Consumer Economics
Test Questions
Course Introduction
Consumer Economics explores the decision-making processes of individuals and households in the marketplace. This course examines the factors influencing consumer choices, including income, credit, spending, saving, and investment behaviors. Students will analyze how economic principles such as demand, utility, and price elasticity apply to consumer behavior, as well as the role of government policies and market institutions in shaping consumer welfare. Practical topics include budgeting, financial planning, consumer rights and responsibilities, and the impact of advertising and market trends on purchasing decisions. The course equips students with the tools to make informed economic choices and navigate the complexities of the modern consumer environment.
Recommended Textbook
Personal Finance 13th Edition by E. Thomas Garman
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17 Chapters
3061 Verified Questions
3061 Flashcards
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Chapter 1: Understanding Personal Finance
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Grandmother Smith has just put $12,000 into an investment earning 6 percent a year for her granddaughter's college education.Approximately how much will be in the account in ten years assuming all the interest is left in the account?
A)$19,200
B)$21,490
C)$16,320
D)$21,259
Answer: B
Q2) Compound interest is the calculation of interest on interest as well as on the original investment.
A)True
B)False Answer: True
Q3) Interest is the price of money.
A)True
B)False Answer: True
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Available
Chapter 2: Career Planning
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76 Flashcards
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Sample Questions
Q1) Nearly 20 percent of workers cash out all of the money they have accrued in their employer-sponsored retirement plan when changing jobs.
A)True
B)False
Answer: False
Q2) When changing employers,the wisest option for the money you have in your current employer-sponsored retirement plan typically involve all of the following except
A)transferring the money to your new employer's 401(k) plan.
B)moving the balance to an IRA rollover account.
C)leaving the money in your old employer's plan.
D)withdrawing and spending the money.
Answer: D
Q3) Salaried employees are paid overtime,and the majority of college graduates have salaried positions.
A)True
B)False
Answer: False
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Chapter 3: Financial Statements,tools,and Budgets
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) The surplus section on an individual's cash-flow statement is similar to net profit for a business.
A)True
B)False
Answer: True
Q2) By analyzing financial statements,a person can assess his or her financial condition and progress.
A)True
B)False Answer: True
Q3) Discretionary income is the money left over once the necessities of living are covered.
A)True
B)False Answer: True
Q4) A cash-flow statement shows flows of income in and expenses out of your finances for a given period of time.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Managing Income Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Tax deferral with a traditional IRA allows investment income to grow without being taxed until it is withdrawn.
A)True
B)False
Q2) When you file your federal income tax you may take a subtraction from your taxable income called an exemption for each person legally defined as your A)child. B)parent. C)tenant.
D)dependent.
Q3) A taxpayer can claim a personal exemption for any person he or she provides over 50 percent of support during the tax year.
A)True
B)False
Q4) Personal income taxes are paid only on your taxable income.
A)True
B)False
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Chapter 5: Managing Checking and Savings Accounts
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181 Flashcards
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Sample Questions
Q1) Most homeowner's and renter's insurance policies partially cover the liability for theft of both debit and credit cards.
A)True
B)False
Q2) Special concerns for blended families include
A)determining who assumes financial responsibility for biological offspring and stepchildren.
B)handling resentment over alimony and child-support payments.
C)managing unequal assets, incomes, responsibilities, and debts.
D)(all of these)
Q3) A lifeline checking account is accurately described as an account that A)always pays interest.
B)assesses monthly fees depending on the maximum balance in the account.
C)assesses no charges for ATM transactions.
D)can be accessed using a debit card.
Q4) Time deposits specify a period that the savings must be left on deposit,such as six months or three years.
A)True
B)False
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Chapter 6: Building and Maintaining Good Credit
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Advantages of credit use include increased protection against rip-offs and frauds.
A)True
B)False
Q2) If the credit bureau refuses to make a correction to an error in your file,you may wish to provide your version of the disputed information by adding a consumer statement to your credit bureau file.
A)True
B)False
Q3) Which of the following is a court-sanctioned procedure by which a portion of your wages are set aside by your employer to pay a debt?
A)bankruptcy
B)debt consolidation
C)flipping
D)garnishment
Q4) Bankruptcy remains on one's credit record for seven years.
A)True
B)False
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Chapter 7: Credit Cards and Consumer Loans
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) Affinity cards are a source of revenue for the sponsoring organization.
A)True
B)False
Q2) The only way to obtain a secured loan is to put up collateral.
A)True
B)False
Q3) The Truth in Lending Act limits a cardholder's credit card liability for lost or stolen credit cards.
A)True
B)False
Q4) Credit cards with a grace period allow the credit cardholder to pay no finance charges if they pay the balance in full every month.
A)True
B)False
Q5) The outstanding balance owed on a debt is the A)APR.
B)principal.
C)finance charge.
D)equity.
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Chapter 8: Vehicles and Other Major Purchases
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) The larger the down payment one can make on a purchase,the easier the payments will fit into one's budget.
A)True
B)False
Q2) Low-balling generally occurs just before the close of a sale.
A)True
B)False
Q3) Same as cash offers often carry the risk that
A)your interest rate will be increased.
B)all prior interest will be owed if full payment is not made within the agreed time period.
C)you will be insolvent.
D)you will lose a tax deduction for the interest owed.
Q4) Prioritizing wants becomes easier when a decision has multiple facets.
A)True
B)False
Q5) Sellers expect consumers to negotiate the price for autos and some other major purchases we make.
A)True
B)False
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Chapter 9: Obtaining Affordable Housing
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) Which of the following documents outlining all of the costs associated with closing on the sale of a home must the purchaser receive at least 1 business day prior to the closing?
