Consumer Economics
Final Test Solutions
Course Introduction
Consumer Economics explores the decision-making processes of individuals and households regarding the allocation of resources, focusing on how consumers choose goods and services within the constraints of their income and market prices. This course examines topics such as consumer behavior, budgeting, saving, credit usage, insurance, and investment strategies. It also addresses public policies that impact consumer welfare, including taxation and consumer protection laws. Students will develop an understanding of how economic principles apply to everyday life and gain skills necessary for making informed financial decisions.
Recommended Textbook
Personal Finance 12th Edition by E. Thomas Garman
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17 Chapters
3013 Verified Questions
3013 Flashcards
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Page 2
Chapter 1: Understanding Personal Finance
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Which of the following is not an advantage of participating in your employer's retirement plan?
A) Tax-deductible contributions
B) Employer's matching contributions
C) Tax-deferred growth
D) Higher take home pay
Answer: D
Q2) Marginal cost is the incremental cost of one more incremental unit of something.
A)True
B)False
Answer: True
Q3) If you receive tax-sheltered income,it means that
A) you will never have to pay taxes on the income.
B) the income has already been taxed.
C) the taxes on the income will be deferred until a later date.
D) taxes will be assessed on the state rather than federal level.
Answer: C
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Chapter 2: Career Planning
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) A résumé in a chronological format would position the first of your previous three jobs at the end of the experience section of the document.
A)True
B)False
Answer: True
Q2) After a job interview,you should immediately e-mail a thank-you note and restate your interest in the position.
A)True
B)False
Answer: False
Q3) Nonsalary benefits are forms of compensation that result in the employee not having to pay out-of-pocket money for certain expenses.
A)True
B)False
Answer: True
Q4) As many as 75 percent of all job openings are listed in want ads.
A)True
B)False Answer: False
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Chapter 3: Financial Statements,tools,and Budgets
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Eric Jones develops computer software for a major company.Eric's salary and bonuses total $82,000,but he pays $29,233 in income and Social Security taxes.If Eric's annual debt repayments are $33,620,what is his debt -to-income ratio?
A) 41 percent
B) 64 percent
C) 36 percent
D) 77 percent
Answer: A
Q2) The investment assets-to-total assets ratio compares the value of your investment assets with your total assets.
A)True
B)False
Answer: True
Q3) Refer to Figure 3-1.What is Maria and John's asset-to-debt ratio?
A) 0.57
B) 35.0
C) 2.56
D) 1.77
Answer: D
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Page 5
Chapter 4: Managing Income Taxes
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) A taxpayer can claim a personal exemption for any person he or she provides over 50 percent of support during the tax year.
A)True
B)False
Q2) Life insurance benefits received are taxable income.
A)True
B)False
Q3) Short-term capital gains and long-term capital gains are taxed at the same rate.
A)True
B)False
Q4) A long-term capital gain (or loss)occurs when the asset is held for over one year.
A)True
B)False
Q5) Long-term capital gains are taxed at a maximum rate of ____ percent.
A) 15
B) 20
C) 28
D) 35
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Chapter 5: Managing Checking and Savings Accounts
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) Your bank will regularly (usually monthly)a compilation of your recent account activity is called a(n)
A) receipt.
B) periodic statement.
C) reconciliation.
D) account ledger.
Q2) Most homeowner's and renter's insurance policies cover your liability for theft of debit cards but not credit cards.
A)True
B)False
Q3) To be legally responsible for only the first $50 of unauthorized use,one must report an ATM card missing within two days after the loss or theft of the card.
A)True
B)False
Q4) Money deposited in mutual funds is insured by the federal government. A)True
B)False
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Chapter 6: Building and Maintaining Good Credit
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) The best use of credit is probably to A) consume expensive products earlier.
B) obtain discounts.
C) consolidate debts.
D) obtain an education.
Q2) Which of the following is a court-sanctioned procedure by which a portion of your wages are set aside by your employer to pay a debt?
