2/20 CP Quiz

If you deposited money in a savings account that paid 1% interest, approximately how long would it take your money to double? a. 72 years b. 36 years c. 18 years d. 2 years e. It is impossible to determine with the information given.

a. 72 years

Which of the following is true regarding spending and saving? a. Money that is spent cannot be saved. b. Spending is good for the economy; saving is bad for the economy. c. Spending money on items that are on sale is the same as saving money. d. Saving money and spending the same dollars has become easier with online banking.

a. Money that is spent cannot be saved.

As interest rates increase: a. The incentive to save increases. b. The incentive to borrow increases. c. The incentive to save decreases. d. It is impossible to determine a result with the information given.

a. The incentive to save increases.

When the U.S. Government borrows money to finance deficit spending, a. It takes a loan from a large foreign bank. b. It takes a loan from a large American bank. c. It sells IOU's called U.S. Treasury securities. d. It receives a loan from the central bank of another nation.

c. It sells IOU's called U.S. Treasury securities.

A good strategy for planning a comfortable retirement is: a. Plan to live on Social Security benefits. b. Save three to six months' worth of living expenses. c. Save 10 to 15 percent of your income while working to fund retirement spending. d. Start saving for retirement in your 50's, when you reach your peak earning years.

c. Save 10 to 15 percent of your income while working to fund retirement spending.

Which of the following statements concerning a bank savings account is false? a. Deposits are insured for at least $100,000. b. Your money will earn interest. c. You will pay a hefty fee for cashing or depositing your paycheck into a savings account. d. You can use an ATM or debit card with a savings account.

c. You will pay a hefty fee for cashing or depositing your paycheck into a savings account.

The Federal Reserve has recently added new rules pertaining to Debit Cards. One of the new rules is that: a. you need to be 21 to have a debit card. b. overdraft protection is now mandatory for consumers. c. overdraft protection is now the consumer's choice. d. banks can no longer charge late fees on debit card accounts.

c. overdraft protection is now the consumer's choice.

According to the paradox of thrift: a. Being frugal does not pay off in the long run. b. Government should save money during a recession and increase spending as the economy recovers. c. During a recession it might be in your self-interest to reduce spending and increase saving, but those same actions might make a recession more severe. d. During a recession it might be in your self-interest to reduce saving and increase spending, but those same actions might make a recession more severe.

d. During a recession it might be in your self-interest to reduce saving and increase spending, but those same actions might make a recession more severe.

Which of the following statements concerning direct deposit is false? a. Direct deposit is more convenient than being paid with a paper check. b. Direct deposit is safer than being paid with a paper check. c. Direct deposit is more efficient than being paid with a paper check. d. It isn't legal for companies to require employees to use direct deposit.

d. It isn't legal for companies to require employees to use direct deposit.

The risk-reward relationship says: a. Risky behavior deserves an award. b. Investors who choose less risky investments are rewarded by earning higher interest rates. c. There is an indirect relationship between risk of loss of principal and expected rate of return. d. There is a direct relationship between risk of loss of principal and expected rate of return. e. Investors who choose risky investments always make more money than investors who choose less risky investments.

d. There is a direct relationship between risk of loss of principal and expected rate of return.

Compound interest is: a. the price of using someone else's money. b. the original amount of money deposited or invested. c. the part of a person's income that is not spent or used to pay taxes. d. interest computed on the sum of the original principal and accrued interest. e. a method to estimate the number of years it will take for an investment or debt to double in value.

d. interest computed on the sum of the original principal and accrued interest.

A debit card is a: a. card for which you pay interest on purchases made. b. convenient form of borrowing with a revolving line of credit. c. card that only allows you to withdraw money from your account at an ATM. d. service offered by banks for a point of sale transaction. It replaces both cash and checks.

d. service offered by banks for a point of sale transaction. It replaces both cash and checks.