Econ Final

The FDIC insures bank deposits in member banks up to a maximum of

$250,000

Form used to file Individual Income Tax Return

1040

Form used to report various types of income other than wages, salaries, and tips

1099

Negative financial information can stay on your credit report for

7 years

Based on the rule of 72, money earning 8% would take this number of years to double

9

Speeding tickets or accidents may result in

A higher premium

A credit report is:

A loan and bill payment history

Who is most likely to face the highest finance charges?

A person who pays bills late and infrequently

An endorsement on the back of a check indicating that the check is to be accepted for deposit only is

A restrictive endorsement

Dividend is

A stock's portion of the company's profits

A common advantage of using credit is

Ability to obtain needed items now

What is the most essential characteristic of a market economy?

Active competition in the marketplace.

Which of the following best describes the "bait and switch" method of advertising?

Advertise low-priced items that are not in stock to attract customers

Auto insurance premiums may vary according to

All of the above

The worst mistake when it comes to buying insurance is:

All of the above

Which of the following changes is most likely to cause an increase in employment?

An increase in consumer spending

Inflation is

An increase in the average price level

Tax returns must be filed by

April 15

The calculation for determining your net worth is

Assets - liabilities

Most companies calculate the finance charge on credit card accounts as a percentage of the

Average daily balance

A report of deposits, withdrawals, and bank balances sent to a depositor by a bank is called a

Bank statement

The purpose of comparison shopping is to find out the:

Best buy

Federal law allows lenders to deny credit based on a person's

Bill paying record and income

Who benefits when a person rents an apartment?

Both the person renting the apartment and the landlord.

A person's regular income is referred to as

Capacity

Which of the following instruments is NOT typically associated with spending?

Certificate of deposit

When considering a credit card's APR, it is most important to:

Choose a low APR to pay less interest

When deciding which of the two items to purchase, one should always

Choose an item after comparing the costs and benefits of both items.

Something of value (often a house or car) pledged by a borrower as security for a loan is called

Collateral

The Fair Debt Collection Practices Act applies to which of the following

Collection agencies

If you have caused an accident, which type of automobile insurance would cover damage to your own car?

Collision

What is the interest that is computed on the amount saved plus the interest previously earned?

Compound Interest

This auto insurance coverage pays for loss or damage to the insured vehicle that doesn't occur in an auto accident.

Comprehensive

Liability coverage pays for

Damage or injury for which you are responsible

The amount the insured pays on a claim before the insurer pays the policy remainder

Deductible

Pensions that specify a fixed amount are a

Defined contribution plan

The steady decline in the resale value of any vehicle that you buy

Depreciation

The most important factor that affecting the value of a company's stock is

Earnings

What is commonly considered a flexible expense?

Entertainment

Gasoline tax is a (n)

Excise tax

What does a balance-of-trade surplus imply?

Exports exceed imports.

Who insures your funds at a bank or savings institution?

FDIC

Your take-home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?

Federal income tax, social security, and Medicare contributions

A court order directing that money (usually wages) of a third party be seized to satisfy a debt owed.

Garnishment

Which of the following best describes an opportunity cost for a student who chooses to quit a full-time job to go to college?

Giving up current wages and benefits

When industries or countries specialize in producing goods and services, this results in I

Greater economic interdependence

Skills that embodied in a person are called

Human capital

Which of the following is true about risk and return?

In general, the greater the risk, the greater the required reward.

If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?

Income tax may be charged on the interest if your income is high enough

IRA stands for

Individual Retirement Account

College loan is

Installment credit

Money paid for the use of money.

Interest

Which of the following would be most likely to accelerate innovation in the computer industry?

Investing in more research and development in the computer

What is the FAFSA used for?

It calculates a family's financial need.

Banks create money by

Lending out part of their deposits

Virginia requires

Liability Insurance

A right to claim property belonging to another person until a debt is paid is called a

Lien

Which of the following would cover a loss of income due to a sudden death of a family member?

Life Insurance

A budget plan helps individuals and families balance expenses and income. To develop a budget you need to know what information?

Monthly fixed expenses, regular flexible expenses, occasional expenses and income

If the price of beef doubled and the price of poultry stayed the same, people would most likely buy

More poultry and less beef.

