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Fremd > Consumer Ed Final Review 2024 > Flashcards

Consumer Ed Final Review 2024 Flashcards

1
Q

What does FTC stand for?

A

Federal Trade Commission

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2
Q

What does the FTC do?

A

Responsible for protecting consumers from unfair, deceptive, or fraudulent business practices

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3
Q

What does FDA stand for?

A

Food and Drug Administration

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4
Q

What does the FDA do?

A

Responsible for protecting the public health by ensuring the safety of our food, drugs, and cosmetics

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5
Q

What does BBB stand for?

A

Better Business Bureau

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6
Q

What does the BBB do?

A

Files public complaints against local businesses/merchants

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7
Q

What does UL stand for?

A

Underwriter Laboratories

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8
Q

What does the UL do?

A

Checks products for fire and electrical safety standards

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9
Q

What does the Consumer’s Union do?

A

Tests products and rates them based on quality

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10
Q

What does CPSC stand for?

A

Consumer Product Safety Commission

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11
Q

What does the CPSC do?

A

Works to reduce the risk of injuries and death by developing industry standards and recalling products

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12
Q

What does the CPSC NOT oversee, and what organization DOES?

A

Food, drugs, and cosmetics; FDA

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13
Q

What does EPA stand for?

A

Environmental Protection Agency

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14
Q

What does the EPA do?

A

Responsible for creating standards and laws promoting the health of individuals and the environment

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15
Q

What do the state and local governments do for consumers?

A

State attorney’s office handles frauds and misleading ad claims

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16
Q

What is the order of complaining about consumer problems?

A

Store/manager -> manufacturer/corporate -> consumer group/agency -> lawsuit

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17
Q

What is an implied warranty?

A

An unwritten guarantee that a product or service should work as expected

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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

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19
Q

What does “as-is” mean?

A

No warranty; product is being sold in its current condition, with no promises

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20
Q

What is puffery? Is it legal?

A

Exaggerated or false praise; yes

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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

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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

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23
Q

Why should you open a checking account? (4)

A

Provides security, protect your purchasing power, earn interest, banks are regulated

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24
Q

What are two factors of a for-profit bank?

A

Interest rates are competitive, and the FDIC covers up to $250,000

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25
Q

How do banks make money? (4)

A

Interest, loans, investments, fees

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26
Q

What are two factors of a non-profit bank?

A

Members can borrow money from pooled deposits at low interest rates, and the NCUA covers up to $250,000

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27
Q

What does FDIC stand for?

A

Federal Deposit Insurance Corporation

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28
Q

What does the FDIC do?

A

Insures your deposits up to $250,000 per depositor, per insured bank, for each account ownership category

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29
Q

What types of identification can you use to open an account?

A

(Choose two) Drivers’ license, state ID, passport, birth certificate

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30
Q

a check which cannot be deposited by the payee because of insufficient funds in the drawer’s account

A

bounced check

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31
Q

What is an outstanding check?

A

A check that has been written but not yet paid by the bank

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32
Q

What is the most common but least safe form of endorsement, and how is it written?

A

Blank endorsement; “name”

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33
Q

What type of endorsement cannot be redeemed for cash, and how is it written?

A

Restrictive endorsement; “for deposit only, name”

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34
Q

What is the most secure form of endorsement and how is it written?

A

Endorsement in full; “pay to the order of name”

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35
Q

a summary you receive once a month of what the bank believes is in your account

A

bank statement

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36
Q

a booklet that keeps track of all your transactions

A

register

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37
Q

What do you do during a reconciliation?

A

Comparing the records in your register to the bank statement

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38
Q

What are some reasons for saving?

A

Save for emergencies, college, a house, traveling/vacations, etc.

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39
Q

What does a traditional savings account do?

A

A bank account that allows you to keep money safe and withdraw and deposit funds, all while earning interest

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40
Q

What is a credit union?

A

A member’s only, not-for-profit business owned by its members

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41
Q

What is a certificate of deposit?

A

Agree to leave a certain amount of money in for a set time with a set interest rate, with fees for withdraw

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42
Q

What are the two types of retirement accounts?

A

401K and 403B

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43
Q

What is simple interest?

A

Calculated on the original balance

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44
Q

What is compound interest?

A

Calculated on original balance with interest added

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45
Q

What is investing?

A

Allocating resources (usually money) to generate a profit

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46
Q

The higher the risk, the ___ the return. Conversely, the lower the risk, the ___ the return.

A

higher; lower

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47
Q

What is diversification?

