Content Connected
Authoritative content is presented in an easy-to-comprehend
and relevant format. The material focuses on the acquisition
of research, problem-solving, and academic skills that are
required for those taking the next step on the path to college
and career readiness.
¶ Career features throughout the text present information
about careers in the 16 career clusters. By studying
this information, you can learn more about career
possibilities for your future.
¶ Case Study features simulate real-world scenarios to
give context to issues that arise when learning to be
financially responsible.
¶ College and Career Readiness Portfolio activities
enable you to create a personal portfolio for use when
exploring volunteer, education and training, or career
opportunities.
¶ You Do the Math activities focus on math skills that are
important to your understanding of personal finance. You
are given an opportunity to apply what you learn in context
with the material that has been presented in the chapter.
¶ Math Skills Handbook provides you with a quick
reference for basic math functions. This helpful
information will supplement the content provided in the
You Do the Math features throughout the text.
It is important to assess what you learn as you progress
through the text. Multiple opportunities are provided to
confirm learning as you explore the content. Formative
assessment includes the following.
¶ Checkpoint activities at the end of each major section of the
chapter provide an opportunity to review what you have
learned before moving on to the next section in the chapter.
¶ Review Your Knowledge covers basic concepts
presented in the chapter so you can evaluate your
understanding of the material.
¶ Apply Your Knowledge challenges you to combine
what you learned in the chapter with your own
experiences and goals.
¶ Teamwork encourages a collaborative experience to
help you learn to interact with other students in a
productive manner.
¶ College and Career Readiness activities provide ways
for you to demonstrate the literacy and career readiness
skills you have mastered.
Section 21.1 Economic Globalization
639
When a US company moves a piece of its operations to another country, it
creates jobs in that country. Often those jobs offer workers in the host country
better opportunities than were previously available.
While outsourcing offers companies substantial cost savings and greater
productivity, it also results in job losses for workers at home. These displaced
workers must upgrade their skills and seek retraining to find new jobs. This
is one painful reality of globalization.foreign is a process in which companies open subsidiaries in
the United States and create jobs here. Some American companies also are
insourcing when they return operations from other countries to the United
States. Today, US subsidiaries of foreign companies account for over five
million jobs in America. Foreign-owned companies insource millions of good
paying jobs each year. For example, BMW recently completed a billion dollar
expansion in North Carolina, and Toyota is building new plants in Mississippi
and Texas. These companies provide good, high paying jobs to American
workers. Nestle USA, T-Mobile USA, Sony Corporation of America, and
Volvo Group North America are among the companies that insource jobs to
the United States.
Flow of Capital Investmentcorporations
has increased the flows of
l
i ney used to generate
Case Study: The World Economy
Profi
t Squeeze
Walter owns a small business in Illinois. In recent years the cost of running his
business has increased across the board. The cost of doing business threatens to
reduce profits to the point that it is not worth Walter’s time, effort, and investment to
keep his business going.
Walter has two options. He can either increase his prices, or he can decrease
his production costs. Nothing about Walter’s business requires him to be located in
Illinois. Cost savings is the chief advantage of mo
ving all or part of a business to a
country with low-cost labor and a favorable tax structure. In addition, there would be
far less government interference and oversight.his
Unfortunately, if Walter decides to do this, 70 employees will be left jobless.
Relocating them would not be practical.
Case Review
1. Do you think Walter is justified in moving his business to another country? What
other alternatives might he have?
2. If Walter decides to move the business, what do you think he should do about
the employees he must let go? Does he have a responsibility to them?
3. What do you think could be done in the United States to encourage businesses
to stay in the country? How does the economy suffer
when businesses leave?
26
Chapter 1 Personal Finance: An Overview
Careers in Arts, A/V Technology &
Communications
What Does a
Foreign Correspondent Do?
