Economics 1-5
What does a high credit score tell a lender?
A high score suggests a person is very likely to repay debt.
Which items can a person use to ensure the return of funds to a payday loan company? (Select all that apply.) partial---
AHC verbal contact
Which accurately describe differences between credit and debit cards?
Credit cards charge interest, whereas debit cards do not charge interest. Credit cards pull money from a predetermined line of credit, whereas debit cards deduct funds from a person's banking account.
What is the function of credit cards?
Credit cards enable individuals to borrow against their line of credit to purchase goods and services.
What would count as a negative against your credit score?
a payment made more than 30 days past due
What is overdraft protection?
a service that prevents checking account holders from accidentally bouncing a check
Which are part of the marketing mix?
have the proper packaging know what people will pay have multiple locations
Which tax is the main source of revenue for the federal government?
income
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.
Sandy wants a new bed but does not want to pay for it right away. Which is her best option?
credit card
What was the original purpose of savings and loan associations?
a way for groups of people to pool their money so that each member could build or buy a home
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
Which best explains product advertising features?
advertising that focuses exclusively on the benefits of the product
What are the four Ps of marketing (also known as the marketing mix)?
product, price, promo, place
What is true about the risk and return of an investment?
Higher-risk investments offer the potential for a higher return.
Jerry is 20 years old and has three credit cards open for five years each, which he has paid in full every month. Owen is 19 years old and has two credit cards open for less than one year. He has balances near the limit of each card. Which person has a better credit score and why?
Jerry has a better credit score because he has cards open for a longer period and pays them in full each month.
Marc just turned 16 and is looking to purchase a vehicle. The bank will grant him a loan under the condition that he opens a checking account and has the monthly payment debited directly from his account. Why would the bank grant Marc the loan under these specific conditions?
The bank is trying to lessen the possibility of default on the loan.
What are typical fees associated with checking accounts from banks without any branches?
account minimum fees overdraft fees ATM fees
What is the main job of the Securities and Exchange Commission (SEC)? protect corporations protect investors protect brokers protect banks
protect investors
What is the meaning of the word economics?
laws for the home
Which describes the best use of a checking account?
to access cash
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
Miguel knows he wants to join the military. What should Miguel do before enlisting to help with employment after his service? partial---
He should speak with the recruiter about the specific opportunities and jobs that he will be able to pursue.
Which is an example of a SMART financial goal?
I want to save $25 dollars per week by packing my own lunch in order to pay off $100 in credit card debt in the next 30 days.
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.
What is true of a savings account?
It is a highly liquid asset that receives a low 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.
What is a purpose of the Federal Deposit Insurance Corporation (FDIC)?
It protects consumers from losing their money if a bank fails.
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 is an advantage of credit unions?
They are nonprofit institutions, and their primary concern is the member.
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.
Which is the best example of direct vendor advertising?
a commercial during the Super Bowl for Starbucks coffee
Which accurately describe features on a credit report?
a history of delinquent payments a person's credit account information, such as lines of credit from credit cards a person's personal information, such as date of birth and Social Security number
What is a budget?
a plan for spending your money to meet your wants and needs
Comparative advertising includes which of the following criteria?
better price increased quantity additional features
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 is disposable income?
income that is available after taxes and other mandatory expenses have been paid
Which factors impact returns on investments? (Select all that apply.) partial-------
level of diversification of a financial portfolio length of time of the investment length of time of the investment
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
George is saving for a mortgage on a $125,000 house. He needs 20 percent for a down payment. He currently has $22,000. How long will it take George to save the rest of the money when he earns 5 percent interest per year?
three years
Why do the credit reporting agencies track data on consumers?
to help a lender decide whether a person is a good credit risk
What is the purpose of credit?
to provide customers with the opportunity to purchase and consume goods and services and to pay at a later date to provide customers with a powerful tool for creating personal financial success and success in business
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
What is the most important factor in maintaining a high credit score?
making payments on time
Alexa is balancing her checkbook before she leaves for college. She began with an account balance of $83. She deposited the $1200 that she earned from her summer job. She used her debit card to purchase a plane ticket back to college for $896. Going online, she was able to purchase all of her textbooks for $272. Then she put $115 into her meal account. What is the current balance in Alexa's checking account? $0 $115 $83 $32
0
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 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.
