AnswersOR-Grade 8 US HistoryMaking Spending Decisions

Making Spending Decisions — Cumulative exam Answers

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Which questions should Robert ask himself before investing the $10,000 he inherited? Select four options.How am I protected as an investor? Are my friends investing in a similar way? What guarantees are in place so I make money? What taxes will I have to pay on this investment?How do the risks compare to the potential gains? What are the chances that the investment will fail?

A
How am I protected as an investor?
B
Are my friends investing in a similar way?
C
What guarantees are in place so I make money?
D
What taxes will I have to pay on this investment?
E
How do the risks compare to the potential gains?
F
What are the chances that the investment will fail?
2
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Which statement best describes the role of a credit agency?

A
It tracks the use of credit for lenders.
B
It predicts future earning potential for lenders.
C
It teaches how to make smart financial decisions.
D
It shows how saving money makes financial sense.
3

Which is an example of a short-term investment?

A
bonds
B
retirement funds
C
savings accounts
D
houses
4

Why do some lenders require borrowers to secure credit?

A
to prevent defaults
B
to guarantee full repayment
C
to avoid any losses
D
to reduce risk
5

Which financing option has the highest overall costs?

A
rent to own
B
credit card
C
installment
D
cash
6

When discussing a loan, interest rates are expressed as a percentage of the

A
investment fees.
B
the principal.
C
the profit.
D
taxes owed.
7

Interest paid on a loan is calculated as a percentage of the

A
principal.
B
amount owed.
C
compounded principal.
D
collateral.
8

Which action is the most important for managing credit effectively?

A
Minimize your debt by paying off what you owe as soon as possible.
B
Open several credit cards to increase your borrowing limit.
C
Make only the minimum payment each month to avoid late fees.
D
Avoid checking your credit report to prevent score changes.
9

marginalcomparisonemotionalresearch

A
marginal
B
comparison
C
emotional
D
research
10

Which of these affect real investment value? Check all that apply.fees and expensesinflationnominal interest ratepretax returnstaxes

A
fees and expenses
B
inflation
C
nominal interest rate
D
pretax returns
E
taxes
11

salarytuitionhourly payemployee benefits

A
salary
B
tuition
C
hourly pay
D
employee benefits
12

one yeartwo yearsthree yearsfour years

A
one year
B
two years
C
three years
D
four years
13

Which of these are ways that identity theft can happen? Check all that apply.by forgeryby phishingby fraudby financial engineeringby social engineering

A
by forgery
B
by phishing
C
by fraud
D
by financial engineering
E
by social engineering
14

Changes in monetary policy occur when the Federal Reserve

A
adjusts business laws to affect the money supply.
B
changes taxation levels to affect the economy.
C
changes spending levels to affect the economy.
D
adjusts interest rates to affect the money supply.
15

Martin receives an e-mail about a money-making opportunity from a sender who asks for his bank account number. The best way to avoid having his identity stolen is to

A
contact the government and report the e-mail.
B
delete the e-mail and mark it as spam.
C
open the e-mail and follow the steps outlined.
D
contact the police and file a phishing report.
16

What do borrowers use to secure a mortgage loan? Check all that apply.a credit carda down paymenta houselanda vehicle

A
a credit card
B
a down payment
C
a house
D
land
E
a vehicle
17

Which statement best describes a college education?

A
An employer typically pays for it in order to educate an employee.
B
The student pays for it, and it is required in many professions.
C
It usually takes two years to complete and tends to focus on technical training.
D
It lasts a short period of time—only a few months, or even weeks.
18

The Hendersons are hosting a barbecue for five people and want to purchase enough chicken for everyone to have two pieces. Which option makes the most financial sense?

A
10 individual chicken breasts at $3 each
B
5 two-packs of chicken breasts at $5 each
C
a 12-pack bag of chicken at $20
D
a 20-pack bag of chicken at $35
19

Putting money into more than one kind of investment at a time is called

A
liquidity.
B
sunken cost.
C
diversification.
D
compound interest.
20

How does time generally affect the risk of an investment?

A
Short-term investments are generally less risky than long-term investments.
B
Long-term investments are generally more risky than short-term investments.
C
Time has no effect on the risk of an investment.
D
Short-term investments are generally more risky than long-term investments.

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