ECON FINAL EXAM
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
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
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
Inflation is
An increase in the average price level
Tax returns must be filed by
April 15th
The calculation for determining your net worth is
Assets - Liabilities
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.
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
The Fair Debt Collection Practices Act applies to which of the following
Collection agencies
What is commonly considered a flexible expense?
Entertainment
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
Greater economic interdependence
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
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
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
When governments supply products and services, these products and services usually benefit
More than one person at a time whether they have paid for it or not.
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%
The lowest interest rate is usually earned on a
Passbook savings account
The security deposit you pay
Protects landlord from damage to property
International agreements such as NAFTA
Reduce barriers to trade
Paying yourself first" refers to:
Saving money on a regular basis
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
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
Monetary policy is:
The use of money and credit to influence the economy
You obtain a car loan. This transaction is subject to the
Truth in Lending Act
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
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
A complete ban on the import or export of products to a particular country is known as
an embargo
Which of the following changes is most likely to cause an increase in employment?
an increase in consumer spending
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
A person's regular income is referred to as
capacity
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
Which of the following instruments is NOT typically associated with spending?
certificate of deposit
Something of value (often a house or car) pledged by a borrower as security for a loan is called
collateral
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
The largest component of GDP is
consumer spending
Liability coverage pays for
damage or injury for which you are responsible
Market structure
deals with how much competition exist in each market
More allowances claimed on a W4
decease tax amount withheld paycheck
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
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
Gasoline tax is a (n)
excise tax
Term life insurance
expires after a specified period of time
What does a balance-of-trade surplus imply?
exports exceed imports
A type of insurance that people purchase to cover specific items that aren't normally covered under their policy is called a
floater
Speeding tickets or accidents may result in
higher premium
What is the most important thing to know about a used car before you make the purchase?
history of car
Skills that embodied in a person are called
human capital
College loan is
installment credit
Money paid for the use of money.
interest
The legal document that defines the conditions of the rental agreement between the tenant and the landlord is called a
lease
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 monthly budget is an effective tool that will help you
manage your spending and save for the future in order to accumulate wealth.
An example of a public good is
national defense
A monopoly occurs when
one firm sells a good that has no close substitutes and a barrier blocks entry for other firms
What tool does the Fed rely on the most in conducting policy?
open market operations
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
Retirement income paid by a company is called:
pension
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
Why would one country place an embargo another?
political differences
The fee paid by the policyholder is called a
premium
Minimum wage is an example of
price floor
In the United States, who determines what goods and services should be produced?
producers, consumers, government
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
Today the MOST important function of the Federal Reserve System is
regulating the nation's money supply
An endorsement on the back of a check indicating that the check is to be accepted for deposit only is
restrictive endorsement
MasterCard and Visa used on vacation represents
revolving credit
A loan that has collateral backing up the amount borrowed is called a(n)
secured loan
Fiscal policy deals with
spending and taxes
The investment with the most risk would be
stocks
The length of time I'm borrowing money is called the
term
The Federal Reserve System can best be described as
the central banking system for the United States
Which of the following limits an economy's potential output?
the quantity and quality of labor, capital, and natural resources
What happens when you contribute to a 401(k)?
third party administrator manages your choices
What is the most important task of all economies?
to make the best use of scarce resources
Comparative advantage is related to
trade
Which of the following is considered a major economic indicator on the health of the economy?
unemployment rates
A business cycle refers to
ups and downs of real GDP
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
