Personal Finance 3

You need to purchase a pair of sneakers since they are required for physical education class.  Which of the following is an example of effective decision making?

• You buy a pair of sneakers after considering fit, appearance, and cost.
• You buy the first pair of sneakers you try on at the first store you visit.
• You use your money to buy a pair of jeans instead of a pair of sneakers.
• You buy the most stylish and expensive pair of sneakers you find.

Which economic term best describes using money to earn more money?

• borrowing
• investing
• selling
• trading

A disadvantage of a revolving credit account is that

• balances can rise quickly if only the minimum payment is made each month.
• it is illegal.
• it is very difficult for borrowers to qualify for such an account.
• the balance must be paid off every month.

Which of the following is the best definition for saving?

• the discount received from buying something on sale
• putting your money under your mattress
• disposable income minus consumption spending
• the interest paid on a savings account

Making purchases on credit

• is never a good idea.
• decreases the cost of the purchase to the borrower.
• is a good idea if the purchaser has so many credit payments that he or she is unable to live comfortably.
• is a good idea if the benefits to the purchaser are greater than the costs.

When is the best time to borrow money?

• when a person has a poor credit rating
• when the interests rates are low
• when a person has no job or steady income
• when a person wants to purchase the expensive item, like a new cell phone

Which is the most diversified investment?

• bank savings account
• stock in Coca-Cola
• municipal bond
• Vanguard mutual fund

Which of the following allows people to increase their income?

• arguing with a boss
• applying for a credit card
• receiving more training
• opening a checking account

Which form of payment is the most expensive for the buyer?

• credit card
• debit card
• cash
• check

Which of the following is NOT an example of credit?

• credit card
• debit card
• home loan
• student loan