A) bankruptcy
B) debt consolidation
C) flipping
D) garnishment
Q3) ____ make both secured and unsecured small loans and require repayment on a monthly installment basis.
A) Sales finance companies
B) Stockbrokers
C) Consumer finance companies
D) Insurance companies
Q4) Loans generally require equal payments over a set period of time.
A)True
B)False
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Chapter 7: Credit Cards and Consumer Loans
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Jason took his friend Jennifer out for her 21st birthday.He paid for the dinner with his Visa card and purchased a dozen red roses using his American Express green card.John will have to pay his ____ bill upon receiving the statement,but he will have the option of paying his ____ bill over several months.
A) American Express;Visa
B) Visa;American Express
C) He can make extended payments on both Visa and American Express.
D) He will have to pay both Visa and American Express in full on billing.
Q2) If no payment is received by the due date on a credit account,
A) a credit bureau may be notified of slow payment.
B) the company may begin collection efforts.
C) the cardholder may be declared in default.
D) All of these.
Q3) When the discount method is used,the borrower actually receives less money than the amount of the loan.
A)True
B)False
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Chapter 8: Vehicles and Other Major Purchases
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) A technique used by an auto dealer whereby an offer for a traded-in vehicle is much higher than its true value in order to get a buyer to accept a too high price for the vehicle being purchased is called
A) a dealer holdback.
B) high-balling.
C) low-balling.
D) a rebate.
Q2) Never discuss ____ with an auto dealer.
A) trade-in values
B) cost of service contracts
C) affordable monthly payments
D) the need for a loan
Q3) Prioritizing wants becomes easier when a decision has multiple facets.
A)True
B)False
Q4) The money factor (or lease rate or lease factor)measures the rent portion of your lease payment.
A)True
B)False
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Chapter 9: Obtaining Affordable Housing
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) ____ rarely appreciate(s)in value.
A) Mobile homes
B) Condominiums
C) Cooperatives
D) Manufactured housing
Q2) In communities with a multiple-listing service,a listed home
A) can be shown by all realtors in the community.
B) is listed with many different realtors.
C) is listed many times with one realtor.
D) can be shown by only realtors approved by the listing agency.
Q3) Homeowners today often spend up to ____ percent of disposable income on housing.
A) 30 to 40
B) 40 to 50
C) 50 to 60
D) 60 to 70
Q4) The front-end ratio compares the total annual expenditures for housing to the loan applicant's gross annual income.
A)True
B)False
Page 11
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Chapter 10: Managing Property and Liability Risk
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) After a Halloween night of madness on Sixth Street,Mark and two friends took Mark's four-wheel-driving Bronco for a midnight tour of campus.The next morning campus police found Mark and his Bronco in the middle of the campus fountain.Of the various sections if Mark's auto insurance,damage to the fountain is covered by Mark's ____ coverage,and damage to the Bronco is covered by his ____ coverage.
A) comprehensive;collision
B) property damage liability;comprehensive
C) comprehensive;property damage liability
D) property damage liability;collision
Q2) The fee charged for insurance protection is called a premium.
A)True
B)False
Q3) Risk reduction generally includes the use of insurance.
A)True
B)False
Q4) The federal government administers the National Flood Insurance Program.
A)True
B)False
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Page 12
Chapter 11: Managing Health Expenses
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) You might want to seek out disability income policies with a cost-of-living clause,which will increase your benefit amount to keep up with inflation.
A)True
B)False
Q2) If a long-term care policy is purchased prior to age ____,the buyer faces a significant risk because inflation may render the daily benefit woefully inadequate when care is ultimately needed.
A) 60
B) 50
C) 40
D) 30
Q3) Under the Affordable Care Act,your level of income used to calculate the maximum tax penalty if you do not have a health care plan is your
A) adjusted gross income.
B) modified adjusted gross income.
C) gross income.
D) taxable income.
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Page 13
Chapter 12: Life Insurance Planning
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) A 10-year term life policy will cost ____ a 5-year renewable term policy during the early years of the 10-year period,other factors being equal.
