Consumer Economics
Midterm Exam
Course Introduction
Consumer Economics examines the decision-making processes of individuals and households as they navigate markets and allocate limited resources to satisfy their needs and wants. The course covers topics such as consumer behavior, personal finance, budgeting, credit and debt management, savings and investment strategies, insurance, and the impact of government policies on consumer welfare. Students will analyze how economic principles shape real-world financial choices and learn to apply these concepts to enhance their economic well-being in a complex and changing marketplace.
Recommended Textbook
Personal Finance 13th Edition by E. Thomas Garman
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17 Chapters
3061 Verified Questions
3061 Flashcards
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Page 2
Chapter 1: Understanding Personal Finance
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/26518
Sample Questions
Q1) Dan just received a $2,000 end-of-year bonus from his employer.If he pays a 25 percent marginal tax rate for federal income taxes,his state income tax is 5 percent,and the Social Security tax rate is 7.65 percent,approximately how much of the $2,000 bonus will Dan have left to spend on holiday gifts?
A)$2,000
B)$1,400
C)$1,247
D)$753
Answer: C
Q2) 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
Q3) The preferred stage of the economic cycle is the contraction phase.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Career Planning
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) Whenever you request that someone write a reference letter you should provide the person with your résumé.
A)True
B)False
Answer: True
Q2) As many as 75 percent of all job openings are listed in want ads.
A)True
B)False
Answer: False
Q3) The _____ is a short,persuasive summary of your experiences and skills when networking.
A)elevator speech
B)job interview
C)job application
D)reference letter
Answer: A
Q4) A career plan provides guidance to help you attain your career goals.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Financial Statements,tools,and Budgets
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) A cash-flow statement is also known as a(n) ____ statement.
A)income and expense
B)net worth
C)taxable income
D)asset-and-liability
Answer: A
Q2) The primary purpose of setting long-term financial goals is to help
A)measure financial success or failure
B)provide direction for overall financial planning.
C)acquire great wealth.
D)achieve a comfortable retirement.
Answer: B
Q3) Once budget estimates are determined; one should not make any changes in the budget for at least one year.
A)True
B)False
Answer: False
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Chapter 4: Managing Income Taxes
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Interest income is reported to the recipient on a W-2 form.
A)True
B)False
Q2) A person's average tax rate is always lower than his or her marginal tax rate.
A)True
B)False
Q3) Refer to Figure 4-1.If Tony and Liz owe $3,296 in taxes on their taxable income what is their final tax liability after taking the credits for which they qualify?
A)$0
B)$1,296
C)$2,296
D)$3,296
Q4) Personal income taxes are paid only on your taxable income.
A)True
B)False
Q5) Section 529 college savings plans are state-sponsored.
A)True
B)False
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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) If one believes interests rates will move lower in the months ahead,he or she should invest in long-term,fixed-rate savings investments.
A)True
B)False
Q2) In community property states,the rights of the husbands and wives are unequally protected.
A)True B)False
Q3) NOW accounts get their name because they are considered demand deposits. A)True B)False
Q4) Husbands and wives who own a checking or savings account together would most likely want to set up the account with A)tenancy in common.
B)a payable on death designation.
C)joint tenancy.
D)periodic tenancy.
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Chapter 6: Building and Maintaining Good Credit
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Invitation-to-apply is a credit card offer sent without any prior screening.
A)True
B)False
Q2) A debt management plan is an arrangement whereby the consumer makes monthly payments that are distributed to each creditor.
A)True
B)False
Q3) Consumer credit can take the form of an installment loan that is repaid in ____ payments over a ____ period of time.
A)variable; variable
B)equal; set
C)increasing; set
D)decreasing; variable
Q4) Collection agencies may telephone a debtor's employer to obtain financial information.
A)True
B)False
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Chapter 7: Credit Cards and Consumer Loans
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) For an open-end credit account,a credit limit is set by the lender and represents the maximum outstanding debt allowed on the account.
A)True
B)False
Q2) Which of the following pieces of information does not have to be disclosed in credit card ads and applications?
A)The introductory rate
B)Credit limit
C)Length of grace period
D)Method used to calculate the account balance
Q3) Repossession clauses protect the borrower's interest.
A)True
B)False
Q4) A line of credit is structured much like a
A)credit card account.
B)travel and entertainment card account.
C)budget account.
D)service credit.
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Chapter 8: Vehicles and Other Major Purchases
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) A service contract comes at no additional cost and offers free repairs for a specific period of time.
A)True
B)False
Q2) Matt has a three-year closed-end lease on his Prius V.His contract stipulates a $0.31 per mile excess mileage charge in excess of 39,000 miles.If he actually drove the vehicle 45,000 miles during the three years,he would be charged an extra ____.
A)$0
B)$1,209
C)$1,860
D)$5,580
Q3) Most people should not make buying decisions for expensive purchases
A)inside a retail store.
B)at home.
C)in a showroom.
D)inside a retail store or in a showroom.
Q4) Big-ticket items are products that have a high selling price.
A)True
B)False
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Chapter 9: Obtaining Affordable Housing
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) Lenders charge a loan origination fee to pay for the cost of
A)processing the mortgage loan.
B)investigating the borrower's credit rating.
C)the title search.
D)an appraisal of the property.
Q2) A lease typically protects the landlord but not the renter.
A)True
B)False
Q3) Monthly fees assessed to buyers of cooperatives include funds for A)management fees.
