Econ Exam

A clearly written financial goal would be

"To establish an emergency fund of $4,000 in 18 months."

According to this paystub, what was the net or take-home pay for this employee for this pay period?

$1,102.98

According to the paystub, how much did this person pay towards Medicare in this pay period only?

$19.62

A minor may request a copy of his or her credit report after what age?

14

If you could choose just one financial tool to help you avoid damaging financial decisions, which of the following do you think would be most effective?

A balanced budget that you track and update regularly.

What is the definition of interest on debt?

A fee you pay to your lender in exchange for the right to use the borrowed funds.

Which of the following is true about fixed and adjustable-rate mortgages?

Adjustable-rate mortgages have a fixed interest rate for a short period, but then the interest rate fluctuates, which can lead to higher or lower interest rates for the homeowner.

The ________ effects of the drug are too severe to allow it to be marketed.

Adverse

The university receives more than half its _______ income from government sources.

Aggregate

Which of the following could have a negative impact on your credit score?

Applying for multiple credit cards in a short period of time (e.g., a week)

Which of the following is not an example of safe Internet use?

Archive credit card information in your email.

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

Ask his parents to cosign a credit card or add him as an authorized user on their credit card.

How do you calculate net worth?

Assets minus liabilities.

An example of a fixed expense is

Auto insurance

Which of the following is true about checking accounts?

Banks can change the fee policies as long as they put the changes in writing and notify you.

What is the best advice to prevent identity theft?

Be careful with your credit and bank account numbers, create strong passwords, and beware of phishing emails.

How could you determine whether your debt load is more than you can afford?

Calculate your debt-to-income ratio.

Aaron realizes he has a budget deficit of roughly $175 at the end of two months in a row. Which of these options makes the most sense for him to fix his problem?

Cancel his cable TV subscription and go out to dinner three fewer times each month with friends.

The ________ acts as a form of protection for the lender in case the borrower defaults on their loan payments.

Collateral

The word has a negative _________ and is generally directed at women.

Connotation

When loans are amortized, monthly payments are _____. while the interest portion of the monthly payment ______ and the principal portion of the monthly payment _______ over time.

Constant, Decreases, Increases

Why do so many people continue to use payday loans despite the financial risk?

Consumers need quick access to money that is not provided by other financial institutions.

You find an error on your credit report: your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do first?

Contact the credit card company to have them fix it.

They hired a _________ to remodel the kitchen

Contractor

Security breaches are easier to address with which payment form?

Credit card

You're paying your credit card bill and your student loan payment each month, but you're falling behind on your auto loan payment. Which friend's advice could have a negative impact on your credit score?

Debbie says, "Stop making the credit card payment for a few months until you're caught up on the auto loan."

A common government practice to help reduce the budget _______ is to raise taxes

Deficit

Your paycheck will automatically _____ into your account on the 10th of each month.

Deposit

These changes greatly ________ the value of the house

Depreciate

This is commonly considered a flexible expense.

Entertainment

He inherited __________from his parents after their passing.

Estate

Clyde Cash owned two houses, three office buildings, a Bugatti Veyron, antiques, stocks, and a jet, all worth $25 million. He passed away. His heirs owe the government $9 million in taxes. What kind of taxes do his heirs owe?

Estate Tax

She liked to throw lavish parties and was known for her _________ display of wealth

Excessive

It is common for an __________ to be imposed on a number of goods.

Excise

State citizens voted to add a 75-cent tax to each pack of cigarettes to pay for programs to help people quit smoking. What type of tax is added to each pack of cigarettes?

Excise Tax

In the desert, temperatures are known to _______ dramatically

Fluctuate

Optimists ________ an immediate upswing in business as soon as vaccines are administered.

Forecast

Avoid spending money on unnecessary things that may be _______ or will not stand the test of time.

Frivolous

Some companies _______ tax refunds or paychecks, put a lien on properties and bank accounts or even take claimants to court who do not pay their bills.

Garnish

David wants to change his daily habit of buying a $5 coffee and save more money. Which of the following should he do?

Identify what triggers his habit and what reward he is trying to satisfy.

Which of the following statements is true?

If the cardholder pays $523.00 by the due date on the bill, she will pay no interest to the credit card company.

Jake got his paycheck today. He worked 40 hours at $20 per hour. His gross pay was $800, but the amount of his paycheck was only $623.15. What type of tax was taken from Jake's paycheck?

Income/Social Security/Medicare Tax

Those seeking the services of the famous attorney will also _______ the legal fees that come with those services.

Incur

Further ___________ showed that he had visited the city twice before.

Inquiry

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

It is deducted directly from your checking account.

Frank and Jasmere are both shopping for a new car. They are looking for a $20,000 loan to pay for the new car that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is true?

Jasmere's monthly payment on the loan will be about $100 more than Frank's payment.

Which statement best describes why payday loans are sometimes referred to as "predatory lending?"

Lenders "prey" on low-income borrowers who have little to no other options for obtaining a loan.

Which of these costs would be the most difficult to adjust if you were looking to reduce your expenses?

Loan payment on a new car.

Which best describes the Debt Snowball method for paying off debt?