A
foreign correspondent
is a journalist who reports news of
international significance, usually from a foreign country. The job
involves frequent travel to locations
around the world. Foreign
correspondents
typically:
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Section 21.2
International Monetary System
647
the United States restricts the export of technological know-how and
materials that could be used to build weapons that might be used
against the country.
To address unfair trade practices.
For example, importers may engage in
dumping. This refers to the sale of imported products at lower prices
than those charged in the domestic market for similar products. Once
the imported products dominate the market and drive the domestic
producers out of business, the importer raises the price. To combat
dumping, governments may tax these imports to raise their prices so
domestic companies can compete. Critics of free trade have other arguments. In the United States, they claim
that free trade increases the US trade deficit in world markets as the United
States continues to import more than it exports. Others say free trade benefits
larger companies and developed nations at the expense of smaller businesses
and emerging nations. Many people think that free trade also threatens
cultural identity and individuality as large multinational corporations replace
small local businesses. They seem to create a “worldwide sameness” as they
become a dominant presence around the globe. In many countries, there is a
fear that imports bring foreign values and cultural identities with them at the
expense of local traditions, values, and culture.
t Restrict Trade
÷ − + ×withneed
You Do the Math
It may be necessary to convert currency when doing business with another
country. To determine the exchange, you can use one of the many currency
converters found on the Internet.
Complete the Following Problemsin=
You want to buy two books published only the U.K. The cost of the books
is £17.98. The current exchange rate is $1.00 £0.
60797.
1.
What is the cost of the books in US dollars? (Round up to the nearest cent.)
2.
Shipping from the U.K. is £9.97. What is the
total cost of your purchase
including shipping in US dollars?
3.
What is the current exchange rate for the pound¶Estate
? How much will this book
cost in US dollars using the current exchange rate?
228
Chapter 7 Investing and Estate Planning
Real Estate
Buying estate (land or buildings) is another way to invest for future
profit. This type of investment usually requires enough
money for a down
payment plus long-term loan.
For most people, buying a home is their fiyourusually
rst experience in real estate.
When the real estate market is strong, owning
home can increase your
net worth and protect against inflation. Pro
perty increases in value
over time. Still, most financial experts advise t
hinking of a home first in terms
of a place to live and second as an investment.
Buying land or buildings for investment pur
poses is not for amateurs.
Before investing in real estate for profit, buyers nee
d to know about property
values and property management. They also
need to learn about mortgages,
down payments, taxes, titles, insurance, and the legal aspects of leases and
property ownership. These consideration
s are described in Chapter 12.
Purchasing stock in a
real estate investment trust (REIT)
is a way to invest
in real estate without the complications and finan
cial commitment of owning
property. A REIT is a company that owns profit-earning real estate, such
as apartments, shopping malls, office buildings, or hotels. Mortgage REITs
specialize in buying and selling mortgage-backed
securities.
The government requires that REITs distribute
most of their profits
to shareholders through dividends. Shares of many
REITs are traded on
securities exchanges.
Real estate mutual funds
are another way to invest indirectly in real estate.
Funds may include a mixture of securities from REITs, commercial developers,
and other types of real estate companies.
Investing in REITs and real estate mutual
funds requires less capital and
offers more liquidity than purchasing property. Changes in interest rates,
housing prices, and demand for housing can affect the rate of return. As with
other securities, investors should research before investing and carefully
review prospectuses and annual reports.
Valuable Goodspreciousitems
People have collected goods and objects for thousands of years
and continue to do so today. These can be attractive
investments because
their value is not eroded by inflation as money can be.
Valuable goods include
the following.
¶
Collectibles.
Collectibles are objects purchased for
the pleasure of
ownership and because they are expected to increase in value. Common
collectibles include rare coins, books, stamps, art, antiques, sports
memorabilia, and vintage automobiles.
¶
Precious metals.