Why is cooperative advertising the most common form of advertising used by wholesalers and manufacturers who jointly advertise a product?
It allows for sales at a discounted price. Large quantities can be held in stock.
A __________ is a plan for spending your money to meet your wants and needs.
budget
Where would you find the most accurate information about future job prospects?
bureau labor statistics
What does a person need to consider when planning his or her future?
cost of education and job availability anticipated earnings and where to live
What are the most common fixed expenses for the majority of people?
house payment automobile loan
Which best defines disposable income?
income available after taxes and other mandatory expenses
Which items are typically included in a monthly budget?
income, fixed expenses, and variable expenses
In a market economy, the exclusive possession or control of the supply or trade in a commodity or service can develop, discouraging competition. What is this called?
monopoly
April wants to open checking and savings accounts. Her mom told her to be careful because banks charge fees that can really add up. Before she opens the account, April decides that she should research the fees the banks near her house charge. Which are fees that banks charge account holders?
overdraft fees minimum balance fees ATM fees
Which questions are asked on the W-4 form?
whether you are a head of household whether you are single or married whether you are a dependent or independent
What is the term for money remaining after mandatory expenses, such as taxes and bills, and available to spend or save?
disposable income
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
Which correctly explains fixed expenses? Barbara purchased new clothes for the party this Saturday. Barbara refilled her car with gas after driving to San Diego for a concert. Barbara paid the rent on the first day of the month to keep her apartment. Barbara attended a hockey game with her friends last month.
Barbara paid the rent on the first day of the month to keep her apartment.
How do individuals benefit from creating a budget?
It helps them identify their expenses. It helps them devise a plan to save money. It helps them identify their income.
How is whole life insurance different from term life insurance?
Whole life insurance does not expire, whereas term life insurance does.
Which are advantages of credit?
You can buy items now and pay for them later. You make one monthly payment.
What are possible consequences for not monitoring your budget? (Select all that apply.) You may run low on available money to spend. Your 401(k) account will have plenty of money for retirement. Your ability to save and invest for the future may be negatively affected. You will be able to pay for any unexpected expenses that arise.
Your ability to save and invest for the future may be negatively affected. You may run low on available money to spend.
What does a high credit score indicate?
a person who has a history of repaying debts on time
What is creditworthiness?
an appraisal made by a lender as to how likely a customer is to repay a loan as agreed
Julian has an ATM card with his local bank and travels out of state. What features can he use out of state? (Select all that apply.) apply for a loan check his balance withdraw some cash make purchases
check his balance withdraw some cash make purchases
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 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
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
Ronnie is 21 and has three credit cards, each of which has a balance. His debt-to-credit ratio is 80 percent, and he has applied for his first car loan. Why will his interest rate be higher than what is typical? His interest rate will be higher because he has had a car loan in the past and made payments. His interest rate will be higher due to having only three credit cards, which he pays each month. His interest rate will be higher because he is 21, has perfect credit, and has proof of previous loans. His interest rate will be higher due to having several credit cards and a high debt-to-credit ratio.
His interest rate will be higher due to having several credit cards and a high debt-to-credit ratio.
Which is the term for borrowing money to make purchases right away and then paying the money back later? debit savings capital credit
credit
Taxes are mandatory financial contributions to the government. What purpose do taxes serve in the United States? partial----
to pay for government expenses to redistribute wealth
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?
whether the financial institution has government oversight the types of services he will need
Emergency room care is considered what type of expense?
variable
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.
What are the three largest credit reporting agencies?
TransUnion, Equifax, and Experian
When actively applying for a loan, what should you avoid doing with your credit? applying for new types of credit, such as credit cards or store cards using your credit cards to complete a shopping spree at the local mall calling your credit card company and asking for a lower interest rate paying as much as you can afford to pay down credit cards and paying on time
applying for new types of credit, such as credit cards or store cards
Medical and automobile insurance premiums are considered what kind of monthly expense?
fixed
Which form is used by employers to withhold the proper amount of income tax from employees' paychecks?
w-4
What do banks offer that credit unions do not?
