Unit 2 Study Guide Review

After high school, graduates have a number of options other than immediately starting college. Bethany is going to graduate from high school this semester and currently works part time at a clothing store. She does not have a scholarship to her college of choice, and her parents are unable to help financially support her when she graduates. What option would financially benefit Bethany MOST if she wants to begin college a year after graduation?

• After graduation, begin working full time, saving as much money as possible to support herself when she begins college.

• Travel for one year

  before starting school, so she will not have to spend money on travel while

  also paying for college.

• Find an internship in

  the field of her chosen college major, improving her chances of getting a job

  after college graduation.

• Take a "gap year" between high school graduation and the start of college, allowing her to refocus before beginning school again.

Tina's mother and father pay her car insurance as long as she makes good grades. This is an example of which economic concept?

• scarcity

• law of demand

• positive incentive

• negative incentive

· speeding ticket

· littering fine

· library fine

· detention

All of these are examples of

• productive resources

• negative incentives

• opportunity cost

• positive incentives

Which statement explains a major difference between a traditional Individual Retirement Account (IRA) and a Roth IRA

• Traditional IRAs are

  employer-based retirement plans, while Roth IRAs are supplemental plans

  provided by private brokerages.

• Traditional IRAs are supplemental plans provided by private brokerages while Roth IRAs are employer-based retirement plans.

• Traditional IRAs provide tax breaks at the time of withdrawal, while Roth IRAs are tax-deductible for the year the contributions are made

• Traditional IRAs are tax-deductible for the year the contributions are made, while Roth IRAs provide tax breaks at the time of withdrawal.

Ben is choosing between two savings accounts. Both accounts pay 3% interest. Account X pays compound interest. Account Y pays simple interest. Ben should choose account X because

• the interest would be

  tax free.

• it would pay interest on interest

• the interest rate

  would decrease over time.

• the interest rate would increase over time

How might APR affect a consumer's choice of which credit card to choose?

• A consumer would not

  worry about the card's APR.

• Consumers would look for a card with a lower APR.

• Consumers would look for a card with a higher APR.

• APR would determine

  how much credit the consumer received.

When considering creditworthiness, which person is likely to pay the SMALLEST credit card finance charges if they all charge the same amount each month on their cards?

• James, who always pays

  the minimum each month

• Georgia, who sometimes

  pays more than the minimum amount

• Mary Lou, who always

  pays the full credit bill each month

• Mark, who usually pays

  his credit card bill in full, if he can afford to

David considers himself to be a responsible and safe driver. He has never been in an accident and never received a speeding ticket. He is looking for the minimal amount of automobile insurance possible. Which type of coverage best fits David's goals?

• liability coverage

• collision coverage

• comprehensive coverage

• uninsured and

  underinsured motorist coverage

When considering creditworthiness, which person is likely to pay the GREATEST credit card finance charges if they all charge the same amount each month on their cards?

• James, who always pays

  the minimum each month

• Georgia, who sometimes

  pays more than the minimum amount

• Mary Lou, who always

  pays the full credit bill each month

• Mark, who usually pays

  his credit card bill in full, if he can afford to

What is the primary purpose of insurance?

• To pay for your

  mistakes

• To take money away

  from you

• To protect you against

  a financial loss

• To allow you to do

  things you couldn't do