Consumer Ed Final Review 2024 Flashcards
1
Q
What does FTC stand for?
A
Federal Trade Commission
2
Q
What does the FTC do?
A
Responsible for protecting consumers from unfair, deceptive, or fraudulent business practices
3
Q
What does FDA stand for?
A
Food and Drug Administration
4
Q
What does the FDA do?
A
Responsible for protecting the public health by ensuring the safety of our food, drugs, and cosmetics
5
Q
What does BBB stand for?
A
Better Business Bureau
6
Q
What does the BBB do?
A
Files public complaints against local businesses/merchants
7
Q
What does UL stand for?
A
Underwriter Laboratories
8
Q
What does the UL do?
A
Checks products for fire and electrical safety standards
9
Q
What does the Consumer’s Union do?
A
Tests products and rates them based on quality
10
Q
What does CPSC stand for?
A
Consumer Product Safety Commission
11
Q
What does the CPSC do?
A
Works to reduce the risk of injuries and death by developing industry standards and recalling products
12
Q
What does the CPSC NOT oversee, and what organization DOES?
A
Food, drugs, and cosmetics; FDA
13
Q
What does EPA stand for?
A
Environmental Protection Agency
14
Q
What does the EPA do?
A
Responsible for creating standards and laws promoting the health of individuals and the environment
15
Q
What do the state and local governments do for consumers?
A
State attorney’s office handles frauds and misleading ad claims
16
Q
What is the order of complaining about consumer problems?
A
Store/manager -> manufacturer/corporate -> consumer group/agency -> lawsuit
17
Q
What is an implied warranty?
A
An unwritten guarantee that a product or service should work as expected
18
Q
What is an expressed warranty?
A
A specific quality or performance promise made by a seller to a buyer, either orally or in writing
19
Q
What does “as-is” mean?
A
No warranty; product is being sold in its current condition, with no promises
20
Q
What is puffery? Is it legal?
A
Exaggerated or false praise; yes
21
Q
What is a bait-and-switch? Is it legal?
A
Luring customers in with specific claims about an unavailable product in order to upsell a similar item; no
22
Q
What is a loss leader? Is it legal?
A
Pricing products lower than the production cost to attract new customers or sell additional products; no, but it must be intentional
23
Q
Why should you open a checking account? (4)
A
Provides security, protect your purchasing power, earn interest, banks are regulated
24
Q
What are two factors of a for-profit bank?
A
Interest rates are competitive, and the FDIC covers up to $250,000
25
How do banks make money? (4)
Interest, loans, investments, fees
26
What are two factors of a non-profit bank?
Members can borrow money from pooled deposits at low interest rates, and the NCUA covers up to $250,000
27
What does FDIC stand for?
Federal Deposit Insurance Corporation
28
What does the FDIC do?
Insures your deposits up to $250,000 per depositor, per insured bank, for each account ownership category
29
What types of identification can you use to open an account?
(Choose two) Drivers' license, state ID, passport, birth certificate
30
a check which cannot be deposited by the payee because of insufficient funds in the drawer's account
bounced check
31
What is an outstanding check?
A check that has been written but not yet paid by the bank
32
What is the most common but least safe form of endorsement, and how is it written?
Blank endorsement; "name"
33
What type of endorsement cannot be redeemed for cash, and how is it written?
Restrictive endorsement; "for deposit only, name"
34
What is the most secure form of endorsement and how is it written?
Endorsement in full; "pay to the order of name"
35
a summary you receive once a month of what the bank believes is in your account
bank statement
36
a booklet that keeps track of all your transactions
register
37
What do you do during a reconciliation?
Comparing the records in your register to the bank statement
38
What are some reasons for saving?
Save for emergencies, college, a house, traveling/vacations, etc.
39
What does a traditional savings account do?
A bank account that allows you to keep money safe and withdraw and deposit funds, all while earning interest
40
What is a credit union?
A member's only, not-for-profit business owned by its members
41
What is a certificate of deposit?
Agree to leave a certain amount of money in for a set time with a set interest rate, with fees for withdraw
42
What are the two types of retirement accounts?
401K and 403B
43
What is simple interest?
Calculated on the original balance
44
What is compound interest?
Calculated on original balance with interest added
45
What is investing?
Allocating resources (usually money) to generate a profit
46
The higher the risk, the ___ the return. Conversely, the lower the risk, the ___ the return.
higher; lower
47
What is diversification?
