This upcoming Sunday is National Ice Cream Day, so make plans to buy yourself something cold and creamy. Whether it's an ice cream cone, sandwich, or milkshake, it's hard to go wrong with ice cream. But if you feel a bit guilty about indulging, take a few minutes to read this blog post first and learn about four ice cream related financial terms. Then, to make sure the lesson is really imprinted in your mind and body, get over to the ice cream shop. Consider the guilty pleasure an important part of your financial education.
Frozen Account
You are probably already familiar with this term, and hopefully not from experience. When one of your financial accounts is frozen, it means there is a stop on your account and you can't make any purchases or withdrawals. You might end up in this situation if you have an outstanding debt or there was suspicious activity in your account.
Say you go to Vegas for the weekend and rack up a hefty bill at the casino, a fancy restaurant, and a show. Chances are pretty high that you will wake up the next morning to find your account is frozen. It happens simply because your bank is surprised at all the big expenses coming from a state you don't reside in and they are worried that your identity was stolen. While it is annoying, the situation is easy to clear up. Just call your bank, confirm your identity and purchases, and the freeze will be called off.
If you have outstanding debt, you might have to work a bit harder to get the freeze lifted. Say you get a speeding ticket late one Saturday night and, hoping that it will just disappear, don't pay your fine. After a few months, you'll probably find that a creditor froze your bank account. This time you might need to call a lawyer and jump through a few more hoops but if you pay out, you can successfully unfreeze your account
ICE
ICE, or the Intercontinental Exchange, is the parent company of the New York Stock Exchange. ICE is also a public company on the NYSE. ICE operates global markets and clearing houses and has reshaped the global market using groundbreaking technology that helps big companies grow.
Global Economic Sweet Spot
You have a sweet spot in yoga where you've stretched just the right amount but haven't thrown out your back. Your dog has a sweet spot on his belly where he can't resist a good scratch. Did you know that the global economy has a sweet spot too? Economists say that the global economy is at its sweet spot because the global middle class is growing in direct proportion to overall economic growth.
The trend is the result of policy changes taking place primarily in developing countries. The changes are creating new opportunities that spur economic growth, without putting governments into debt. The development is most visible in China, India, and South East Asia, while the US and Canada’s middle classes are experiencing stability. In a period of perceived economic unrest, the fact that we are in a global economic sweet spot is something to celebrate, maybe with a double chocolate ice cream cone.
Sticky Prices
The rule of supply and demand is a fundamental economic concept. Low supply and high demand will create higher prices while high supply and low demand will create lower prices. Let’s say you open a donut store and start selling delicious fresh donuts. You charge $10 a donut because your donuts are really out of this world. If seven additional, and equally delicious, donut shops open up in your area, the rules of supply and demand say that you will be forced to lower the price of your donuts.
Price stickiness is a term that refers to a situation where, according to the rules of supply and demand, the prices should go down, but they don’t. The donut price is sticky if, despite all the new donut stores, the price of donuts stays the same.
If we widen the scope we understand that prices need to fluctuate in line with the rest of the economy. Milk, eggs, cell phone service, and housing prices all change over time. They don’t change too quickly, but they’re not set in stone either. When prices are sticky and don't change, it represents a lack of equilibrium in the economy and it could be a symptom of more significant economic challenges.
Financial Education With A Cherry On Top
Frozen Account, ICE, Global Economic Sweet Spot, and Sticky Prices. Who knew that economic terms could be so enticing? Now you know the meaning of four new terms that can help you can make more informed financial decisions. Now’s the time to go and treat yourself to that ice cream. You deserve it!