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Economic Final Flashcards | StudBud
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Economic Final
Economic Final
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Questions
49
Answers
1
What is revolving credit?
Credit that allows borrowing up to a limit, like a credit card
A loan for a specific purpose
A fixed interest rate loan
A type of installment loan
2
What are mutual funds?
Individual stocks managed by investors
Pooled investments managed by professionals
CompoundinDebt securitiesg
Loans provided by the government
3
Opportunity cost refers to the trade-off of choosing one option over another.
True
False
4
The main difference between a checking account and a savings account is:
Savings accounts for transactions, checking accounts for long-term saving
Checking accounts are for transactions, savings accounts for saving
Both are used for everyday transactions
Checking accounts earn interest, savings accounts don’t
5
What is a credit score?
The amount of money in your account
A numerical representation of your creditworthiness
The total amount you owe
The interest rate on a loan
6
What is a "bull market"?
A market characterized by rising prices and investor confidence
A market where prices remain stagnant over time
A market focused exclusively on trading bonds
A market characterized by falling prices and pessimism
7
Credit cards are a form of installment loans that require fixed monthly payments over a set period.
False
True
8
What causes people to make irrational decisions?
Proper budgeting skills
Cognitive or emotional biases
High interest rates
Strong financial literacy
9
What is behavioral economics?
A) The study of financial markets
D) A system for tracking spending
B) The study of how psychological factors influence economic decisions
C) A method for budgeting money
10
A mortgage is a type of revolving credit used to buy a home.
True
False
11
Diversification in investing reduces overall risk by spreading investments across different asset types.
False
True
12
Behavioral economics studies how psychological factors influence economic decisions.
True
False
13
A savings account typically offers easier access to your money than a checking account.
True
False
14
What is the main purpose of a checking account?
Avoiding fees
Accumulating long-term savings
Earning high interest
Performing everyday transactions
15
Which of these fields focuses on the role of psychology in economic decisions?
Investment strategies
Portfolio diversification
Credit management
Behavioral economics
16
Who are the unbanked?
People without access to traditional banking services
People with high credit scores
People who use only credit cards
People who prefer to save cash at home
17
A fixed-rate loan has an interest rate that remains constant throughout the term of the loan.
False
True
18
What are index funds?
High-interest savings accounts
Funds that track the performance of a market index
Loans for investing
Individual stocks managed by investors
19
Overdraft protection ensures that all transactions are declined if you have insufficient funds.
True
False
20
Mutual funds allow investors to pool money to buy a diversified mix of stocks or bonds.
True
False
21
A checking account is designed for long-term savings and earns high interest.
True
False
22
What are stocks?
Bonds
Loans to corporations
Shares of ownership in a company
Digital currencies
23
What are bonds?
Ownership in a company
Debt securities issued by governments or corporations
A type of mutual fund
High-risk investments
24
What are preferences influenced by?
Interest rates
Only economic theory
Banking fees
Experiences, emotions, and context
25
What is direct deposit?
Receiving your paycheck directly into your bank account
Writing a physical check
Setting up automatic savings
Managing bills online
26
A credit score is a numerical representation of your creditworthiness.
False
True
27
What are ATM fees?
Monthly maintenance fees
Charges for using an ATM outside your bank’s network
Interest charged on your savings account
Fees for overdrafting
28
Which bias leads people to prefer a smaller, immediate reward over a larger, delayed one?
Delayed bias
Rational bias
Present bias
Future bias
29
What is a portfolio?
A high-risk stock
A single investment
A type of mutual fund
A collection of investments owned by an individual or institution
30
Which term explains the trade-off of choosing one option over another?
Opportunity cost
Behavioral bias
Rationality
D) Immediate preference
31
What are overdraft fees?
Interest on savings accounts
Maintenance fees
Monthly fees for checking accounts
Charges for spending more money than is in your account
32
The APR (Annual Percentage Rate) only includes the interest rate on a loan and does not account for any additional fees.
False
True
33
What type of loan is specifically used to purchase a home?
Revolving credit
Car loan
Mortgage
Installment loan
34
Which technology underlies cryptocurrencies?
Compounding
Blockchain
Stocks
Diversification
35
What does a savings account help you do?
Overdraft your account
Avoid paying fees
Save money over time
Make everyday transactions
36
Which of these is a digital currency?
Mutual funds
Bonds
Stocks
Cryptocurrency
37
What is cryptocurrency?
Interest earned on investments
A type of loan
Digital currency using encryption techniques
Traditional savings tools
38
Paying only the minimum amount due on your credit card each month is a good way to save on interest charges.
False
True
39
Overdraft fees can be avoided by keeping track of your account balance and setting up overdraft protection.
False
True
40
What is overdraft protection?
A minimum balance requirement
A guarantee for earning interest
A fee banks charge for ATM withdrawals
A service that prevents declined transactions due to insufficient funds
41
Keeping your credit utilization ratio low can help improve your credit score.
True
False
42
What is collateral?
A type of credit score
A fee charged for overdrafting
The total amount of debt owed
An asset pledged to secure a loan
43
Interest rates on savings accounts are typically higher than the rates on most checking accounts.
False
True
44
What is online banking?
A way to earn interest on savings
A tool for building credit history
A system for loan applications
A way to manage accounts and pay bills digitally
45
What is APR?
The minimum payment on a loan
Your credit score
A type of credit card
The annual percentage rate, including interest and fees
46
Compounding allows you to earn interest only on the initial amount you invested.
False
True
47
People without access to traditional banking services are referred to as "underbanked."
False
True
48
What is compounding?
Earning interest on your principal and previously earned interest
A method of borrowing money
Diversifying your investments
A type of investment fund
49
What is diversification?
Spreading investments across different assets
Focusing on one type of investment
Buying only bonds
Avoiding risks altogether