Spreading investments out to avoid losing all your money and limit risk
48
how quickly you can convert investments/assets into cash
liquidity
49
Rank the assets by most liquid to least liquid: CDs, real estate, cash deposits (savings account), stocks and mutual funds
3, 4, 1, 2
50
buying part ownership in a company
stocks
51
loans made by investors to a borrower
bonds
52
operated by professional money managers who allocate money into portfolios of a variety of securities
mutual funds
53
buying and selling homes for profit
real estate
54
purchasing something of value in hopes that the value will grow over time
collectibles
55
a type of stock with voting rights, more volatile price, and no guaranteed dividends
common stock
56
a type of stock with no voting rights, less volatile price, and guaranteed dividends
preferred stock
57
What is the stock market?
A collection of "markets" and "exchanges" where investors buy and sell shares of publicly traded companies
58
this is largely determined by its supply and demand
stock price
59
What does NYSE stand for and what is it?
New York Stock Exchange; a physical space for trading, the biggest and oldest
60
What is NASDAQ?
An online stock market with more volatile stocks and fast-growing tech companies
61
a distribution of corporate earnings to eligible shareholders determined by the company's board of directors
dividends
62
a huge company with an excellent reputation and a history of paying dividends
blue chip stock
63
companies which are expected to grow sales and earnings at a faster rate than the market average
growth stock
64
What does SEC stand for and what do they do?
Securities Exchange Commission; enforces the rules and regulations of the stock market
65
money collected by the government from its citizens and businesses
taxes
66
Why does the government collect taxes?
Taxes give the government spending money and they can use them to give back to the citizens
67
What are six areas of public services that taxes benefit?
National defense, state and local police, financial aid, health care for the elderly, social services, and public education
68
a type of tax used for education, parks, roads, and EMS
local taxes
69
a type of tax used for national defense, highways, national parks/wildlife, and health and welfare systems
federal taxes
70
Income taxes fund...
national defense
71
Gas taxes fund...
modern highways
72
Property taxes fund...
public schools
73
Social security taxes fund...
money for retirement
74
a tax that takes the same percentage of income from all income groups (ex. property taxes)
proportional taxes
75
a tax that takes a larger percentage of income from low-income groups (ex. sales tax)
regressive taxes
76
a tax that is meant to discourage habits/products without making them illegal (ex. cigarettes)
excise (sin) taxes
77
a tax that takes a larger share as income grows (ex. federal income taxes)
progressive taxes
78
a tax based on the amount of taxable income people receive annually after deductions
personal income tax
79
amount(s) taxpayers may subtract from their income before determining tax
deductions
80
What are some examples of deductions?
Donations to charity, medical expenses, college expenses, mortgage interest, and property taxes
81
an actual expense that reduces the amount of income subject to tax
itemized deduction
82
a set amount taxpayers may deduct from income before determining tax
standard deduction
83
What is the significance of Jan 31?
Earnings Report - W-2's must be mailed
84
What is the significance of April 15?
Tax Day - tax forms must be filed
85
a form that recaps earned income from a job
W-2
86
a form that recaps interest earned during the year
1099-INT
87
a form that recaps dividends earned during the year
1099-DIV
88
everyone can use this tax return to file their income taxes
1040
89
determines how much federal income tax you should be paying based on your taxable income
tax table
90
If too little federal income tax is withheld from your pay...
you will owe tax in your tax return
91
If too little federal income tax is withheld from your pay...
you will be due a refund in your tax return
92
What does IRS stand for and what do they do?
Internal Revenue Service; monitors taxes
93
Four things that can happen if you don't pay taxes
Charged with a crime, penalty from the IRS, government can garnish your wages, interest can accrue on past due taxes
94
Two things the IRS cannot do
Recommend you get fired from your job, contact your relatives to ask them to pay your tax due
95
a legal means of reducing taxes and claiming legitimate deductions and credits
tax avoidance
96
an illegal manes of reducing taxes by failing to declare all income and falsifying deductions and credits
tax evasion
97
a thorough detailed examination of a person's tax return by the IRS
tax audit
98
reducing exposure to risk by spreading the burden of loss among many people
shared risk
99
limiting possible financial losses to amounts you can handle
risk insurance
100
protection against financial loss
insurance
101
a person through the insurance company you choose that handles any claims against you
insurance agent
102
a written agreement between a policyholder and the insurance company
insurance policy
103
the consumer who purchases insurance
policyholder
104
how much you pay for the agreed coverage in an insurance plan
premium
105
a request to the insurance company to pay for a loss
claim
106
the amount of money the insured person must pay per loss before your insurance pays out
deductible
107
When your deductible goes up, your premium...
