Economics A4
Read the sentence. Jennifer wants to use her tax refund to pay off her credit card balance. How much money would Jennifer receive if her withholdings and exemptions are 100 percent accurate?
$0
Read the scenario. Debbie needs to know how much she will pay on her car loan. Using the simple interest formula, how much will she pay with a principal balance of $12,000, an interest rate of 5 percent, and a 60-month loan?
$15,000
Read the scenario. Ricky wants a new car that costs $15,000. His credit union will give him a loan at 4.75 percent for 4 years. What is the total cost Ricky will spend?
$2,347.50
Which are disadvantages of credit?
-If you are late making payments, interest rates can increase. -If you fail to make payments, you can hurt your credit score.
How do individuals benefit from creating a budget?
-It helps them devise a plan to save money. -It helps them identify their income. -It helps them identify their expenses.
Which are advantages of credit?
-You can buy items now and pay for them later. -You make one monthly payment.
Which accurately describes a push marketing tactic to help manufacturers sell more products?
A manufacturer offers department stores incentives for selling its product.
What is a characteristic of a need?
A need is something you cannot live without, such as water.
What is the process for qualifying for a payday loan?
A person must possess an active checking account, valid identification, and be at least 18 years old.
Which is an example of specialization?
A person studies nursing and works in a hospital.
Which famous economist wrote The Wealth of Nations?
Adam Smith
Which government agency provides consumer protection in case of a bank failure and plays a direct role in the US economy?
Federal Deposit Insurance Corporation
George is 22 years old, single, and has just started his first job. He saves 5 percent of his monthly income for retirement. Kirsten is 30 years old and married with two children. She will start saving 6 percent of her income for retirement when she turns 35. Which person will have more money at age 65 if all other factors are the same?
George will because he is younger and saving for a longer period.
What is the primary function of the Federal Deposit Insurance Corporation?
It provides consumers protection in case of a bank failure.
Which form is used by employers to withhold the proper amount of income tax from employees' paychecks?
W-4
What is one fundamental principle, or question, of economics?
What should the country produce?
What would count as a negative against your credit score?
a payment made more than 30 days past due
What does a high credit score indicate?
a person who has a history of repaying debts on time
What is a budget?
a plan for spending your money to meet your wants and needs
What is overdraft protection?
a service that prevents checking account holders from accidentally bouncing a check
What are typical fees associated with checking accounts from banks without any branches?
account minimum fees overdraft fees ATM fees
Which best explains product advertising features?
advertising that focuses exclusively on the benefits of the product
What is creditworthiness?
an appraisal made by a lender as to how likely a customer is to repay a loan as agreed
What is the meaning of the word economics?
laws for the home
Read the sentence. The housing bubble expanded in 2003 when _[blank]_ were at a 50-year low. Which best completes the sentence?
mortgage interest rates
Which type of loan requires the borrower to write a postdated check for the amount he or she wishes to borrow, in addition to a fee, in exchange for cash?
payday loan
Which tax is the main source of revenue for the federal government?
income
What are the four Ps of marketing (also known as the marketing mix)?
Product, price, promotion, and place
Which best defines disposable income?
income available after taxes and other mandatory expenses
What do the three basic economic questions determine?
the allocation of resources
Read the scenario. Jan has auto insurance with a $250 deductible. When she is in a hit-and-run accident, she learns that the repairs will cost $4,500. What will Jan's out-of-pocket expenses be?
$250
Read the scenario. In the simple interest formula, I=Prt, Robert needs to calculate total monies earned on a savings account with the following information: principal = $4,000; interest rate = 2.5 percent; and time = 7 years. What is the total money in the account?
$4,700
Read the scenario. Heathcliff is balancing his checkbook. He starts his ledger with the $145 he has in his account. He records $27 spent at the grocery store followed by $58 spent on his cellphone bill. Then, he receives $540 from work. He then spends $54 at a restaurant and $38 at the movies. He deposits a check from his parents for his birthday worth $180. Then, his landlord cashes his check for rent for $600. How much did Heathcliff earn from work and for his birthday?
