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Spring 2025 Economics Unit 2 Test Review (Personal Financial Literacy) Flashcards | StudBud
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Spring 2025 Economics Unit 2 Test Review (Personal Financial Literacy)
The Rule of 72 is used by savers to determine
Savings Account
Spring 2025 Economics Unit 2 Test Review (Personal Financial Literacy)
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Answers
1
Savings Account
asset
liability
2
The Rule of 72 is used by savers to determine
The amount of interest they will pay each year
The number of monthly payments it would take to pay off debt
Your net worth
The length of time it will take to double your savings
3
Account that requires a higher minimum balance and pays a higher rate of interest.
Checking Account
Money Market Account
CD
Savings Account
4
All of the following are steps in financial planning EXCEPT
Make decisions
Analyze information
Discuss with your financial advisor
Create and implement a plan
5
What happens to the total finance charges a borrower has to repay as the term of the loan increases?
The finance charges will decrease.
The length of the loan term has no effect on finance charges.
The finance charges will stay the same.
The finance charges will increase.
6
Credit card companies refer to the interest paid by cardholders as
APR which means amortized percentage rate
APR which means average percentage rate
APR which means actual percentage rate
APR which means annual percentage rate
7
Which of the following scenarios would HURT your credit score?
Your income is low, but you owe a large amount.
Your job history shows that you stay at a job for a reasonable amount of ti
You have a savings account with a high balance.
You always pay your bills on time.
8
Accounts that require you to keep your money in the bank for a fixed period of time
Checking account
401 (K)
Certificate of Deposit
403 (b)
9
Define Condition
The impression you make on the prospective investor
The intended purpose of the loan.
assets and net worth
The borrower’s ability to pay back the loan
10
Which type of interest makes a strong argument for beginning to invest as early as possible for retirement?
Complex interest
Complicated interest
Compound interest
Annual interest
11
When savers put their money into a bank account, it is called
income
A loan
interest
A deposit
12
401 (k) retirement account
Liability
asset
13
Mortgage
liability
asset
14
Certificate of Deposit
Liability
Asset
15
If you deposited $1200 into a savings account with a 10% interest rate on February 1, and made no other transactions the
$1250
$1320
$1300
$1212
16
Collateral
intended purpose of the loan
All the money you personally have
pledge an asset you own to the lender in case you cannot pay
borrower’s ability to pay back the loan
17
What is the difference between a certificate of deposit (CD) and a savings account?
CDs are designated for a certain length of time and a certain amount of $$
Savings accounts are designated for a certain length of time and a certain
CDs don’t pay interest.
Savings accounts don’t pay interest.
18
Auto Loan
liability
asset
19
Define Capacity
to pledge an asset you own to the lender in case you cannot pay
impression you make on the prospective lender
The borrower’s ability to pay back the loan.
All the money you personally have
20
Which of the following would be considered a wealth creating asset?
Designer Shoes
car
credit card
savings account
21
A deposit account that pays interest but cannot be withdrawn by check writing
Checking account
Savings Account
CD
Money Market account
22
Car
Liability
Asset
23
What is overdraft protection (ODP)?
An insurance policy sold by banks
A service provided by the government that insures individual’s deposit
A cheap and easy way to always avoid overdrawing
A service to prevent returned checks and declined purchases
24
Define Capital
All the money you personally have, including all assets and net worth
borrower’s ability to pay back the loan.
25
Which of the following is NOT one of the important pieces of an effective financial plan?
Creating a clearly defined goal
Having an appropriate time frame
Making sure you have credit on your credit card
Determining how much you will actually need to save
26
Which of the following would HELP your credit score?
You have a credit card that you defaulted on paying.
You have declared bankruptcy.
You apply for every credit card offer you receive
You always pay your bills on time.
27
Student Loan
Liability
asset
28
House
asset
liability
29
Credit Card Balance
Asset
Liability
30
Account that allows you to access your money with a debit card and does not pay interest.
Stock Market
Money Market
Savings Account
Checking Account
31
Define Character
intended purpose of the loan
impression you make on the prospective lender or investor
borrower’s ability to pay back the loan
assets and net worth
32
What is the effect of a higher APR on monthly payment?
a higher APR increases the finance charges.
a higher APR decreases the monthly payment.
a higher APR increases the length of the loan term.
a higher APR increases the monthly payment
33
Which of the following would calculate your net worth?
Assets - Credit
Assets – Liabilities
Credit + Liabilities
Liabilities- Debits
