CONSUMER CREDIT

1. Ahmed has seen an advertisement for a computer. It includes the words ‘credit terms available’. Which statement explains why he is interested in buying the computer shown in the advertisement?

• A. Cash vouchers will be offered to him.

• B. His money will be refunded if he finds he cannot use the computer.

• C. Payment for the computer can be spread over time.

• D. The price will be reduced if he pays cash when he buys the computer.

2. To avoid paying interest, credit card holders should pay for their goods.

• A. at the time of purchase.

• B. before a date given on the monthly statement.

• C. two months after the purchase date.

• D. when their goods arrive.

3. Which statement explains why retailers offer credit to consumers?

• A. to decrease retailers’ costs

• B. to decrease consumers’ incomes

• C. to increase consumers’ debts

• D. to increase retailers’ sales

Q4. Which question is most important for a customer considering buying goods on credit?

• A. Are the goods fit for the purpose?

• B. Do the goods represent value for money?

• C. What discount will be given by the retailer?

• D. What is the difference between the cash price and the credit price?

5. Which statement about credit is not true?

• A. Credit enables buyers to purchase expensive goods.

• B. Impulse buying is encouraged by having credit available to use.

• C. Offering credit to customers is risk-free for retailers.

• D. Spending on credit means borrowing against your future income.

6. What is a disadvantage to the buyer of buying a television on credit?

• A. A credit check will be made by the seller.

• B. Interest may be charged by the seller.

• C. Payment is postponed until a later date.

• D. There is no need to carry a large amount of cash when buying.

7. A retailer who allows informal credit would usually expect payment

• A. at the end of the week.

• B. immediately.

• C. in a year’s time.

• D. when the customer has the money

8. How does buying on credit contribute to a country’s standard of living?

• A. Consumers are able to buy what they want or need.

• B. Many people accumulate large amounts of debt.

• C. More goods will be imported for sale.

• D. People will save less of their income

9. A student wishes to buy a laptop to aid his studies. Which factor would be the most important for him to consider when deciding which type of credit to use?

• A. immediate ownership

• B. length of repayment period

• C. number of instalments

• D. overall total costs

10. A customer buys goods. He makes a payment using his PIN. What type of payment is being made?

• A. credit card

• B. deferred payment

• C. hire purchase

• D. informal credit