$720
Read the scenario. Heathcliff is balancing his checkbook. He starts his ledger with the $145 he has in his account. He records $27 spent at the grocery store followed by $58 spent on his cellphone bill. Then, he receives $540 from work. He then spends $54 at a restaurant and $38 at the movies. He deposits a check from his parents for his birthday worth $180. Then, his landlord cashes his check for rent for $600. How much did Heathcliff spend at the grocery store and for his cell phone?
$85
Which accurately describe features on a credit report?
-a person's personal information, such as date of birth and Social Security number -a person's credit account information, such as lines of credit from credit cards -a history of delinquent payments
Comparative advertising includes which of the following criteria?
-additional features -increased quantity -better price
How do you benefit from understanding personal finance?
-comprehending the difference between debit and credit cards -making quality choices about money by creating and managing a budget
Which are offered by joining the military after high school?
-receive training while earning a salary -receive tuition assistance after serving a certain number of years
Read the scenario. Paul is 18 years old and has never had a banking account. He has a job and wants to start saving money to buy a car. What are some important things Paul should consider before opening an account?
-the types of services he will need -whether the financial institution has government oversight
What is the purpose of credit?
-to provide customers with a powerful tool for creating personal financial success and success in business -to provide customers with the opportunity to purchase and consume goods and services and to pay at a later date
Which political theory allows for voluntary cooperation between citizens and the absence of government?
Anarchism
What do banks offer that credit unions do not?
Banks offer open access, whereas credit unions require membership.
Review the budget. Which is best classified as a want?
Cable
The free enterprise economy is most closely aligned with which system?
Capitalism
In which political system does the government own all businesses and the economy?
Communism
What is the function of credit cards?
Credit cards enable individuals to borrow against their line of credit to purchase goods and services.
Which is considered a need?
Daily meals
Which accurately describe differences between debit and credit cards?
Debit cards deduct funds from a person's banking account, whereas credit cards pull money from a predetermined line of credit. Credit cards charge interest, whereas debit cards do not charge interest.
What is true about the risk and return of an investment?
Higher-risk investments offer the potential for a higher return.
How is the JOBS Act helping to stimulate business? (Select all that apply.)
It offers easier registration for a public company under federal regulations. It permits companies to sell securities through crowdfunding or the Internet.
What economic theory was proposed by Adam Smith and explains that an economy's success is determined by people's ability to pursue their own financial self-interest?
Invisible hand
What does the JOBS Act do for companies? (Select all that apply.)
It gives private companies more access to capital from various sources. It makes it easier for certain companies to go public on US stock exchanges.
How does business competition impact the consumer?
It helps them because it keeps the price of goods low.
Jim wrote a check for $30, but he only had $25 in the bank. What is Jim's account balance?
It is -$70 to cover the cost of the check and the overdraft fee.
What is true of a savings account?
It is a low liquidity asset that receives a moderate return in interest.
How does the government protect investors?
It oversees the buying and selling of securities so that consumers are not taken advantage of by businesses.
Read the statement. One weakness of a free market economy is instability. Which argument would supporters of a free market economy most likely use to argue that instability is acceptable?
Market corrections are difficult but necessary. The benefits people receive from innovation and freedom in a free market system are worth the cost of instability.
Which is a description of scarcity?
People have limited resources, so they must pick which wants to satisfy.
Stacy has a steady job with limited extra funds. She does not want to pay any additional fees for her checking account and would like a bank dedicated to serving her rather than making money. Her bank wants to charge her every time she visits the branch to complete a transaction or her account balance falls below a certain amount. Stacy believes it is time to find a new financial institution. What should Stacy do?
She should open a checking account with a credit union.
Which are accurate regarding debit card reward programs?
Some debit card reward programs offer cash back at select retailers. Most debit card reward programs are less lucrative than credit card reward programs.
What is an advantage of credit unions?
They are nonprofit institutions, and their primary concern is the member.
Which is true regarding the FDIC?
The FDIC takes over for failed banks.
Which accurately describes why the FDIC was created?
The FDIC was created in 1933 after many bank failures caused the Great Depression.
Read the sentence. The US government plays an impactful role in the economy, both directly and indirectly. Which is an example of the federal government indirectly affecting the market economy?
