Consumer Economics
Exam Solutions
Course Introduction
Consumer Economics explores how individuals and households make choices about spending, saving, investing, and managing resources in everyday life. The course examines the fundamental principles of microeconomics from the consumers perspective, covering topics such as budgeting, credit, insurance, consumer rights, behavioral economics, and the influence of advertising and public policy. Through analysis of real-world examples and case studies, students gain tools to make informed financial decisions and understand the broader economic environment affecting consumers.
Recommended Textbook
Personal Finance 11th Edition by Jack R. Kapoor
Available Study Resources on Quizplus
19 Chapters
2490 Verified Questions
2490 Flashcards
Source URL: https://quizplus.com/study-set/2542 Page 2
Chapter 1: Personal Finance Basics and the Time Value of Money
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/50532
Sample Questions
Q1) Higher inflation usually results in lower interest rates.
A)True
B)False Answer: False
Q2) Analyzing your current financial position is a part of the first stage of the financial planning process.
A)True
B)False Answer: True
Q3) Most decisions have only a few alternatives from which to choose.
A)True
B)False Answer: False
Q4) A financial plan is another name for a budget.
A)True
B)False Answer: False
Q5) What are the six steps in the financial planning process? Answer: Answers will vary.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Financial Aspects of Career Planning
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/50531
Sample Questions
Q1) The purpose of a cover letter is to determine if a company has jobs available.
A)True
B)False
Answer: False
Q2) If you are planning on starting a business, what 3 main issues must you consider?
Answer: First, become knowledgeable about your product or service. Second, identify potential customers, select an appropriate location, and study competitors. Third, consider your financial resources.
Q3) You are given the choice of $4,000 in extra taxable income per year or a tax-exempt medical policy. The medical policy costs $300 per month. Your tax rate is 25%. Considering financial factors only, should you take the cash or the medical policy? Explain your decision.
Answer: Answers will vary.
Q4) A cafeteria-style employee benefits program allows workers to select the benefits they prefer based on their personal situations.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Money Management Strategy: Financial Statements and Budgeting
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/50530
Sample Questions
Q1) Changes in the cost of living are:
A) different in various geographic areas.
B) the same for different locations.
C) constant from month to month.
D) the same for all goods and services.
E) not a factor when preparing a budget.
Answer: A
Q2) Money management activities refer to long-term investment decisions.
A)True
B)False
Answer: False
Q3) Which of the following payments would be considered a variable expense?
A) Rent
B) Installment loan payment
C) Mortgage payment
D) Payment on a car loan
E) Water bill
Answer: E
Q4) Explain why opportunity cost is an important concept in money management. Answer: Answers will vary.
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Planning Your Tax Strategy
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/50529
Sample Questions
Q1) Tax evasion is the use of illegal actions to reduce one's taxes.
A)True
B)False
Q2) Why would tax-exempt income provide greater short-term financial benefits than tax-deferred income?
Q3) Earnings from a limited partnership would be an example of ____________ income.
A) passive
B) capital gain
C) portfolio
D) earned
E) excluded
Q4) When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177, the marginal tax rate is ______ percent.
A) 15
B) 20
C) 25
D) 28
E) 31
Q5) How is taxable income computed?
Q6) What are the advantages of a 401K?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Financial Services: Savings Plans and Payment Accounts
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/50528
Sample Questions
Q1) A restrictive endorsement will usually include the words "for deposit only."
A)True
B)False
Q2) An advantage credit unions may have over other financial institutions is:
A) interest-bearing checking accounts.
B) low-cost personal loans.
C) flexible-rate loans.
D) credit cards.
E) variable-rate savings plans.
Q3) To avoid high fees for loans, a person should avoid borrowing from a:
A) credit union.
B) savings and loan association.
C) pawn shop.
D) commercial bank.
E) mutual savings bank.
Q4) When preparing a bank reconciliation, interest earned on your checking account is added to the bank statement balance.
A)True
B)False
Q5) What are the main types of financial institutions used by consumers?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Introduction to Consumer Credit
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/50527
Sample Questions
Q1) Which federal law allows consumers to withhold payment for faulty or defective goods or services (within certain limitations) when purchased with a credit card?
A) Truth in Lending Act
B) Fair Credit Reporting Act
C) Fair Credit Billing Act
D) Equal Credit Opportunity Act
E) Fair Debt Collection Practices Act
Q2) Most of the information in your credit file may be reported for only seven years. If you have declared personal bankruptcy, that fact may be reported for 10 years.
A)True
B)False
Q3) The information in your credit report is primarily used by the credit bureau to compute your:
A) debt to equity ratio.