Make the monthly minimum payments on all your debts and put any extra cash toward the debt with the lowest balance.

Which of these credit payback strategies would lead to the highest interest charges?

Making the minimum payment of 3% of your credit card balance every month with an occasional late payment.

Just like the medieval castle, the ________ serves to protect those inside the fortress and their riches from outsiders.

Moat

The company has had a successful year and hopes to maintain its ________ by introducing new products.

Momentum

How often do customers typically receive a bank statement for their checking account?

Monthly

He will have to take out a _______ in order to buy the house

Mortgage

Without a car, living close to work is a _________

Necessity

The park was overgrown and littered from years of _________

Neglect

After bankruptcy, which one of the following is a way you can rebuild your financial credibility?

Obtain a secured credit card account.

How frequently can you request a free copy of your credit reports?

Once every 12 months

As a young adult, all of the following are good strategies for building credit, except

Open a checking account, and start using a debit card.

These accounts have low monthly maintenance fees and no _____ fees

Overdraft

What are the two most important factors in calculating your credit score?

Payment history and amounts owed.

The company made millions for investors but clearly engaged in ______ lending practices

Predatory

The United States has a _________ tax system, meaning the more income you have, the higher the tax rate you pay.

Progressive

Sasha bought a townhouse last year. She just got a tax bill from the county showing the value of her house and the amount of tax she owes. What kind of tax does Sasha owe?

Property tax

You're considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Which of your expenses would likely decrease by having roommates?

Rent

Yvonne buys gloves that cost $10.00. At the register, she must pay $10.80. What type of tax did Yvonne pay?

Sales Tax

An example of a long-term goal would be

Saving for retirement

As the pandemic lingers on, food ________ is growing across the country.

Scarcity

I forgot to pay my credit card bill one month. For how long will that payment information show up on my credit report?

Seven years

Nancy wants to take steps to better protect her personal information. Which of the following is a bad idea?

She creates one really strong password that no one knows and uses it for all of her financial accounts.

The teacher keeps a ________ of tissues in her desk in case anyone needs one.

Stash

If you are having trouble making auto loan payments, and are really following a tight budget, which recommendation below represents the worst advice?

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control.

Which of the following could be considered good debt?

Student Loan

During the recession, there was a ______ of workers and not enough jobs.

Surplus

Bigmart sells boots that are made in China and boots made in the United States. Bigmart must pay 27% tax on each pair made in China, but not on the U.S.-made pairs. What type of tax is Bigmart paying on each pair of boots made in China?

Tariff

Why is it important to be extremely careful when completing your 1040 form?

The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government.

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

The 25 days after the end of the billing cycle is referred to as the grace period.

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.

Which of the following statements is correct about secured loans?

They require collateral, in the form of assets like a car or a home, to be exchanged for the loan.

Through hard work and ______ our father was able to raise the money to put all four of us through college.

Thrift

You overhear your cousin talking about the importance of creating and sticking to a budget. Which of the following reasons he gives below is actually false?

Using a budget can qualify you for special discounts at your favorite stores.

You have a credit card and want to know the best way to use it to boost your credit score. Which step will have the greatest impact?

Using less than 30% of the credit limit on your card and paying it off in full every month by the due date.

You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?

W-4

Which of these represents a potential consequence of neglecting to pay your credit card or loan debts?

Wages or tax refunds can be garnished.

Which of the following is a bad budgeting strategy to use if you want to save money at the grocery store?

When comparing similar products, focus on the price only.

When do you start paying taxes?

When you make more than the minimum income requirement.

Which of the following statements comparing credit and debit cards is true?

With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back the money eventually.

She has been _________ $20 from her paycheck every week for the last four years.

Withholding

You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate that your monthly costs to be rent of $900, car related expenses to be $550, entertainment of $200, food expense of $250, cable bill of $75, mobile phone of $100, student loan payment of $400 and other expense of $150. How would you describe your budget after analyzing all of your income and expenses?

You have a deficit of $125.

Which of the statements below is true about filing your taxes, assuming your only income comes from the salary you earn at your job?

You must file your tax return by April 15th of the following year or request an extension by that date.

Which of the following is a sign that you have a budget deficit?

You overdraw your checking account on a consistent basis (with a $34 cost per overdraft).

Which of the following best describes what Two Factor Authentication (2FA) is?

You type in your account password on your laptop and are prompted to enter a one-time code you receive via text message.

When signing up for a new checking account, you answer "yes" to receive overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12, and dinner for $15. What is likely to be the outcome resulting from these transactions?

You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn ($29).

Reading through a credit card disclosure, you see the APR for a specific card is set at 9.99%-23.99%. Which statement is true?

Your APR will be within that range, depending on the strength of your credit history.

How can your credit score impact your financial situation?

Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be.

All of the following are appropriate agencies to contact in the case of identity theft except

Your local news outlet

What is one benefit of selecting an income-based repayment plan for your student loans?

Your monthly loan payment will be set based on your income, so that you're not paying more than 20% of income toward your loans.

The shorter your term length, the _____ your monthly payments, and the _____ the total interest you will pay.

higher, lower