Income and expenses
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Income and Expenses. Income. Income from work A. Wage – money paid by the hour or unit of production. B. Salary – money paid on a weekly, monthly, or yearly basis. . Income from Wealth.

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Income and Expenses

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Income and expenses

Income and Expenses


Income

Income

  • Income from work

  • A. Wage – money paid by the hour or unit of

  • production.

  • B. Salary – money paid on a weekly, monthly,

  • or yearly basis.


Income from wealth

Income from Wealth

  • Wealth – the value of the things you own: house, car, belongings, bank accounts, savings, investments.

  • Net worth – an individuals wealth after debts and other obligations have been subtracted.

  • Wealth can be used to earn money.


Examples

Examples

  • Rent – payment for use of someone elses property.

  • Interest – income from allowing someone else to use your financial capital.


Wealth accumulation

Wealth Accumulation

  • Influenced by several factors

  • Disposable income – take home pay after taxes.

  • Income – when income increases people save and invest more. Less when income decreases.

  • Expectations – When expectations are high people spend more and save less. When expectations are low people save more.


Income and expenses

  • Current interest rates – higher interest rates promote savings.

  • Taxes – tax rates on income from savings and investments can encourage or discourage savings.


The dilemma

The Dilemma

  • Banks, insurance companies, stock brokerages try to persuade people to save or invest money.

  • Businesses want you to spend more.

  • You must decide what things to buy and also whether to save and invest.


Question

Question

  • In the current economic situation, do you think people should be spending more or saving more? Explain your answer based on what you have learned so far about the economy.


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