreements affect global business.
• Trade opens new markets, drives innovation, and influences global economic conditions.
• Competition is increasing as businesses expand internationally and face global rivals.
• Tariffs tax imports.
• Quotas limit quantity.
• Embargoes restrict trade to influence international relations and protect domestic industries.