Spending Unit

Question 1

Becky no longer wants to use her Clothes‐R‐Us store credit card. What is the best thing she could
do with the credit card?
a. File the credit card away for use at a later time.
b. Let a family member take over the credit account so her credit score will not be affected.
c. Keep the credit card in her wallet in case she needs proof of identification.
d. Close the account by phone and in writing, then destroy the card.

Answer 1

D

Question 2

When may a person view his/her credit report for free?

a. At any time and an unlimited number of times
b. Once a year, from each of the three main credit reporting agencies
c. A person may not review his/her credit report
d. If a person has sufficient financial resources

Answer 2

b

Question 3

When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which
statement best describes what this is likely to mean for Bryce?
a. The interest rates on his loan will be lower, since his credit score is low.
b. The purchase price of the item he needs the loan for will be higher due to his low credit
score.
c. The monthly loan payments will be lower due to his lower credit score.
d. The interest rates on his loan will be higher, since his credit score is low.

Answer 3

d

Question 4

Which is NOT an example of a data furnisher?

a. Landlord
b. Credit card company
c. Utility company
d. Medical provider

Answer 4

b

Question 5

Jenny is 18‐years‐old and has applied for credit for the first time. Her credit application was
declined because she has no credit history. What would you recommend Jenny do to being to build
a positive credit history?
a. Jenny should acquire several credit cards to establish that she can manage them
responsibly.
b. Jenny should obtain a secured credit card.
c. Jenny should re‐apply for the same credit but include a letter of recommendation from
someone who knows her well and can vouch for her character.
d. Jenny should apply for a different type of credit. Since she was applying for a bank loan, she
should apply for a credit card.

Answer 5

b

Question 6

Jake’s credit application has been declined because of his negative credit history. Which statement
is most likely to be true?
a. Jake pays his bills consistently and on time.
b. Jake has applied for 4 credit cards and a car loan in the past 6‐weeks.
c. Jake has received 3 traffic tickets in the past 2 months.
d. Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage

Answer 6

b

Question 7

Which of the following is NOT included in an individual’s credit report?

a. Current and past addresses
b. Account balances
c. Bankruptcies and foreclosures
d. Medical information

Answer 7

d

Question 8

Edward wants to develop a positive credit history. How should he do this?

a. maintain reasonable amounts of available credit
b. have one type of credit account
c. pay cash for the majority of purchases
d. open credit accounts in their parents’ names

Answer 8

a

Question 9

Evan is writing a scholarship essay about the importance of responsible money management. He
wants to explain the meaning of borrowing. Which statement below would explain the importance
of understanding the process of borrowing money?
a. When you are borrowing, you are spending future income.
b. Borrowing is an important part of a responsible financial plan.
c. Borrowing strongly affects the present self but has less impact on the future self.
d. Borrowing builds a strong credit history because it requires individuals to file a credit
report.

Answer 9

a

Question 10

The financial counselor that Ariel consulted about her use of credit recommended that she keep
her use of credit within safe boundaries. Ariel’s financial counselor most likely told her to:
a. Keep the total amount of money she has borrowed, including her mortgage and her car
loan, under 20% of her net income.
b. Keep the total amount of money she has borrowed, including her mortgage and her car
loan, under 40% of her net income.
c. Keep the total amount of money she has borrowed, not including her house, under 20% of
her net income.
d. Keep the total amount of money she has borrowed, not including her house, under 40% of
her net income.

Answer 10

c

Question 11

David earns $5000 per month at his accounting job. He has a student loan payment of $120, a car
loan of $300. Which statement is true?
a. David’s total credit payments are higher than the recommended amount for someone
earning his income.
b. David’s student loan payment must be subtracted from his car loan payment to determine
whether his overall credit payments are is within the safe range.
c. David’s student loan payment is within the safe range but his car loan is not.
d. David’s credit payments are within the safe range for someone with his income.

Answer 11

d

Question 12

To answer the essay test question about the meaning of open‐end credit, Ryan should include
which statement?
a. A down payment must be made before receiving a loan.
b. Individual are allowed to borrow an unlimited amount of money as long as they pay it back
c. Credit is extended in advance so the borrower does not have to apply for credit each time
credit is desired.
d. Payments are equal and required to be paid on a regular basis.