Precious metals include gold, silver, platinum, and other
metals. People buy them in the form of pieces o
f jewelry, coins, bars, or
ingots from banks and dealers. An
ingot
is a bar of metal that is sized
and shaped for easy transportation and storage. Why do investors buy
gold when gold does not pay interest or dividends?ldGold
is a store of
f er It does not tarnish, corrode, or degrade. Gold
mined today.
FYI
In times of doubt and
uncertainty in the
securities market, investors
often buy gold. In early
December of 2008, as the
world economy entered a
recession, gold was selling
for $749 an ounce. Less
than three years later, the
price of gold had exceeded
$1,900 an ounce as
investors bought gold as
t
Real Analysts
Real estate analysts
estimate the value of land
and buildings, ranging
from residential homes to
major shopping centers.
They write detailed
reports on their research
and observations and
explain reasons for
arriving at their estimates.
230
Chapter 7 Investing and Estate Planning
Checkpoint 7.1
1. List four reasons a person would invest rather than keeping all of his or
her money in a savings account.
2. What are two ways a stock investor can realize a return?
3. What is an initial public offering (IPO)?
4. What is the difference between the pri
mary market and the secondary
market?
5. How do stocks differ from bonds?
Build Your Vocabulary
As you progress through this course, develop
a personal glossary of
personal finance terms and add it to your
portfolio. This will help you build
your vocabulary and prepare you for a career. Write a definition for each of
the following terms and add it to your personal finance
investing
capital gain
capital loss
stock
dividend
common stock
proxy
preferred stock
stock trade
securities
exchangeglossary.
stockbroker
bond
mutual fund
net asset value (NAV)
money market fundcard
bull market
bear market
66
Chapter 2 Making Smart Decisions
Chapter Summary
Section 2.1 Your Personal Financial Landscape
¶
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Section 2.3 Young Adult and Family Finances
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Now that you have finished the chapter, see what you
learned about personal finance by taking the chapter
posttest. If you do not have a smartphone, visit the
G-W
Learning companion website.
G-W Learning mobile site:
www.m.g-wlearning.com
G-W Learning companion website:
www.g-wlearning.com
Check Your Personal Finance IQ
68
Chapter 2 Making Smart Decisions
Teamwork
Consumers have a responsibility to live within their
means. Work
in a team with other students to discuss the follooverspending,
wing questions. When
consumers have financial difficulties caused by what, if any,
public assistance should be available to them? Is it ethical to create credit
debt to buy nonessentials, to buy a car you c
annot afford, or to borrow
money you cannot repay? Is it ethical for creditors to make credit readily
available to borrowers who have limited ability to repay as agreed? Share
your team’s opinion with the class.
G-W Learning Mobile Site
Visit the G-W Learning mobile site to complete the chapter pretest
and posttest and to practice vocabulary using e-flash cards. If you
do not have a smartphone, visit the G-W Learning
companion
website to access these features.www.m.g-wlearning.com
G-W Learning mobile site:
G-W Learning companion website:
www.g-wlearning.com
Common Core
CTE Career Ready Practices.
For every actinot.
on, there is a
reaction—whether it is immediately seen or
There are
positive and negative consequences for different
actions and
inactions. Make a list of five things that you have
done for
which there were either positive or negative con
sequences. Put
a plus sign (+) beside the positive outcomes and a minus (-)
sign beside the negative outcomes. What could you have done
differently that would have changed each outcomearticle ?
Reading.
Read a magazine, newspaper, or online about tthesummaryandof
he importance
of personal finance for teens. Determine th
e central ideas of article
review the conclusions made by the author. Provide
an accurate
your reading, making sure to incorporate the who
, what, when, and how of
this situation.
Writing.
Research the history of personal finance. Where did the concept
originate? Write an informative report consi
sting of several paragraphs to
describe your findings.
Web Connect
Investigate several money management softwarthem.
e programs online.
Compare and contrast the key features of three of Discuss ways
money management software could help you with
financial planning and
management over your lifetime.
College
and Career
Readiness