A

Spreading investments out to avoid losing all your money and limit risk

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48
Q

how quickly you can convert investments/assets into cash

A

liquidity

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49
Q

Rank the assets by most liquid to least liquid: CDs, real estate, cash deposits (savings account), stocks and mutual funds

A

3, 4, 1, 2

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50
Q

buying part ownership in a company

A

stocks

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51
Q

loans made by investors to a borrower

A

bonds

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52
Q

operated by professional money managers who allocate money into portfolios of a variety of securities

A

mutual funds

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53
Q

buying and selling homes for profit

A

real estate

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54
Q

purchasing something of value in hopes that the value will grow over time

A

collectibles

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55
Q

a type of stock with voting rights, more volatile price, and no guaranteed dividends

A

common stock

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56
Q

a type of stock with no voting rights, less volatile price, and guaranteed dividends

A

preferred stock

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57
Q

What is the stock market?

A

A collection of “markets” and “exchanges” where investors buy and sell shares of publicly traded companies

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58
Q

this is largely determined by its supply and demand

A

stock price

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59
Q

What does NYSE stand for and what is it?

A

New York Stock Exchange; a physical space for trading, the biggest and oldest

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60
Q

What is NASDAQ?

A

An online stock market with more volatile stocks and fast-growing tech companies

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61
Q

a distribution of corporate earnings to eligible shareholders determined by the company’s board of directors

A

dividends

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62
Q

a huge company with an excellent reputation and a history of paying dividends

A

blue chip stock

63
Q

companies which are expected to grow sales and earnings at a faster rate than the market average

A

growth stock

64
Q

What does SEC stand for and what do they do?

A

Securities Exchange Commission; enforces the rules and regulations of the stock market

65
Q

money collected by the government from its citizens and businesses

A

taxes

66
Q

Why does the government collect taxes?

A

Taxes give the government spending money and they can use them to give back to the citizens

67
Q

What are six areas of public services that taxes benefit?

A

National defense, state and local police, financial aid, health care for the elderly, social services, and public education

68
Q

a type of tax used for education, parks, roads, and EMS

A

local taxes

69
Q

a type of tax used for national defense, highways, national parks/wildlife, and health and welfare systems

A

federal taxes

70
Q

Income taxes fund…

A

national defense

71
Q

Gas taxes fund…

A

modern highways

72
Q

Property taxes fund…

A

public schools

73
Q

Social security taxes fund…

A

money for retirement

74
Q

a tax that takes the same percentage of income from all income groups (ex. property taxes)

A

proportional taxes

75
Q

a tax that takes a larger percentage of income from low-income groups (ex. sales tax)

A

regressive taxes

76
Q

a tax that is meant to discourage habits/products without making them illegal (ex. cigarettes)

A

excise (sin) taxes

77
Q

a tax that takes a larger share as income grows (ex. federal income taxes)

A

progressive taxes

78
Q

a tax based on the amount of taxable income people receive annually after deductions

A

personal income tax

79
Q

amount(s) taxpayers may subtract from their income before determining tax

A

deductions

80
Q

What are some examples of deductions?

A

Donations to charity, medical expenses, college expenses, mortgage interest, and property taxes

81
Q

an actual expense that reduces the amount of income subject to tax

A

itemized deduction

82
Q

a set amount taxpayers may deduct from income before determining tax

A

standard deduction

83
Q

What is the significance of Jan 31?

A

Earnings Report - W-2’s must be mailed

84
Q

What is the significance of April 15?

A

Tax Day - tax forms must be filed

85
Q

a form that recaps earned income from a job

A

W-2

86
Q

a form that recaps interest earned during the year

A

1099-INT

87
Q

a form that recaps dividends earned during the year

A

1099-DIV

88
Q

everyone can use this tax return to file their income taxes

A

1040

89
Q

determines how much federal income tax you should be paying based on your taxable income

A

tax table

90
Q

If too little federal income tax is withheld from your pay…

A

you will owe tax in your tax return

91
Q

If too little federal income tax is withheld from your pay…

A

you will be due a refund in your tax return

92
Q

What does IRS stand for and what do they do?

A

Internal Revenue Service; monitors taxes

93
Q

Four things that can happen if you don’t pay taxes

A

Charged with a crime, penalty from the IRS, government can garnish your wages, interest can accrue on past due taxes

94
Q

Two things the IRS cannot do

A

Recommend you get fired from your job, contact your relatives to ask them to pay your tax due

95
Q

a legal means of reducing taxes and claiming legitimate deductions and credits

A

tax avoidance

96
Q

an illegal manes of reducing taxes by failing to declare all income and falsifying deductions and credits

A

tax evasion

97
Q

a thorough detailed examination of a person’s tax return by the IRS

A

tax audit

98
Q

reducing exposure to risk by spreading the burden of loss among many people

A

shared risk

99
Q

limiting possible financial losses to amounts you can handle

A

risk insurance

100
Q

protection against financial loss

A

insurance

101
Q

a person through the insurance company you choose that handles any claims against you

A

insurance agent

102
Q

a written agreement between a policyholder and the insurance company

A

insurance policy

103
Q

the consumer who purchases insurance

A

policyholder

104
Q

how much you pay for the agreed coverage in an insurance plan

A

premium

105
Q

a request to the insurance company to pay for a loss

A

claim

106
Q

the amount of money the insured person must pay per loss before your insurance pays out

A

deductible

107
Q

When your deductible goes up, your premium…

A

goes down

108
Q

a health insurance program for people over 65 and covered by social security

A

medicare

109
Q

a joint federal and state program to help low income groups with long-term medical care

A

medicaid

110
Q

a plan that is offered through an employer and keeps premium costs down by spreading the risk

A

group plan

111
Q

a plan that helps students, self-employed, and retirees, though it may be more expensive

A

individual plan

112
Q

What does HMO stand for and what is it?

