The need for identity-theft insurance has increased because of the

increased use of credit card purchases.

Unit pricing is a way of

comparing the cost of items per unit of weight or volume.

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.

Insurance companies are

businesses hoping to make a profit.

The main purpose of a will is to

divide an individual's assets among heirs.

spread the risk of investing among many securities.

Which of the following statements about consumer credit is false?

It is available only in the form of personal loans.

a health maintenance organization.

An individual's insurance needs change

as the individual goes through different stages in life.

The two most common types of property and liability insurance are

motor vehicle insurance and homeowner's insurance.

The Better Business Bureau is a

nationwide organization sponsored by private businesses.

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Economics Unit 4

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Personal Economics

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Questions 95

Answers

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

Economics Unit 4 Flashcards | StudBud