A) more than
B) less than
C) the same as
D) Not enough information is given to answer the question.
Q2) One's need for life insurance is generally the greatest during which phase of the life cycle?
A) Single
B) Young married
C) Young married with children
D) Older married during retirement
Q3) Modified life insurance is a form of life insurance for which the insurance company charges reduced premiums in the early years and higher premiums thereafter.
A)True
B)False
Q4) Cash-value accumulations in life insurance are taxed as they are earned.
A)True
B)False
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Chapter 13: Investment Fundamentals
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173 Flashcards
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Sample Questions
Q1) People seeking aggressive returns should consider investing in
A) fast-growing companies.
B) high-yielding junk bonds.
C) stock-index and commodity futures.
D) Any of these.
Q2) Houses,real estate,and other ownership investments are subject to the inflation rate risk in that the general price level in the economy might drop,thereby reducing the investment's value.
A)True
B)False
Q3) Gary purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share.He paid commissions of $15 when he purchased the stock and $10 when he sold the stock.Dividends of $1.50 per share were paid during the year.The total rate of return on this investment was
A) 22.98 percent.
B) 22.70 percent.
C) 18.92 percent.
D) 19.32 percent.
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Chapter 14: Investing in Stocks and Bonds
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351 Verified Questions
351 Flashcards
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Sample Questions
Q1) Unless otherwise indicated,any order received by a stockbroker is assumed to be a good-til-canceled order.
A)True
B)False
Q2) When a bond indenture requires that money be set aside annually to repay the bond,the bond
A) has a sinking fund.
B) is a senior bond.
C) is a serial bond.
D) is callable.
Q3) Most stock investors invest in A) privately-held corporations.
B) partnerships.
C) public corporations.
D) preferred stocks.
Q4) A month order is good until the close of trading on the last business day of the current month.
A)True B)False
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Chapter 15: Investing Through Mutual Funds
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) The SEC regulations regarding disclosure of fees include requiring a standardized expense table within the profile prospectus at the front of the fund's full prospectus.
A)True
B)False
Q2) A redemption charge is designed to discourage frequent trading in and out of particular mutual funds.
A)True
B)False
Q3) If you want to receive periodic,regular income from your mutual fund account you would set up a
A) systematic withdrawal plan.
B) closed-end withdrawal plan.
C) guaranteed investment contract.
D) beneficiary designation contract.
Q4) It is much easier to select specific stocks and bonds than it is to select an open-end mutual fund share.
A)True
B)False
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Page 17
Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) ____ are cultural artifacts that have value because of their beauty,age,scarcity,or popularity.
A) Collectibles
B) Options
C) Calls
D) Puts
Q2) The amount of cash flow in income-producing real estate investments depends on A) rent received.
B) expenses paid.
C) method of repaying mortgage debt.
D) All of these.
Q3) When one trades equity in one property for equity in a similar property without receiving cash,he or she pays
A) no income taxes in the year of the exchange.
B) income taxes at a maximum 27 percent rate.
C) income taxes at the normal marginal tax rate.
D) income taxes the year following the exchange.
Q4) Transfer costs are generally 6 to 7 percent of the property's sale price.
A)True
B)False
Page 18
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Chapter 17: Retirement Planning
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257 Verified Questions
257 Flashcards
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Sample Questions
Q1) Every type of employer-sponsored plan is open to any group of workers.
A)True
B)False
Q2) For Social Security purposes,workers younger than age 72 who have fewer than six credits of work experience are transitionally insured.
A)True
B)False
Q3) If you inherit a 401(k)retirement account from someone other than a spouse you can avoid taxes by transferring the balance directly into an inherited IRA in your name.
A)True
B)False
Q4) When purchasing an annuity for retirement purposes,
A) there will generally be no commissions.
B) a series of payments will be received at stated intervals.
C) the investment should be made through your IRA account.
D) the decision should be made early in life.
Q5) A will is a written document that directs the disposition of assets after death.
A)True
B)False
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