The sum of all actions one takes to accumulate wealth to leave to one's heirs and to determine how the estate is divided

among the heirs is called estate planning.

An advantage of buying on credit is that credit

enables consumers to buy now and pay later.

The difference between property insurance and liability insurance is that property insurance

provides financial protection against loss/damage to an injured's property.

Which of the following statements about consumer credit is false?

It is available only in the form of personal loans.

Which of the following statements is true?

Advertising may bot stimulate and reduce competition.

A policy that requires the insurance company to pay hospital and medical costs no matter who is responsible for an

accident is called no-fault insurance.

An individual's insurance needs change

as the individual goes through different stages in life.

a health maintenance organization.

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Economics Unit 4

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Personal Economics

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Questions 95

Answers

1
The sum of all actions one takes to accumulate wealth to leave to one's heirs and to determine how the estate is divided
among the heirs is called estate planning.
among the heirs is called no-fault insurance.
among the heirs is called disability insurance.
2
Compund interest includes interest earned on previous interest.
False
True
3
A homeowner's policy is an example of property and liability insurance.
True
False
4
Term -life insurance
is strictly savings.
is strictly insurance.
is more expensive than a straight-life policy for a young nonsmoking male.
5
An advantage of buying on credit is that credit
causes interest rates to fall.
usually is less expensive than paying with cash.
enables consumers to buy now and pay later.
6
An amount equal to the accumulated savings and dividends of a life insurance policy is called
cash value.
deductible.
credit value.
7
When lenders speak of "capacity," they are referring to the borrower's
previous credit history.
ability to repay the loan.
other credit charges.
8
People invest in stocks because they are relatively safe.
True
False
9
Life insurance that also is a vehicle for forced savings is called
straight life insurance.
term life insurance.
10
Security on a loan is called
an installment plan.
collateral.
a credit history.
11
The home is usually used as collateral for a credit card purchase.
True
False
12
A corporation that uses its stockholders' capital to buy securities of other firms is called a
money market fund.
stock market.
mutual fund.
13
The percentage cost of credit on a yearly basis is called
interest.
APR.
disposable family income.
14
What a family has left after paying taxes is called its
disposable family income.
gross income.
personal income.
15
Straight-life insurance contains a savings factor.
False
True
16
Personal risk management is necessary because
we may have invested only in stocks.
our goals may be unrealistic.
life is uncertain.
17
The difference between property insurance and liability insurance is that property insurance
is less expensive.
provides financial protection against loss/damage to an injured's property.
costs more.
18
Passbook savings accounts have greater liquidity than real estate investments.
True
False
19
A certificate of deposit usually offers higher rates of return than a savings account.
False
True
20
Which of the following is an example of a nongovernment insurance program?
Medicaid
Medicare
motor vehicle insurance
21
Which of the following statements about consumer credit is false?
It enables people to buy things now that they otherwise would delay buying.
It is available only in the form of personal loans.
It serves to keep up the high level of consumer spending in our economy.
22
A customer's account at a business to which his or her purchases are charged is called a
charge account.
home equity loan.
credit card.
23
Paid announcements calling attention to one's product or service in hopes of attracting customers are called
advertising.
collateral.
creditworthiness.
24
Homeowner's insurance is an example of
life insurance.
health insurance.
property insurance.
25
Which of the following offers the greatest liquidity?
corporate stock
a certificate of deposit
a savings account
26
In a market economy, a brand name product is sold at the same price wherever it is purchased.
False
True
27
A budget is a plan of actual spending and income over a specific period of time.
True
False
28
An example of impulse buying is when a consumer buys unplanned an item seen on a store shelf.
False
True
29
Income that is not spent is called
personal income.
savings.
disposable family income.
30
Net worth is the same as the total value of an individual's assets.
True
False
31
A vehicle that allows consumers to invest savings in short-term securities is called a(n)
money market fund.
certificate of deposit.
mutual fund.
32
Which of the following statements is true?
Advertising may bot stimulate and reduce competition.
There is nothing to learn from an ad.
Watching ads is a waste of time.
33
A policy to reduce financial risk associated with being injured/ill and not being able to work for a living is called
long-term care insurance.
disability insurance.
no-fault insurance.
34
The federal agency that monitors advertising is the
FDA.
FCC.
FTC.
35
A piece of plastic that allows a customer to buy goods and services and pay for them later is called a
charge account.
home equity loan.
credit card.
36
Which of the following types of insurance provides both financial protection and forced savings?
homeowner's
straight-life
term-life
37
A policy that requires the insurance company to pay hospital and medical costs no matter who is responsible for an
accident is called comprehensive insurance.
accident is called disability insurance.
accident is called no-fault insurance.
38
A pledge of property as security for a loan other than a mortgage is called a
credit card.
home equity loan.
collateral.
39
A policy that pays the cost of damage or injuries to another person or their property is called
disability insurance.
no-fault insurance.
personal liability insurance.
40
The date at which a bond is set to be redeemed at face value is called its
maturity.
liquidity.
wealth.
41
An investment instrument in which the buyer agrees not to withdraw his/her deposit for a period of time is called a(n)