B)payment on the cooperative's debt.
C)insurance covering the building(s).
D)All of these
Q4) Sellers of homes generally set a sales asking price ____ percent higher than what they expect to get for it.
A)0 to 5
B)5 to 10
C)5 to 15
D)15 to 20
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Chapter 10: Managing Property and Liability Risk
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209 Verified Questions
209 Flashcards
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Sample Questions
Q1) Good documentation is important when seeking reimbursement through insurance.
A)True
B)False
Q2) Actual cash value of an asset represents the purchase price of the property less depreciation.
A)True
B)False
Q3) Homeowner's insurance will pay for bodily injuries to visitors regardless of who is at fault for the loss.
A)True
B)False
Q4) One can lower insurance premiums by doing all of the following except
A)increasing the deductible.
B)avoiding coinsurance.
C)reducing hazards.
D)practicing loss reduction.
Q5) Driving under the influence of alcohol is an example of a hazard.
A)True
B)False
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Chapter 11: Managing Health Expenses
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) Less than 50 percent of Americans are covered by some type of private or government health care plan.
A)True
B)False
Q2) A special power of attorney gives the designated person virtually absolute power to manage your financial affairs.
A)True
B)False
Q3) An any-occupation policy will cost more than an own-occupation policy,everything else being equal.
A)True
B)False
Q4) Long-term care insurance policies can be written to cover in-home care.
A)True
B)False
Q5) ACOs generally operate as a fee-for-service organization.
A)True B)False
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Chapter 12: Life Insurance Planning
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215 Verified Questions
215 Flashcards
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Sample Questions
Q1) Variations on term life insurance include
A)adjustable life.
B)universal life.
C)credit life.
D)modified life.
Q2) Life insurance provides protection against dying too soon,and cash-value life insurance does this best.
A)True
B)False
Q3) A disadvantage of first-to-die life insurance policies is that the survivor will have no coverage after the death of the first person.
A)True
B)False
Q4) Life insurance is the best way to address the "living-too-long" problem.
A)True
B)False
Q5) Cash dividends are paid only on participating life insurance policies.
A)True
B)False
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Chapter 13: Investment Fundamentals
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) When investing,you want to select a portfolio of investments that will provide the necessary potential total return through current income and capital gains in the proportions that you desire.
A)True
B)False
Q2) Selling shares of stock for more than you originally paid is called A)modern portfolio theory.
B)leverage.
C)current income.
D)capital gain.
Q3) Total risk comprises random risk and market risk.
A)True
B)False
Q4) A risk premium constitutes the difference between the riskier investment's return and the totally safe return on the T-bill.
A)True
B)False
Q5) Short-term investing requires more diligent monitoring than long-term investing. A)True
B)False
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Chapter 14: Investing in Stocks and Bonds
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352 Verified Questions
352 Flashcards
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Sample Questions
Q1) Which of the following types of investments can potentially provide tax-exempt interest if the principal and interest are used to pay a child's college education?
A)Certificates of deposit
B)A government-issued super NOW account
C)Series EE U.S. government bonds
D)Money market mutual fund
Q2) Buying a security with the hope that it will go up in value is called buying long. A)True
B)False
Q3) The stock market index of interest to investors who focus on less popular,more speculative and smaller companies traded in the over-the-counter market is the
A)NASDAQ Composite Index.
B)Wilshire 5000 Index.
C)Russell 2000 Index.
D)Speculative Index.
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Chapter 15: Mutual Funds and Exchange Traded Funds
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) A money market mutual funds include tax-exempt funds and government securities funds.
A)True
B)False
Q2) The process of selecting a mutual fund begins with determining whether you want to invest in a load or no-load fund.
A)True
B)False
Q3) Which is not a method for taking your funds out of a mutual fund?
A)Borrowing against your fund account
B)Taking a set dollar amount each month
C)Cashing in a set number of shares each month
D)Taking the current income as cash
Q4) Selecting mutual funds in which to invest is an easy,do-it-yourself (DIY) effort for no-load investors.
A)True
B)False
Q5) Mutual funds front-end loads are,in effect,trailing commissions.
A)True
B)False
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Chapter 16: Real Estate and High-Risk Investments
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) One advantage of an investment in real estate is that leverage can increase an investor's return.
A)True
B)False
Q2) Scams and frauds abound with collectibles as investments.
A)True
B)False
Q3) Some people are persuaded by telemarketers to buy precious metal and stones.
A)True
B)False
Q4) Using borrowed funds to increase the rate of return on an investment is called leverage.
A)True
B)False
Q5) Borrowing to finance a real estate investment is more expensive than borrowing to buy one's own home.
A)True
B)False
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Chapter 17: Retirement and Estate Planning
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269 Verified Questions
269 Flashcards
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Sample Questions
Q1) The older you are the more risk you should take when investing your retirement funds.
A)True
B)False
Q2) Withdrawing money early from a tax-sheltered retirement account makes it difficult to make up for lost compound growth.
A)True
B)False
Q3) Making tax-deferred deposits into a retirement account means that the funds are
A)taxed when deposited but not taxed when withdrawn.
B)not taxed when deposited but taxed when withdrawn.
C)taxed both when deposited and when withdrawn but not while held in the account. D)never taxed.
Q4) The salary-reduction pension plan specifically designed for employers with 100 or fewer employees is called a A)SIMPLE IRA.
B)401(k) plan.
C)403(b) plan. D)457 plan.
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