A

Health Maintenance Organization; no deductibles, small copayment, list of doctors, pays 100% for the most part

113
Q

What does PPO stand for and what is it?

A

Preferred Provider Organization; higher deductibles, more freedom of doctors, policyholder pays a %

114
Q

pays you a percentage of your income if you cannot work

A

disability coverage

115
Q

a type of insurance that protects your loved ones if you die and provides coverage for a set number of years

A

life insurance

116
Q

those who receive your money and assets after you pass away (names must be written in a legal will)

A

beneficiary

117
Q

least expensive type of life insurance that provides for a set amount of time

A

term life insurance

118
Q

life insurance for your whole life with a cash value and penalties if you borrow

A

permanent life insurance

119
Q

supplying of money, goods, or services at present time in exchange for the promise of future payment

A

credit

120
Q

the three C’s of credit

A

character, capital, capacity

121
Q

closed-end credit, repaid in equal/fixed monthly payments, stated interest rate, backed by collateral, assets that can be repossessed (ex. mortgage)

A

installment loan

122
Q

open-end credit, changing interest rates, interest charged on balance, charge up to a certain limit (ex. credit card)

A

revolving credit

123
Q

higher monthly payments, lower interest rates, lower total cost

A

short-tem loan

124
Q

lower monthly payments, higher interest rates, higher total cost

A

long-term loan

125
Q

What if your credit card is stolen?

A

Notify the issuer and you’ll be charged for no more than $50

126
Q

data collectors or credit reporting agencies

A

credit bureau

127
Q

a valuable asset that a borrower pledges as security for a loan

A

collateral

128
Q

high interest rate loans to those with low credit scores

A

subprime loan

129
Q

any lending practice that imposes unfair and abusive loan terms on borrowers (ex. unusually high interest rates)

A

predatory lending

130
Q

the seizure of property that usually occurs as a result of nonpayment of a debt; can happen quickly and without warning

A

repossession

131
Q

the cash that a buyer pays upfront in a real estate transaction and other large purchases

A

down payment

132
Q

agrees to pay the debt (loan) if the debtor does not pay

A

co-signer

133
Q

the time between the billing date and the payment due date on a credit card when no interest is charged

A

grace period

134
Q

a credit law whose principle is “if you’re rejected for credit, you must be told why”

A

Equal Credit Opportunity Act

135
Q

a credit law whose principle is “promotes accuracy, fairness, and privacy of credit info”

A

Fair Credit Reporting Act

136
Q

a credit law whose principle is “requires lenders to provide finance charge (interest ($) and APR (%))

A

Truth in Lending Act

137
Q

a credit law whose principle is “companies can’t use unreasonable or unfair debt collection practices

A

Fair Debt Collections Practices Act

138
Q

occurs when a person is unable to pay their bills and can do severe, permanent damage to your credit score

A

bankruptcy

139
Q

a plan for dividing up your income among spending and saving options

A

budget

140
Q

What are the four steps of budgeting?

A

Determine goals, estimate net income, estimate savings and expenses, and review and adjust your budget

141
Q

costs that stays the same from month to month (ex. rent, student loans)

A

fixed expenses

142
Q

costs that vary from month to month (ex. food, entertainment)

A

variable/flexible expenses

143
Q

the loan you take out when purchasing a house

A

mortgage

144
Q

difference between what you owe on your mortgage and what your home is currently worth (does not apply to renting)

A

equity

145
Q

increase in value over time

A

appreciation

146
Q

Advantages of buying

A

Build equity, tax benefits, privacy, make it your own

147
Q

Disadvantages of buying

A

Upfront costs, less mobility, maintenance, liquidity

148
Q

written contract that details the term of your rental agreement for an apartment

A

lease

149
Q

the person responsible for managing an apartment building

A

landlord

150
Q

an amount of money you have to pay up front in case you damage your apartment or fail to pay rent

A

security deposit

151
Q

Advantages of renting

A

Cheaper rent, repairs aren’t your responsibility, flexibility to move, lower upfront costs

152
Q

Disadvantages of renting

A

Can’t truly customize, no equity, doesn’t improve credit, limited privacy

153
Q

Pros and cons of buying a car

A

Ownership and freedom; cost (loans, gas, maintenance, parking, depreciation)

Fremd (6 decks)

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