B) FICO credit score.
C) debt payment to income ratio.
D) liquidity ratio.
E) long term capitalization ratio.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Choosing a Source of Credit: The Costs of Credit Alternatives
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/50526
Sample Questions
Q1) With collateral, you will probably pay a higher interest rate on your loan than you would without collateral.
A)True B)False
Q2) If you default on your automobile loan:
A) an advance notice to you is required before your car is repossessed.
B) no advance notice is required before repossession.
C) the federal consumer credit laws give you protection from your car being repossessed.
D) you don't have to pay the full balance due on your automobile loan.
E) you pay fifty percent of the balance due on your automobile loan.
Q3) In a Chapter 7 bankruptcy, the debtor:
A) is required to draw up a petition listing all assets and liabilities.
B) does not have to pay a filing fee.
C) is called a "bankrupt."
D) is absolved of alimony and child support payments.
E) does not have to repay educational loans.
Q4) Parents or family members are often the source of the least expensive loans.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Consumer Purchasing Strategies and Legal Protection
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/50525
Sample Questions
Q1) Mediation involves a legally binding decision by a third party to solve a consumer complaint.
A)True
B)False
Q2) The process of resolving consumer complaints with the use of a third party whose recommendations are non-binding is called:
A) mediation.
B) arbitration.
C) a class action suit.
D) a product lawsuit.
E) a small claims court hearing.
Q3) Steve Franklin recently purchased a stereo system. After a few weeks it overheated, causing a small fire and some minor damage. What actions would you recommend to Steve to resolve his consumer complaint? What legal actions might Steve consider for this situation?
Q4) What legal actions are available when assistance is needed to resolve a consumer problem?
Q5) Distinguish between an implied warranty and an express warranty.
Q6) What are the main sources of consumer information?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: The Housing Decision: Factors and Finances
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/50524
Sample Questions
Q1) Explain how current interest rates can affect the price of a home.
Q2) Most people select a place of residence based on the following criteria:
A) lifestyle.
B) needs.
C) financial resources.
D) attitudes.
E) All of these.
Q3) Prefabricated housing refers to:
A) nonprofit ownership.
B) government leasing of living units.
C) rental units available to government employees.
D) ownership available to low-income individuals.
E) housing partially assembled in factories.
Q4) Kate plans to rent instead of buying her housing. Which advantage of renting will she realize?
A) Tax deductions
B) Lower initial costs
C) Property appreciation
D) Restricted lifestyle
E) Home improvement flexibility
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Property and Motor Vehicle Insurance
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/50523
Sample Questions
Q1) Your home insurance provides for replacement value for personal property losses. A microwave is stolen. It cost $300 two years ago and has an expected life of six years. A comparable microwave costs $400 today. What amount will the insurance company pay?
A) $100
B) $150
C) $200
D) $350
E) $400
Q2) Your home insurance policy has a $500 deductible. If a windstorm causes $2,000 damage to your home, what amount of the claim would the insurance company pay?
A) $2,000
B) $1,000
C) $1,500
D) $500
E) $0
$2,000 - $500 = $1,500
Q3) What does the term subrogation mean as it relates to motor vehicle property damage coverage?
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Health, Disability, and Long-Term Care Insurance
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/50522
Sample Questions
Q1) Which health insurance policy pays benefits only when you are hospitalized, but pays these benefits in cash which you can use as you like?
A) Hospital indemnity
B) Interim or short-term
C) Disability income
D) Comprehensive major medical
E) Major medical expense
Q2) Good disability plans pay when you are unable to work at your regular job; poor disability plans pay only when you are unable to work at any job.
A)True
B)False
Q3) What is disability income insurance? What are the major sources of disability income insurance?
Q4) Affordable health care has become one of the most important issues of our time. A)True
B)False
Q5) Dread disease and cancer policies are usually very good values. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Life Insurance
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/50521
Sample Questions
Q1) Who is likely to have the least need for life insurance?
A) Married couple, only one spouse working, with three small children
B) Single person living with parents
C) Married couple with solid jobs and no dependents
D) Married working couple with one child
E) Single person about to be married
Q2) An important provision in every life insurance policy is the right to name your beneficiary.
A)True
B)False
Q3) A contract stating that the annuitant will receive a constant amount of income over a certain period or for life is called a:
A) flexible annuity.
B) fixed annuity.
C) variable annuity.
D) ERISA annuity.
E) participating annuity.
Q4) Stock life insurance companies are owned by their policyholders.
A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Investing Fundamentals
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/50520
Sample Questions
Q1) Which type of risk affects only a specific company or a specific industry?