A)deed
B)good-faith estimate
C)uniform settlement statement
D)abstract
Q2) The dollar value of the home in excess of the outstanding mortgage debt is called A)asset value.
B)homeowner's equity.
C)amortization.
D)collateral.
Q3) A form of housing ownership where the owner holds legal title to a specific housing unit and a proportionate interest in the common grounds and facilities is A)a cooperative.
B)a condominium.
C)a manufactured house.
D)both a cooperative and a condominium.
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Chapter 10: Managing Property and Liability Risk
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Sample Questions
Q1) The law of large numbers increases risk for the insurance company.
A)True
B)False
Q2) Auto insurance typically pays only the value that it puts on the vehicle when an automobile is totally destroyed.
A)True
B)False
Q3) Most homeowner's policies will cover contents and personal property for up to 50 percent of the insured value of the house.
A)True
B)False
Q4) If you have an insurance policy with a $300 deductible and 30 percent coinsurance,you would pay 30 percent of your insured loss plus $300.
A)True
B)False
Q5) The HO-6 form is especially written to meet the needs of condominium owners.
A)True
B)False
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Chapter 11: Managing Health Expenses
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136 Flashcards
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Sample Questions
Q1) The hospitalization portion of Medicare (Part A) requires a monthly premium from the insured.
A)True
B)False
Q2) Disability income insurance plans may cover long-term but not short-term disability.
A)True
B)False
Q3) A health care proxy is a legal document in which an individual designates another person to make health care decisions if the individual is rendered incapable of making his or her wishes known.
A)True
B)False
Q4) Both Medicare Part A and Part B pay 100 percent of covered expenses
A)True
B)False
Q5) Medicare (Part B) requires a monthly premium for coverage.
A)True
B)False
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Chapter 12: Life Insurance Planning
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215 Flashcards
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Sample Questions
Q1) You should ignore net cost calculations provided by a life insurance agent when evaluating the cost of a life insurance policy.
A)True B)False
Q2) Convertible term offers the policyholder the option of exchanging a term policy for a cash-value policy without evidence of insurability.
A)True B)False
Q3) A 10-year term life policy will cost ____ a 5-year renewable term policy during the early years of the 10-year period,other factors being equal. A)more than B)less than C)the same as D)Not enough information is given to answer the question.
Q4) Premium payments for a cash-value life insurance policy are tax deductible. A)True B)False
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Chapter 13: Investment Fundamentals
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Sample Questions
Q1) A ____ in the market is a person who expects securities prices to go up; a ____ expects the general market to decline.
A)bear; bear
B)bull; bull
C)bull; bear
D)bear; bull
Q2) ____ is not part of the steps in the investment planning process.
A)Determine current amount of investment assets
B)Change asset allocations monthly
C)Identify what could stop you from succeeding D)Rebalance investment portfolio regularly
Q3) Common or preferred stocks are often called equities.
A)True
B)False
Q4) Of the following investment alternatives,which is highest on the investment pyramid?
A)Growth stocks
B)Municipal bonds
C)Collectibles
D)Aggressive-growth mutual funds
Page 15
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Chapter 14: Investing in Stocks and Bonds
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352 Verified Questions
352 Flashcards
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Sample Questions
Q1) Utility company stocks are generally classified as income stocks.
A)True
B)False
Q2) Rosa Corporation's board of directors is concerned about the market price of each share of stock.They believe that the shares would be more marketable if the market price was closer to $18 a share.They should initiate a ____ split.
A)two-for-one stock
B)three-for-one stock
C)two-for-one reverse stock
D)three-for-one reverse stock
Q3) What is the price/earnings ratio for Rosa's?
A)9.3
B)13.6
C)32.8
D)35.0
Q4) You should consider selling a bond before maturity when the bond rating has seriously slipped.
A)True
B)False
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Chapter 15: Mutual Funds and Exchange Traded Funds
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Mutual funds are readily available to people saving for retirement through 401(k) plans and IRAs.
A)True
B)False
Q2) Periodic,systematic investment in mutual funds is very much like ______ when buying stocks.
A)switching privileges
B)systematic withdrawal
C)dollar-cost averaging
D)exchange trading
Q3) Electronic funds transfers (EFTs) can be used to make regular investments in mutual funds from a checking or savings account.
A)True
B)False
Q4) No-load mutual funds are appropriate for investors who want to buy investments through a broker or financial planner.
A)True
B)False
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Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Investors in real estate enjoy a high level of liquidity.
A)True
B)False
Q2) Borrowing to finance a real estate investment is more expensive than borrowing to buy one's own home.
A)True
B)False
Q3) A primary advantage of real estate investing is liquidity.
A)True
B)False
Q4) One advantage of an investment in real estate is that leverage can increase an investor's return.
A)True
B)False
Q5) Deeded timesharing provides buyers with actual titles and deeds to limited time periods of use of real estate.
A)True
B)False
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Chapter 17: Retirement and Estate Planning
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269 Flashcards
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Sample Questions
Q1) You can automatically save more for retirement as your income increases by setting your savings target as a percentage of income rather than a specific dollar amount.
A)True
B)False
Q2) The maximum yearly contribution you may make to an IRA is $5,500.
A)True
B)False
Q3) An SEP-IRA is intended for taxpayers who work for large corporations.
A)True
B)False
Q4) All funds in a tax-sheltered retirement plan are taxed every five years.
A)True
B)False
Q5) Which tax is assessed by the federal government against the estate of deceased person before it is passed to heirs?
A)Estate tax
B)Inheritance tax
C)Excise tax
D)Flat tax
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