LESSON 4

1.______________ income is primarily used to satisfy needs while discretionary income is used to supply wants.

A. Earned

B. Borrowed

C. Disposable

D. Equitable

2.Choose the correct answer.

______________ is how individuals use their money.

A. Consumption

B. Utilization

C. Spending

D. Expenditure

3.Choose the correct answer.

The area that consumes the majority of a family's income is _____________.

A. transportation

B. food

C. housing and housing operations

D. health care

4.Imagine you are watching a commercial for a particular type of car. The advertiser tries to persuade you that their car performs differently and is more powerful and luxurious than all other cars on the market. What type of advertising is this?

A. Persuasive advertising

B. Bait & switch

C. Competitive advertising

D. Informational advertising

5.What tradeoff occurs when a consumer is gathering information for a purchasing decision?

A. Loss of time and effort to spend on other activities

B. Difficulty analyzing advertisements that appeal to emotions

C. Risk of the price increasing while researching

D. Additional costs of brand name products over generic products

6.Most advertising falls into which category(s)?

A. Competitive

B. Informative

C. Humorous

D. Both competitive and informative

LESSON 5

1.Financial planners usually instruct debtors to pay back which of the following debts first?

A. Credit card debts with the highest interest rate

B. Secured credit card loans which are assigned collateral

C. Their largest debt

D. Their smallest debt

2.What is the major difference between charge cards and credit cards?\

A. Charge cards can only be used at one business or a chain of businesses, and credit cards can be used at many different businesses.

B. Charge cards can only be used if the account is current, and credit cards can be used if the account is delinquent.

C. Charge cards have a fixed line of credit, and credit cards have an unlimited line of credit.

D. Charge cards have an unlimited line of credit, and credit cards have a fixed line of credit.

3.During the credit application process, the lender may ask for collateral. What will happen if the borrower does not repay the loan?

A. The lender can repossess whatever the loan was borrowed to purchase.

B. The lender can repossess whatever was assigned as collateral.

C. The lender can retain the collateral until the loan is repaid.

D. The lender can force the borrower to pawn the collateral for the money to repay the loan.

4.Choose the correct answer.

The figure that expresses the cost of a credit card in dollars and cents is the __________.

A.annual percentage rate

B.monthly payment due

C. credit limit

D. finance charge

5.The resource that allows for immediate purchases with a promise to pay in the future is ______________.

A. Credit

B. Installment loans

C. Debts

D. Collateral

6.Consumers use credit to make purchases of goods when they do not have enough available cash. It is in their best interest to purchase durable goods. Which item below is not a durable good?

A. Apple

B. Washing machine

C. Dish washer

D. Automobile

7.A subprime mortgage is a (an) ____________.

A. mortgage that has a low interest rate

B. mortgage given to someone with bad credit or no credit history

C. interest-only loan

D. Mortgage given to people with a good credit history

8.Why might a business borrow money?

A. To pay its employees

B. To invest in new machinery

C. To lend to customers

D. To improve the credit score of its owner(s)

9.Installment loans are usually used ______________.

A. by consumers to purchase expensive items

B. by businesses to obtain extra capital

C. by consumers to fund entertainment expenses

D. by businesses to fund payroll

10.A bank or lending institution requires _________ for you to have a credit card.

A. the ability to pay the monthly bill

B. a high school diploma

C. owning a business

D. a high balance in your bank account

LESSON 6

1.Which could be an example of an opportunity cost from shopping at a club warehouse store?

A. The convenience of buying small quantities to satisfy immediate wants

B. The funds tied up in bulk food inventory being unavailable for other uses

C. The lack of variety of brands that may be found at a supermarket

D. All of the choices

2.With regard to income taxes, what is the difference between renting and buying a home?

A. Rent is a tax write off and a mortgage is not.

B. Interest on a mortgage is a tax write off and rent is not.

C. A mortgage is a tax write off and rent is not.

D. Where income tax is concerned, it is more beneficial to buy than to rent.

3.The decline in value of durable goods over time is known as ____________.

A. depreciation

B. lifecycle cost

C.wear and tear

4.The amount of time you get to use a product and the value you place on that use is called __________.

A. service flow

B. durability rating

C. utility lifespan

D. depreciation factor

5.When shopping for clothing, what is an important consideration?

A. Quality

B. Price

C. Durability

D. All of the above

6.In a lease contract, arbitrary clauses can prohibit a person from doing all but which of the following?

A. Hanging pictures

B. Having overnight guests

C. Listening to music

D. Not obeying rules that have not yet been written

7.Imagine you are shopping for bag of rice. You prefer the brand name but you see that a private label brand is $.95 cheaper. You decide to buy the private label because you have made the generalization that the rice will be the same as the brand name. Which of the following best explains your choice?

A. Rational choice

B. Reasonable choice

C. Logical choice

D. Realistic choice

8.The landlord agrees to maintain the property. What would be your best choice of housing?

A. A home in the country

B. An apartment

C. A home in the suburbs

D. A time-share condominium

9.Depreciation means a decline in the dollar value of a purchase since it was bought. Which major consumer purchase is associated with the term depreciation?

A. Home

B. Vehicle

C. Diamonds

D. None of the choices

10.Choose the correct answer.

Comparison shopping for food involves making comparison choices between: ___________________.

A. Brand name products

B. Sizes or amounts of food items

C. Stores offering both cost and convenient locations

D. All of the choices