How Credit Works — Unit test Answers

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1
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Look at the table below showing an example of a checkbook ledger.

Question illustration
A
Adrienne forgot to include the $2.00 ATM transaction fee.
B
Adrienne did not use $320.00 as her starting balance.
C
Adrienne deducted $23.50 from her balance instead of $32.50.
D
Adrienne did not enter her ATM withdrawal correctly.
2
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Read what President Bill Clinton said about interest rates in his 1996 State of the Union address."Lower interest rates have made it easier for businesses to borrow and to invest and to create new jobs. Lower interest rates have brought down the cost of home mortgages, car payments, and credit card rates to ordinary citizens.”—President Bill Clinton, January 23, 1996

A
Lower interest rates lead to higher prices for goods.
B
Lower interest rates do not help the economy improve.
C
Lower interest rates lead to more spending and more jobs.
D
Lower interest rates are better for businesses than for citizens.
3

Missing one payment may cause borrowers to

A
need a credit report.
B
lose their collateral.
C
be charged a late fee.
D
need a down payment.
4

Which is the best question for Joe to ask himself when deciding whether to open a checking or savings account?

A
Is there an ATM near my home or work?
B
Does the bank offer free checking?
C
If I need a loan, will they give it to me?
D
Why am I opening a bank account?
5

What is the definition of gross income?

A
amount of income saved per year
B
amount earned before deductions
C
amount of tax deducted from income
D
amount received after deductions
6

[BLANK]

A
increase
B
limit
C
stop
D
maximize
7

What is the definition of inflation?

A
when a company’s profits go up
B
when the interest rates on bank accounts rise
C
when there is an increase in the price of goods and services
D
when there are more products created than demand for them
8

What is one way banking has changed in the 21st century?

A
Customers can now open savings accounts that earn interest.
B
Customers can now apply for checking accounts at all banks.
C
Customers can now get personal loans at local bank branches.
D
Customers can now do banking on their computers or phones.
9

Credit unions differ from retail banks because they are

A
owned by their members.
B
owned by their employees.
C
owned and managed by private corporations.
D
owned by shareholders who purchased stock.
10

Which is an example of a financial change that would require budgetary consideration?

A
paying monthly rent
B
purchasing furniture
C
saving a certain amount
D
buying a monthly bus pass
12

Which living expense needs to be included in the budget of someone renting an apartment?

A
property taxes
B
insurance
C
down payment
D
maintenance
13

Why were savings and loans (S&Ls) originally established?

A
to help people invest in small businesses
B
to help people save money
C
to help people buy homes
D
to help people invest in the stock market
14

The best reason to record income at the top of a budget is

A
to easily add expenses to it.
B
to know how much money is available.
C
to avoid spending too much money.
D
to see that is is more important than expenses.
15

[BLANK]

A
gross
B
discretionary
C
net

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