goes down
108
a health insurance program for people over 65 and covered by social security
medicare
109
a joint federal and state program to help low income groups with long-term medical care
medicaid
110
a plan that is offered through an employer and keeps premium costs down by spreading the risk
group plan
111
a plan that helps students, self-employed, and retirees, though it may be more expensive
individual plan
112
What does HMO stand for and what is it?
Health Maintenance Organization; no deductibles, small copayment, list of doctors, pays 100% for the most part
113
What does PPO stand for and what is it?
Preferred Provider Organization; higher deductibles, more freedom of doctors, policyholder pays a %
114
pays you a percentage of your income if you cannot work
disability coverage
115
a type of insurance that protects your loved ones if you die and provides coverage for a set number of years
life insurance
116
those who receive your money and assets after you pass away (names must be written in a legal will)
beneficiary
117
least expensive type of life insurance that provides for a set amount of time
term life insurance
118
life insurance for your whole life with a cash value and penalties if you borrow
permanent life insurance
119
supplying of money, goods, or services at present time in exchange for the promise of future payment
credit
120
the three C's of credit
character, capital, capacity
121
closed-end credit, repaid in equal/fixed monthly payments, stated interest rate, backed by collateral, assets that can be repossessed (ex. mortgage)
installment loan
122
open-end credit, changing interest rates, interest charged on balance, charge up to a certain limit (ex. credit card)
revolving credit
123
higher monthly payments, lower interest rates, lower total cost
short-tem loan
124
lower monthly payments, higher interest rates, higher total cost
long-term loan
125
What if your credit card is stolen?
Notify the issuer and you'll be charged for no more than $50
126
data collectors or credit reporting agencies
credit bureau
127
a valuable asset that a borrower pledges as security for a loan
collateral
128
high interest rate loans to those with low credit scores
subprime loan
129
any lending practice that imposes unfair and abusive loan terms on borrowers (ex. unusually high interest rates)
predatory lending
130
the seizure of property that usually occurs as a result of nonpayment of a debt; can happen quickly and without warning
repossession
131
the cash that a buyer pays upfront in a real estate transaction and other large purchases
down payment
132
agrees to pay the debt (loan) if the debtor does not pay
co-signer
133
the time between the billing date and the payment due date on a credit card when no interest is charged
grace period
134
a credit law whose principle is "if you're rejected for credit, you must be told why"
Equal Credit Opportunity Act
135
a credit law whose principle is "promotes accuracy, fairness, and privacy of credit info"
Fair Credit Reporting Act
136
a credit law whose principle is "requires lenders to provide finance charge (interest ($) and APR (%))
Truth in Lending Act
137
a credit law whose principle is "companies can't use unreasonable or unfair debt collection practices
Fair Debt Collections Practices Act
138
occurs when a person is unable to pay their bills and can do severe, permanent damage to your credit score
bankruptcy
139
a plan for dividing up your income among spending and saving options
budget
140
What are the four steps of budgeting?
Determine goals, estimate net income, estimate savings and expenses, and review and adjust your budget
141
costs that stays the same from month to month (ex. rent, student loans)
fixed expenses
142
costs that vary from month to month (ex. food, entertainment)
variable/flexible expenses
143
the loan you take out when purchasing a house
mortgage
144
difference between what you owe on your mortgage and what your home is currently worth (does not apply to renting)
equity
145
increase in value over time
appreciation
146
Advantages of buying
Build equity, tax benefits, privacy, make it your own
147
Disadvantages of buying
Upfront costs, less mobility, maintenance, liquidity
148
written contract that details the term of your rental agreement for an apartment
lease
149
the person responsible for managing an apartment building
landlord
150
an amount of money you have to pay up front in case you damage your apartment or fail to pay rent
security deposit
151
Advantages of renting
Cheaper rent, repairs aren't your responsibility, flexibility to move, lower upfront costs
152
Disadvantages of renting
Can't truly customize, no equity, doesn't improve credit, limited privacy
153
Pros and cons of buying a car
Ownership and freedom; cost (loans, gas, maintenance, parking, depreciation)