Answer 12

c

Question 13

Leah is trying to explain the difference between open‐end and closed‐end credit to her roommate.
Which statement should she include in her description of closed‐end credit?
a. It is a continuous loan the borrower must repay with a revolving balance.
b. Equal payments are required on a regular basis until the loan is repaid.
c. Credit limits vary depending on the loan balance.
d. Interest rates vary depending on the repayment history.

Answer 13

b

Question 14

Sarah will turn 18 next month. She plans to apply for a credit card. Which statement is true?
a. Sarah cannot obtain a credit card until she turns 21.
b. Sarah will need to use a special application since she is under 25.
c. Sarah can only obtain a credit card if she has a co‐signer or proof of sufficient income to
make the required payments.
d. Sarah can obtain a credit card by filling out an application as long as she waits until after
her 18th birthday.

Answer 14

c

Question 15

Tyler is trying to be responsible in using his new credit card and has heard there is a way to avoid
paying interest on the things he charges. How can he LEGALLY avoid paying interest when using his
credit card?
a. Tyler needs to make sure he pays the minimum balance every month before the due date
on the credit card statement.
b. Tyler needs to pay the credit card balance in full every month before the due date listed on
the credit card statement.
c. Tyler needs to limit the use of his credit cards to balance transfers only.
d. Tyler needs to understand that the use of a credit card requires paying interest. There is
not legal way for him to avoid paying interest if he uses his card during the billing cycle.

Answer 15

b

Question 16

Paying the minimum payment on a credit card every month will:
a. pay a large percentage of the total balance owed every month
b. make the final amount paid substantially higher than the amount initially charged to
the card
c. help the cardholder create a plan for paying of a credit card in a decent amount of time
d. allow the cardholder to avoid paying any interest charges

Answer 16

b

Question 17

Megan’s credit card statement indicates that she is now paying a Penalty APR. Which scenario best
describes what may have happened?
a. Megan’s missed making her January and February credit card payments while she was
participating in her college’s Study Abroad program when the friend she left in charge of
sending the payments in forgot.
b. Megan’s credit card payment has been paid in full each of the last 6 months.
c. Megan’s card had a lower introductory interest rate for the first year and now the interest
rate has increased, as stated on her contract.
d. The new computer Megan purchased made her account go over the credit limit for 1 week,
until the credit card company processed her credit card statement.

Answer 17

a

Question 18

Which of the following is an act of identity theft?

a. Receiving permission to use a parents’ credit card for school clothes
b. Wrongfully acquiring and using someone’s personal identification
c. Taking the identity of another individual as inspiration for a costume
d. Having the same name as another person

Answer 18

b

Question 19

Carson wallet with his driver’s license, a debit card and his credit card has been stolen. Which of the
following is NOT something an identity thief might realistically do with this information?
a. Rent an apartment under Carson’s name
b. Use Carson’s name during an arrest
c. Make purchases with Carson’s credit card
d. Take a college admissions exam in Carson’s name.

Answer 19

d

Question 20

Ashley plans to do some of her Christmas shopping online. What is a safety tip to follow when she is
shopping online?
a. Shred all sales receipts as soon as the item purchased has been received
b. Use a debit card
c. Use a credit card
d. Black out the bank account numbers on the credit card bill before returning it with
payment.

Answer 20

c

Question 21

Matt wants to guard his personal information. Which personal information is LEAST LIKELY to be
used by scammers?
a. phone numbers
b. credit card numbers
c. bank account numbers
d. driver’s license numbers

Answer 21

a

Question 22

Charis wants to decrease the risk of fraudulent use of her credit cards. Which strategy would be the
most effective?
a. carrying all credit cards in her wallet so they don’t get lost
b. signing the back of her card with her signature and “Please see picture ID”
c. giving account numbers over the internet rather than over the phone
d. using credit cards for all her purchases so she only needs to pay one bill each month

