Econ - Unit 3: Money Management Exam Study Guide

An example of using your credit card responsibly is to pay your bill on time.

• Paying your bill on time

• Overspending on non-essential items

• Ignoring monthly billing cycles

• Making cash advances frequently

A cardholder can avoid paying interest on a credit card by doing what?

• By paying the balance in full before the due date

• By paying the minimum due amount

• By carrying a balance

• By not using the card

Which of the following is a disadvantage of using credit cards?

• High interest rates

• Increased credit score

• No late payment fees

• Cash discounts

What effect do credit cards have on an individual's credit history?

• Credit cards have no impact on credit history.
• Credit cards can improve or harm an individual's credit history

• Credit cards only improve credit history regardless of usage.
• Credit cards automatically guarantee a high credit score.

Which of the following is a difference between a debit card and a credit card?

• A debit card uses your own funds, while a credit card allows borrowing.
• A debit card can accumulate interest, while a credit card cannot.
• A debit card is only accepted at ATMs, while a credit card is accepted everywhere.
• A debit card requires a credit check, while a credit card does not.

Which of the following is NOT a type of insurance people buy?

• Education

• Health

• Life

• Car

Insurance premiums are payments made periodically in exchange for coverage. Which of the following best describes how they typically work?

• They are one-time fees.

• They are recurring payments that secure ongoing coverage.

• They are only charged at the beginning of a policy period.

• They are optional contributions based on usage.

Insurance premium:

• It is the amount paid by the policyholder to the insurer for an insurance policy.

• It is the discount received on buying an insurance policy.

• It is the penalty imposed for not renewing an insurance policy.

• It is the profit earned by the insurer from the insurance policy.

A policyholder is:

• A person who owns an insurance policy

• A person who writes insurance policies

• A regulatory body

• An agency that sells insurance

Deductibles in insurance are:

• They are annual fees paid to the insurance company.

• They are amounts policyholders pay before insurance coverage begins.

• They are profits made by the insurance company.

• They are investment returns earned on premiums paid.