Deck 12: The Importance of Making Sound Economic Decisions

Question 1

____ have the highest median family incomes.

A) Male householders with no wife present
B) Female householders with no husband present
C) Married couple households
D) Cohabiting couple households

Answer 1

C

Question 2

Courting couples rarely discuss:

A) sex.
B) personal dislikes.
C) family planning.
D) money.

Answer 2

D

Question 3

Cox and Demmitt believe that economic stability and security enable families to focus their attention on:

A) meeting basic survival needs.
B) the pursuit of individual happiness.
C) paying bills and consolidating debt.
D) enhancing the quality of life.

Answer 3

D

Question 4

Consumer counseling agencies help clients who are having financial troubles by:

A) providing low interest loans.
B) guiding them toward better money management.
C) issuing debit cards.
D) representing them in bankruptcy court.

Question 5

Most young people start down the road to continued debt by purchasing:

A) automobiles.
B) clothes.
C) electronic items.
D) entertainment expenses.

Question 6

The American family is:

A) society's main production unit.
B) the major distribution unit of society.
C) no longer an important economic unit.
D) a consuming unit.

Question 7

Cox and Demmitt believe that personal and family statuses are derived from:

A) work.
B) competition.
C) credit.
D) attitudes.

Question 8

Families heading toward serious financial problems are likely to exhibit all of the following characteristics EXCEPT:

A) lack of retirement planning.
B) too many liquid assets.
C) a strong belief that the problem will disappear.
D) no regular savings plan.

Question 9

The nation with the highest gross national income per person is:

A) Norway.
B) the United States.
C) Sweden.
D) Saudi Arabia.

Question 10

Most women enter the labor force to:

A) escape the pressures of child rearing.
B) express their independence.
C) find a constructive outlet for their spare time.
D) help make ends meet.

Question 11

Most bankruptcies are caused by:

A) rising debt.
B) gambling on big investments.
C) divorce.
D) acute recessions.

Question 12

The highest rates of divorce, separation, and desertion are reported by:

A) wealthy people.
B) middle-class individuals.
C) the working class.
D) poor people.

Question 13

Newlywed couples are likely to experience a:

A) slight decline in their standard of living.
B) drastic decline in their standard of living.
C) small rise in their standard of living.
D) major increase in their standard of living.

Question 14

Unemployment, especially beyond six months, is associated with all of the following EXCEPT:

A) strained relationships.
B) increased intimacy.
C) loss of self-respect.
D) depression.

Question 15

Most couples who go bankrupt are:

A) super rich.
B) millionaires.
C) upper-middle class.
D) lower- and middle-class.

Question 16

One of the first things threatened by unemployment is:

A) commitment.
B) self-esteem.
C) disclosure.
D) individuality.

Question 17

A key component for maintaining control of your economic life is:

A) earning more.
B) planning.
C) good relationships.
D) consumer counseling.

Question 18

Which of the following exerts the great economic influence?

A) singles
B) families
C) agriculture
D) television

Question 19

An important measure of family function is:

A) wealth.
B) personal spending.
C) consumer debt.
D) personal income.

Question 20

The most common source of conflict for American married couples is:

A) in-laws.
B) communication.
C) money.
D) jealousy.

Question 21

Discount interest is most likely to be charged on the purchase of:

A) a franchise.
B) an automobile.
C) undeveloped land.
D) a first mortgage.

Question 22

Lower marital satisfaction is caused by all EXCEPT:

A) worry about overdue bills.
B) disappointment about not being able to buy what they want.
C) discontent about the way they spend their money.
D) the benefits available to them.

Question 23

A slowdown in consumer spending will:

A) eliminate the federal deficit.
B) have dire consequences for the economy.
C) make it more difficult to get credit.
D) increase the price of investment debt.

Question 24

Consumer debt is:

A) high-priced money.
B) beginning to decline.
C) associated with freedom and independence.
D) the best way to measure a country's wealth.

Question 25

Homes are purchased with:

A) discount interest loans.
B) simple interest loans.
C) consumer credit loans.
D) compound interest loans.

Question 26

A borrower with a discount interest loan pays:

A) interest on the full amount of the loan for the entire time period.
B) interest on the unpaid balance of the loan.
C) a large balloon payment at the beginning of the repayment period.
D) no interest.