A) Interest rate
B) Systematic
C) Unsystematic
D) Economic
E) Inflation
Q2) The maturity dates for most bonds range between ____________ years.
A) 0 to 5
B) 5 to 20
C) 10 to 20
D) 1 to 30
E) 15 to 40
Q3) If interest rates in the overall economy decrease, what will happen to the market value of a corporate bond with a fixed interest rate?
A) The bond will lose all its value.
B) The value of the bond will increase.
C) The value of the bond will decrease.
D) The value of the bond will not change.
E) It is impossible to determine if the bond's value will increase, decrease, or remain constant.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Investing in Stocks
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/50519
Sample Questions
Q1) An investment theory based on the assumption that a stock's market value is determined by the forces of supply and demand in the stock market as a whole is called the ____________ theory.
A) fundamental
B) technical analysis
C) efficient market
D) primary
E) market
Q2) The Arnold Fertilizer Company's stock is selling for $55 in the market and its earnings per share is $5. The company is projected to grow at a rate of 22% over the next year. What is this company's price/earnings to growth (PEG) ratio?
A) 11.00
B) 9.09
C) 0.50
D) 50.00
E) 22.73
Q3) Most speculators use a buy and hold technique.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Investing in Bonds
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/50518
Sample Questions
Q1) A bond that is repaid from the income generated by the project it is designed to finance is called a(n):
A) Treasury bill.
B) savings bond.
C) revenue bond.
D) general obligation bond.
E) agency bond.
Q2) Which one of the following bonds would likely have the lowest risk?
A) Treasury bill
B) Municipal bond
C) Corporate bond
D) Government agency bond
E) Junk bond
Q3) In what ways can a bond investor make money?
Q4) The yield to maturity takes into account the relationship among a bond's maturity value, the time to maturity, the current price, and the dollar amount of interest.
A)True
B)False
Q5) How do interest rates in the economy affect the price of a corporate bond?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Investing in Mutual Funds
Available Study Resources on Quizplus for this Chatper
138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/50517
Sample Questions
Q1) High-yield bond funds are sometimes referred to as junk bond funds.
A)True
B)False
Q2) Another name for a mutual fund that charges a contingent deferred sales load is a class ____________ fund.
A) A
B) B
C) C
D) D
E) E
Q3) Which of the following is an advantage associated with purchasing a mutual fund?
A) No fund management fees
B) Ability to control the timing of the capital gains distributions
C) Total elimination of market risk
D) Switching privileges within the same fund family
E) All of these are advantages to buying into a mutual fund.
Q4) An investment company sponsoring a mutual fund must furnish shareholders a prospectus each year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Investing in Real Estate and Other Investment
Alternatives
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/50516
Sample Questions
Q1) Investment in land usually produces considerable cash flow.
A)True
B)False
Q2) Explain the relationship between syndicates and REITs.
Q3) What is the annual depreciation for tax purposes on residential real estate purchased at a cost of $200,000?
A) $6,349
B) $20,000
C) $2,750
D) $7,273
E) $6,667
Q4) Besides gold, other metals that are used as a hedge against inflation include the following, except:
A) silver.
B) aluminum.
C) platinum.
D) palladium.
E) rhodium.
Q5) What advantages do real estate investments offer?
Q6) What are some possible disadvantages of real estate investments? Page 19
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 18: Starting Early: Retirement Planning
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/50515
Sample
Questions
Q1) Jasmine Smith owns a condo worth $240,000, a car valued at $25,000, and miscellaneous assets worth $7,500. She owes $185,000 on the condo and $15,000 on the car and has no other debts. Her retirement account, in which she is fully vested, contains $27,500 in mutual funds. She is insured with a $500,000 term life insurance policy. What is her net worth?
A) $92,500
B) $100,000
C) $115,000
D) $592,500
E) $600,000
Q2) Your mortgage, car payments, credit card balances, and taxes due are all examples of your liabilities.
A)True
B)False
Q3) To offset inflation, your retirement assets must earn enough to keep up with, and even exceed, the rate of inflation.
A)True
B)False
Q4) What are the possible sources of income for retirees?
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 19: Estate Planning
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/50514
Sample Questions
Q1) Which will should be written, dated, and signed entirely in your own handwriting?
A) Informal
B) Marital trust
C) Formal
D) Statutory
E) Holographic
Q2) Which one of the following provides for the disposition of your assets and is usually prepared with an attorney's assistance?
A) Medical directives
B) Holographic will
C) Formal will
D) Letter of last instruction
E) Living will
Q3) Many people do little, if any, estate planning.
A)True
B)False
Q4) Making any changes on the face of your will can invalidate it.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 22