An example of a public good is

National defense

Your parents gifted you $10,000 in cash. Which is true?

Neither party pays a gift tax

Disadvantage of leasing a car is

Never gain equity in the car if you lease

What percentage of your monthly income should be used for debt payments (excluding rent or mortgage)?

No more than 20%

What tool does the Fed rely on the most in conducting policy?

Open market operations

The lowest interest rate is usually earned on a

Passbook savings account

Retirement income paid by a company is called:

Pension

Why would one country place an embargo another?

Political differences

The fee paid by the policyholder is called a

Premium

In the United States, who determines what goods and services should be produced?

Producers, consumers, and government

The security deposit you pay

Protects landlord from damage to property

MasterCard and Visa used on vacation represents

Revolving credit

Paying yourself first" refers to:

Saving money on a regular basis

Fiscal policy deals with

Spending and taxes

The investment with the most risk would be

Stocks

Consumers who file bankruptcy must

Take an approved course in personal finance.

Economic growth is measured by a positive change in which of the following?

The Gross Domestic Product

The Federal Reserve System can best be described as

The central banking system for the United States

Which of the following is true about a cosigner of a note?

The cosigner is responsible for the payment of the note.

If you lose your credit card or fear it has been stolen, the first call you should make is to

The credit card issuer

What is the most important thing to know about a used car before you make the purchase?

The history of the car

Which of the following limits an economy's potential output?

The quantity and quality of labor, capital, and natural resources.

Monetary policy is:

The use of money and credit to influence the economy

What is the most important task of all economies?

To make the best use of scarce resources

You obtain a car loan. This transaction is subject to the

Truth-in-Lending Act

Which of the following is considered a major economic indicator on the health of the economy?

Unemployment rates

Employees' yearly statement of earnings and taxes withheld is called a

W-2

Employee's Withholding Allowance Certificate is

W-4

What is your liability if you have lost your credit card?

You are liable for the first $50 of charges if your card is used.

Which of the following statements in NOT correct about most ATM (Automated Teller Machine) cards?

You can get cash anywhere in the world with no fee

Why are mutual funds a wise investment?

Your money is invested in a wide variety of stocks and/or bonds.

The euro is the name for

a common European currency.

A credit score is:

a three-digit number summarizing the state of your credit

An example of an electronic funds transfer is

all of the above

A complete ban on the import or export of products to a particular country is known as

an embargo

Profit from sale of a stock is called

capital gain

Bank pays a fixed amount of interest, on a fixed amount of money, for a fixed amount of time.

certificate of deposit

The largest component of GDP is

consumer spending

Market structure

deals with how much competition exist in each market

More allowances claimed on a W4

decease tax amount withheld paycheck

In case you lose your job tomorrow, about how much should you have in your emergency fund?

enough to live comfortably for two to three months

Term life insurance

expires after a specified period of time

A type of insurance that people purchase to cover specific items that aren't normally covered under their policy is called a

floater

The legal document that defines the conditions of the rental agreement between the tenant and the landlord is called a

lease

A monthly budget is an effective tool that will help you

manage your spending and save for the future in order to accumulate wealth.

A monopoly occurs when

one firm sells a good that has no close substitutes and a barrier blocks entry for other firms

A debit card allows you to

pay for purchases directly from your checking or savings account

Under a subsidized Stafford Loan, the federal government will

pay the interest on this loan while I am enrolled in college

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

perfect competition

The largest source of tax revenue for the federal government is

personal income tax

Minimum wage is an example of

price floor

If a government limits the number of Japanese ball bearings that may enter its country to protect its domestic industry, it is using

quota

The process of determining any differences between a checkbook and a bank statement is called

reconciling the bank statement

International agreements such as NAFTA

reduce barriers to trade.

Today the MOST important function of the Federal Reserve System is

regulating the nation's money supply

A loan that has collateral backing up the amount borrowed is called a(n)

secured loan

The length of time I'm borrowing money is called the

term

A business cycle refers to

the ups and downs of real GDP

What happens when you contribute to a 401(k)?

third party administrator manages your choices

Comparative advantage is related to

trade

The biggest factor in your credit score is:

whether you pay your bills on time

A credit score helps a lender determine

whether you're a good financial risk