money market fund.
mutual fund.
certificate of deposit.
42
It is easy to be a wise buyer in today's market economy.
False
True
43
An individual's insurance needs change
as the individual goes through different stages in life.
according to the political party in power.
on a monthly basis.
44
A budget lists
actual income and expenses.
estimated income and expenses.
goals and objectives.
45
Risk management and estate planning are necessary only for wealthy individuals.
False
True
46
All Americans are covered by some form of health insurance.
False
True
47
The "three Cs" of creditworthiness apply only to teenagers seeking to borrow.
True
False
48
An HMO is
another name for home health care.
another name for the federal Medicaid program.
a health maintenance organization.
49
Which of the following type of investment offers the greatest degree of safety?
corporate stock
a mutual fund
a United States savings bond
50
Life insurance rates are the same for all individuals regardless of age, sex, and health habits.
True
False
51
Mutual funds enable small investors to diversify their holdings more easily than buying individual stocks and bonds.
False
True
52
Most of the nation's output of goods and services in the United States is purchased by
consumers.
state and local governments.
business firms.
53
Private health insurance is rarely based on employment.
True
False
54
Someone named to receive the proceeds of an insurance policy is called a
beneficiary.
will.
deductible.
55
A record of all loans and purchases made using credit by one person is called a(n)
installment plan.
will.
credit history.
56
Just as an umbrella protects us when it rains, insurance
protects an individual when a financial loss occurs.
prevents adverse events from happening.
reduces the risk of an adverse event happening.
57
Life insurance for a set number of years but that can be renewed at higher costs is called
term life insurance.
straight life insurance.
58
The ease with which a form of savings can be converted to cash is called its
maturity.
wealth.
liquidity.
59
The difference between an individual's assets and liabilities is known as
cash flow.
net worth.
fixed expenses.
60
The foolish shopper
buys whatever he or she wants.
plans ahead.
watches for sales.
61
Borrowing money to buy a home by pledging the value of that home is called a
mortgage.
home equity loan.
charge account.
62
You should buy insurance
to fit your individual needs.
strictly as an investment.
to the limit the insurance company is willing to sell to you.
63
Term-life insurance is generally less expensive than straight-life insurance.
False
True
64
Consumer spending represents the major portion of gross domestic product.
True
False
65
The interest earned on the principal and on the interest already earned is called
simple interest.
compound interest.
annual percentage yield.
66
Character, capacity, and collateral are known as the
three Cs of creditworthiness.
three Cs of credit application.
three Cs of credit history.
67
An Energy Guide label
evaluates different appliances and advises which is the best buy.
indicates the yearly operating cost of an appliance.
explains how many hours the appliance may operate in a day.
68
An initial portion of a year's medical bills that is not paid by an insurance company is called a
deductible.
will.
beneficiary.
69
Anything that has value is called
income.
disposable family income.
wealth.
70
The purpose of advertising brand name items is to increase competition.
False
True
71
A fund into which an individual annually deposits a limited amount to have money for retirement is called a(n)
IRA.
certificate of deposit.
money market account.
72
The need for identity-theft insurance has increased because of the
increase in the nation's crime rate.
decrease in purchases by phone or over the internet.
increased use of credit card purchases.
73
The borrower's general credit is the security for a personal loan.
False
True
74
Which of the following is not a form of consumer credit?
charge accounts
installment plans
debit cards
75
Installment plans, charge accounts, and home mortgages are examples of
money market funds.
consumer credit.
401 (k) plans.
76
Insurance companies are
all alike.
businesses hoping to make a profit.
well-managed organizations.
77
Mutual funds
are generally riskier than investing in a single stock.
spread the risk of investing among many securities.
are sold only at mutual savings banks.
78
All risks can be avoided.
True
False
79
There are no federal laws to protect consumers against credit fraud.
False
True
80
Identity theft has increased because of the increased use of credit cards and internet buying.
True
False
81
To compare cost per unit of two cans of soup of different size and weight, examine the nutrition label.
True
False
82
Property acceptable as security for a loan is called
collateral.
insurance.
savings.
83
An Energy Guide label compares yearly energy costs of similar energy appliances.
True
False
84
The purpose of advertising is to
encourage wise buying.
create demand.
stimulate competition.
85
A document specifying how one's assets are to be distributed after one's death is called a
will.
beneficiary.
deductible.
86
Unit pricing is a way of
applying price stickers to items for sale in a store.
grading eggs.
comparing the cost of items per unit of weight or volume.
87
According to federal law, a person wanting to borrow may be denied a loan because he is
a poor financial risk.
disabled.
unmarried.
88
Risk management involves identifying risks that may occur and
taking steps to reduce the monetary costs that may result.
staying on the job.
avoiding accidents.
89
Insurance is a way of avoiding all risks.
False
True
90
The main purpose of a will is to
divide an individual's assets among heirs.
avoid paying estate taxes.
record a death.
91
A 401(k) is an investment plan to accumulate funds to go to college.
True
False
92
Spending patterns are the same for different income levels.
False
True
93
The two most common types of property and liability insurance are
life insurance and theft insurance.
life insurance and health insurance.
motor vehicle insurance and homeowner's insurance.
94
A method of purchasing credit with scheduled time payments is called a(n)
installment plan.
credit history.
collateral.
95
The Better Business Bureau is a
testing and rating organization.
testing but not a rating organization.
nationwide organization sponsored by private businesses.

Economics Unit 4 Flashcards | StudBud