Answer 22

b

Question 23

Which is a general rule when dealing with credit reports to minimize identity theft?
a. Check each credit reports at least once per year.
b. Wait 60 days before disputing any wrong information found in a credit report or on a credit
card statement.
c. Keep credit reports in an easily accessible location, so information can be accessed if fraud
occurs
d. Report mistakes to only one credit reporting agency and they will inform the others

Answer 23

a

Question 24

Which of the following actions will not make an individual vulnerable to identity theft?

a. Using a computer without updated spyware
b. Responding to an email from your depository institution
c. Paying cash for a movie ticket
d. Throwing mail in the garbage

Answer 24

C

Question 25

Which of the following best describes the benefits of having insurance?
a. The policyholder may become better off financially if an accident occurs
b. Insurance combined with emergency savings provides a sense of financial security and
peace of mind
c. The policyholder no longer has to worry about paying for financial losses resulting from an
accident because all risk of financial loss is transferred to the insurance company
d. It is required by law to purchase insurance so the benefits do not matter

Answer 25

B

Question 26

Maggie will need to pay $120 per month in order to purchase a health insurance policy. This
monthly payment is known as the:
a. deductible
b. co‐insurance
c. premium
d. moral hazard

Answer 26

C

Question 27

Insurance can be purchased to protect one from which of the following losses?

a. Stock market losses
b. Health care expenses
c. Maintaining the price of your home
d. Car maintenance

Answer 27

B

Question 28

Tiffany was recently involved in a vehicle accident. In order to get her car fixed, her insurance
company is requiring her to pay the first $500 of the repair bill because:
a. she did not call her agent and report the accident quickly enough
b. her policy’s deductible is $500
c. she will be reimbursed by the insurance company later
d. the cost of the repairs is higher than her policy covers

Answer 28

B

Question 29

James received his first medical bill of the year. It was a total of $1000. His health insurance policy
has a $500 deductible and a 20% co‐insurance. How much of the medical bill will Jade be
responsible to pay?
a. $0, insurance will cover the entire medical bill
b. $500
c. $600
d. $700

Answer 29

C

Question 30

As part of Nicholas’ new job, his employers will provide health, life, and disability insurance. Access
to this insurance is provided in addition to his regular salary. This is known as:
a. government programs
b. household production
c. coverage
d. employee benefits

Answer 30

D

Question 31

If a person drives an automobile, they are required by law to have Automobile Liability Insurance.
In which situation would this type of policy protect the policyholder?
a. James hit a deer while driving to work on a foggy morning, killing the deer and causing
$2000 in damage to his car.
b. James backed into a vehicle in the grocery store parking lot and caused $2000 in damages
to his own car and $3000 in damages to the other vehicle.
c. An uninsured driver ran a stoplight, hit James’ car, and caused $2000 in damages to James’
car and $3000 in damage to his own vehicle.
d. James car was in the parking lot at work during a severe hailstorm where $2000 damage
was done to his vehicle.

Answer 31

B

Question 32

Eric has chosen Amanda to be the beneficiary of his life insurance policy. What does this mean for
Amanda?
a. Amanda must pay the insurance premiums to keep the policy in effect.
b. Amanda will receive any proceeds if the Eric dies
c. Amanda will receive a commission for selling Eric his life insurance policy.
d. Amanda is required to serve as the executor of Eric’s estate.

Answer 32

B

Question 33

It is recommended that life insurance be purchased when the:

a. individual reaches the age of 50
b. individual flies in an airplane
c. individual gets their first job
d. individual has dependents

Answer 33

D

Question 34

What is the difference between property and liability insurance?
a. Property insurance pays for loss to the insured person whereas liability insurance pays for
loss to other people
b. Property insurance pays for loss to other people whereas liability insurance pays for loss to
the insured person
c. The difference between property and liability insurance depends on the specific insurance
policy purchased
d. The difference between property and liability insurance depends on whether automobile,
homeowners, or renters insurance is purchased

Answer 34

A

Question 35

Patty recently moved into a new apartment with her friend Emma. Who is responsible for
purchasing renter’s insurance?
a. The property manager
b. Patty and Emma’s parents
c. Patty and Emma
d. Renters insurance is not necessary

