Personal Finance Notes Essay

826 Words Jun 17th, 2013 4 Pages
Seminar 1 Exercises
Chapter 1 (1.2 Question 4): How do business cycles and the health of the economy affect the value of your labor? In terms of supply and demand, what are the optimal conditions in which to sell your labor? How might further education increase your mobility in the labor market (the value of your labor)?
The economy goes in business cycles where it has recurring period of economy-wide expansion (growth) and periods of contraction (shrinking). These cycles are often measured by the increase or decrease in the gross domestic product (GDP). The economy produces not just goods and services to satisfy its members but also jobs, because more people participate in the market economy by trading their labor, and most rely on
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Chapter 2 (2.1 Question 2): Examine your budget and distinguish between wants and needs. How do you define a financial need? What are your fixed expenses—expenses you must pay regularly each week, month, or year? Which of your budget categories must you provide for first before satisfying others? To what extent is each of your expenses discretionary—under your control in terms of spending more or less for that item or resource? Which of your expenses could you reduce if you had to or wanted to for any reason?
Need are necessities (i.e. food, clothing, and roof over our head). Wants are not necessities but something we need to set goals and work toward (i.e. a new car, the newest technologies or clothing, and so on). Fixed expenses are those that do not change from month-to-month. An example would be rent (or mortgage) payment, cable, and phone bill. Discretionary expenses are those that we do have a little more control over (i.e. the monthly credit card bill since we control our spending habits along with utility bills and the way we use energy each month).

Chapter 3 (3.1 Question 2): Using the format for Alice’s cash flow statement, prepare your cash flow statement for the same one-year period. Include your cash flows from all sources in addition to your operating cash flows – the income and expenses that appear on your income statement. What, if any, were the cash flows from financing and the cash flows from investing? Which of your cash flows are

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