The US government provides social security benefits for senior citizens.
In a free market economy, which is true regarding the role of the consumer?
The consumer determines what is produced.
Which explains the US government's role in promoting competition?
The government plays an active role in promoting competition at all levels.
According to the Monthly Budget worksheet, how does a person determine how much money he or she has available to put in savings?
The person subtracts total expenses from total income.
What will happen if you avoid a review of your monthly budget?
You will have no record to keep track of where your money is going.
What are the three largest credit reporting agencies?
TransUnion, Equifax, and Experian
How is whole life insurance different from term life insurance?
Whole life insurance does not expire, whereas term life insurance does.
Read the scenario. Rachelle is saving for college and does not want any student loans. She already has $22,000 but needs to get to $23,000. She has the choice of a bank savings account with 1.5 percent interest for 3 years, a certificate of deposit at 3.5 percent interest for 18 months, a credit union savings account at 2 percent for 2 years, or a savings bond at 1 percent for 5 years. Rachelle is beginning her sophomore year and is on track to start college in 3 years. Which is her best choice?
bank certificate of deposit
Entrepreneurs who like a challenge and are dedicated to bringing their ideas to life have which qualities?
competitive and innovative
Which are considered goods?
couch, pool table, computer
Which is best defined as "the borrowing of money to make purchases now and paying the money back later"?
credit
What type of card is issued by a credit union or bank and allows the user to purchase goods and services electronically by deducting funds directly from his or her checking account?
debit card
What were the functions of the Tennessee Valley Authority Act? (Select all that apply.)
develop agriculture and forest land in the valley improve navigation along the Tennessee River
Read the scenario. Kristine and Katherine are looking to team up. They want an already established business with a great corner store location and the independence to make something good turn into something better. Which are their best options? (Select all that apply.)
franchise partnership
Which characteristics of capitalism drive retail companies to produce better goods and services by the best workers? (Select all that apply.)
freedom & competition
Read the sentence. Capitalism drives the constant rotation of business opportunity, _[blank]_, and failure. Which most accurately completes the sentence?
growth
Read the scenario. Georgia wants to open her own business. She is looking for flexible hours, low overhead costs, and no need for a physical store with total control of the company. Which are her best options? (Select all that apply.)
home-based business online business
Read the sentence. Subprime mortgages allowed many individuals to become homeowners; however, sometimes their credit scores were _[blank]_. Which most accurately completes the sentence?
poor
What is the primary role of producers in the marketplace?
produce
What were the goals of the Tennessee Valley Authority Act? (Select all that apply.)
provide power at a lower cost improve the economy of the Southeast
Read the scenario. Sally needs to pay her bills this month. Her bills include rent, utilities, groceries, concert tickets, airfare, car insurance, a car rental, and a trip to an urgent care facility. What are Sally's fixed expenses?
rent and car insurance
Which are considered fixed expenses?
rent, cable TV, and car insurance
Read the sentence. When society does not have enough resources to produce all of the things people want, it is known as _[blank]_. Which correctly completes the sentence?
scarcity
What is the consumer's role in the marketplace?
someone who acquires and uses goods and services through economic exchanges
Which are characteristics of a command market system? (Select all that apply.)
stricter laws to regulate economic activity priorities for the production of goods
Which are characteristics of a traditional market system? (Select all that apply.)
strong community network predominance of agriculture
An entrepreneur with the ability to motivate others in a collaborative environment that fosters team goals and work productivity has which qualities?
strong leadership and vision
Which are considered services?
tailoring a suit, housecleaning, serving food
What does macroeconomics deal with?
the economy as a whole
What does microeconomics deal with?
the impact of individual and business decisions on economic markets
What is the definition of economics?
the production, distribution, and consumption of goods and services in one country
Which describes the best use of a checking account?
to access cash
Why did the US government establish the FDIC?
to provide deposit insurance for banking customers
In which situation is the US government most likely to regulate the marketplace?
when business practices decrease competition
Which questions are asked on the W-4 form? (Select all that apply.)
whether you are single or married whether you are a dependent or independent whether you are a head of household