Answer 35

C

Question 36

What is NOT an example of a durable good?

a. Automobile
b. Cell phone
c. Food
d. Clothing

Answer 36

C

Question 37

Perry would like to purchase a new car. What should he consider first in the planned buying
process?
a. Research different sellers to determine where to purchase the car from
b. Evaluate the opportunity cost and trade‐offs to purchasing the car
c. Rank product features in order of importance
d. Calculate the cost of ownership

Answer 37

B

Question 38

Sally is researching a new tablet and conducting research using a variety of sources. What is an
example of an unbiased source?
a. Product review from a seller
b. Product review from an individual making money from the sale
c. A product review that is five years old
d. A product review from an independent company

Answer 38

D

Question 39

Why is investing in product research an important part of the planned buying process?

a. Research enhances satisfaction
b. Research decreases satisfaction
c. Research is too time consuming
d. Research is only necessary for big purchases

Answer 39

A

Question 40

Paxten is purchasing a new phone online. What is the best tip should he consider to do so safely
and maximize his satisfaction?
a. Use a debit card
b. Always use the seller offering the lowest price
c. Review shipping and return policies in advance
d. Purchase a warranty

Answer 40

C

Question 41

In which scenario below should renters insurance be considered?
a. Steve and Teri have purchased a home in a rural area.
b. Tim and Hanna are living with his parents in the basement of their home for six months
while flood damage is being repaired in their home. They are paying his parents rent during
the time they are living in their home.
c. Zach and Leah have rented an apartment in an urban area.
d. Don and Denise are landlords for several rental properties.

Answer 41

C

Question 42

A rental agreement is often referred to as:

a. a lease
b. an amenity
c. renters insurance
d. a mortgage

Answer 42

A

Question 43

Chad has decided to rent an apartment and is gathering information to be sure he has enough
money saved for all the expenses when his moves in. His landlord explained to him that he would
need to pay a fee to cover any potential damages that might occur while Chad is living in the
apartment. This fee is called the:
a. rental agreement
b. down payment
c. amenities
d. security deposit

Answer 43

D

Question 44

Rent is defined as:

a. the cost of using someone else’s property
b. the fee charged for performing property management tasks
c. an advance payment for costs beyond normal wear and tear
d. the purchase price of a housing unit

Answer 44

a

Question 45

The equity that you build by making mortgage payments is:

a. the value of the home after the mortgage debt is subtracted
b. purchasing a housing unit as rental property
c. a home loan where the real estate is collateral
d. the amount of money paid on the home at the time of purchase

Answer 45

a

Question 46

Alyssa is considering purchasing a car and wants to be sure she can afford to drive it during the
school year when she doesn’t have a job. Which expense WOULD NOT be considered part of the
total transportation expenses:
a. automobile payment
b. fuel
c. parking
d. depreciation

Answer 46

d

Question 47

Brett borrowed money to purchase a vehicle without making a down payment and now he owes
more on the vehicle than it is worth. This situation is referred to as:
a. depreciation
b. being upside down on the loan
c. leasing
d. a hidden cost

Answer 47

b

Question 48

Melissa needs to a vehicle and is considering leasing one. This means:
a. She would be purchasing the vehicle by making payments over time.
b. She would be renting the vehicle by making payments over time, although the vehicle title
would remain with the lease grantor.
c. Her depreciation costs will likely be higher.
d. She will need to pay a larger down payment to offset the lease agreement fees.

Answer 48

b

Question 49

When making food decisions, which of the following is most likely to be least expensive?

a. convenience foods
b. fast food restaurants
c. ready‐to‐eat foods
d. full‐service restaurants

Answer 49

a

Question 50

Shelby is working on her spending plan and would like to spend less on her food for 6 months as
she saves toward purchasing a more reliable vehicle. As she makes her plan, which factor would be
least important to consider:
a. How much time she has available to prepare food.
b. The skills she has acquired for preparing meals.
c. The nutritional value of the foods she purchases.
d. Her personal preferences

Answer 50

d