Banks offer open access, whereas credit unions require membership.
What is a major difference between banks and credit unions? Banks are regulated by the Federal Deposit Insurance Corporation; there is no government oversight of credit unions. Banks seek to make a profit for shareholders; credit unions are nonprofit. Banks charge fees for all of their services; credit unions do not charge fees. Banks tend to allow only certain people as members; anyone can open an account at a credit union.
Banks seek to make a profit for shareholders; credit unions are nonprofit.
Bill recently graduated from high school. He has decided to enter military service. Which statements best describe potential outcomes of joining the military? (Select all that apply.) Bill may have access to job training while he is earning a salary in the military. Bill may receive tuition assistance for school after serving for a certain number of years. Bill may have to pay higher taxes to repay the government for his military benefits. Bill may receive tax credits if he earns a teaching credential following his military service.
Bill may have access to job training while he is earning a salary in the military. Bill may receive tuition assistance for school after serving for a certain number of years.
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
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.
Larry needs a new computer because his old one just crashed. The computer he chooses costs $1,200. He has enough in his checking account to cover the cost. He also has a credit card with a $2,000 limit and $1,200 available on it. How should Larry purchase his new computer? He should use his credit card because he gets points and does not need to pay back the card immediately. He should use his debit card so that he does not risk paying extra money in interest over time. He should use his debit card, which will significantly reduce his future credit card options. He should use his credit card and pay extra interest since his checking account is now empty.
He should use his debit card so that he does not risk paying extra money in interest over time.
Stella has two credit cards. Each card has a $2,000 limit. She has a balance of $200 on one card and a balance of $400 on the other. What is true regarding her debt to credit ratio?
Her debt-to-credit ratio is low and will have a positive impact on her credit score.
Why is the marketing mix important to advertisers? (Select all that apply.) It helps determine how much money people will have to buy a product. It helps advertisers to spread the word about a product being available. It helps define a particular product and identify what makes it different. It helps companies decide how long the product will take to be produced.
It helps advertisers to spread the word about a product being available. It helps define a particular product and identify what makes it different.
Why is most insider trading against the law? It helps insiders benefit from information that no one else can access. It allows government officials to profit on every stock trade. It creates opportunities for company employees that are not widely available. It hurts the economy by increasing the number of trades made in a short time.
It helps insiders benefit from information that no one else can access.
Joanne just changed jobs and has the option of receiving a paper check or using direct deposit. She has an account with a credit union 10 miles from her home and is a very busy person with little free time. Which is most appropriate for Joanne? She should have her pay direct deposited so that she does not have to drive to the credit union every week. She should cash the check at the local check-cashing company near her house and pay the extra fee. She should drive to her credit union and deposit the check there using the automated teller machine. She should stand in line at her local bank every week to cash her check in person.
She should have her pay direct deposited so that she does not have to drive to the credit union every week.
Read the sentence. When setting financial goals, it is important to set SMART goals. What does the acronym SMART stand for?
Specific, Measurable, Attainable, Relevant, Timely
You own a greeting card startup business with a limited advertising budget. Which form of advertising offers the greatest benefit at the lowest cost? radio, because it has a focused consumer base and is cost-effective television, because it reaches the widest consumer base once production costs are met online, because it reaches the widest consumer base and is cost-effective newspaper, because it reaches a small but educated subscriber base in most markets
online, because it reaches the widest consumer base and is cost-effective
Which are offered by joining the military after high school?
receive tuition assistance after serving a certain number of years receive training while earning a salary
Sally wants a new exercise machine but does not want to pay for it right away. She has a private label card with a sporting goods store offering zero percent interest for six months and then 29 percent interest. She also has a general-purpose card offering 16 percent interest after 30 days. She will receive a bonus from work in three months that will cover the cost of the machine she wants. Which is her best choice to pay the least amount of interest? a cash advance a payday loan the general-purpose card the private label card
the private label card