Question 27

Real-property loans have lower interest rates because:

A) borrowers have better credit ratings.
B) they are guaranteed by the government.
C) there is more competition among lenders.
D) property retains value.

Question 28

Simple interest is charged for:

A) home appliances.
B) new car loans.
C) investment debt.
D) credit card transactions.

Question 29

Student debt has risen for all types of colleges, but the highest levels of debt belong to those who attend:

A) private not-for-profit colleges.
B) private for-profit colleges.
C) state universities.
D) community colleges.

Question 30

What percentage of credit card holders neglect to pay their balance every month?

A) 60%
B) 50%
C) 40%
D) 30%

Question 31

Investment debt is:

A) worse than consumer debt.
B) low-priced money.
C) fueled by automobile sales.
D) common among young couples.

Question 32

Cox and Demmitt compare credit to:

A) lust.
B) friendship.
C) slavery.
D) alcohol.

Question 33

People who pay for their credit card purchases at the end of the month to avoid interest fees are enjoying the benefits of:

A) simple interest.
B) discount interest.
C) open credit.
D) compound interest.

Question 34

Lower-priced money is used for:

A) recreation and entertainment.
B) furniture.
C) discretionary spending.
D) tangible assets.

Question 35

A New Jersey woman was given a loan to purchase 60 acres of undeveloped land in Arizona. The type of interest she will pay on this transaction is:

A) compound interest.
B) simple interest.
C) discount interest.
D) direct interest.

Question 36

A borrower who only pays interest on the unpaid balance of a loan is paying:

A) simple interest.
B) compound interest.
C) discount interest.
D) high interest.

Question 37

When repaying a loan with discount interest, the true interest is about:

A) four times the stated interest rate.
B) twice the stated interest rate.
C) half the stated interest rate.
D) one-fourth the stated interest rate.

Question 38

A working mother charged her children's Christmas gifts on her department store credit card. The type of interest she will pay on this transaction is:

A) direct interest.
B) simple interest.
C) discount interest.
D) compound interest.

Question 39

Which of the following has allowed Americans a higher standard of living?

A) wage inflation
B) overtime pay
C) protective labor laws
D) credit buying

Question 40

Simple interest is:

A) interest paid at the origin of the loan.
B) interest accumulated and added to the face amount of the loan.
C) interest charged only on the outstanding balance of a loan.
D) waiving of interest on a complex loan.

Question 41

The most important step in effective money management is to:

A) plan an effective family budget.
B) determine how most monetary decisions will be made.
C) recognize the common consumer traps.
D) develop the skills necessary for wise spending.

Question 42

Charlie and Rachel are newlyweds. They both went through a divorce previously. What is the most likely scenario of their monetary situation?

A) All situations are unique, so theirs cannot be determined.
B) It is likely that Charlie and Rachel will maintain separate funds.
C) They will most likely have a joint account and give themselves an allowance.
D) Charlie will allow Rachel to make all of the decisions.

Question 43

Financial independence is synonymous with:

A) freedom.
B) bankruptcy.
C) credit.
D) marriage.

Question 44

In The Hidden Persuaders, Vance Packard questioned the morality of:

A) discount interest.
B) advertising techniques.
C) consumer counseling.
D) open credit.

Question 45

Vance Packard links the "psychological obsolescence" of products to:

A) modern advertising.
B) personality flaws.
C) consumer power.
D) production cutbacks.

Question 46

The first step in the budgeting process is to allot money for:

A) savings.
B) necessities.
C) education.
D) retirement.

Question 47

The factor(s) that is/are the most important determinant of economic contentment is/are:

A) attitudes and values.
B) one's economic level.
C) consumer wants.
D) thrift and saving.

Question 48

Mike and Laura are married. Mike works outside the home, while Laura does not. Money may be used as a source of ____________ by Mike.

A) need
B) happiness
C) sharing
D) power

Question 49

According to the text, why is advertising immoral?

A) Advertising is false-the products do not do what they advertise.
B) They force companies to spend money that could pay employees.
C) They create problems to create need.
D) It manipulates consumers into buying regardless of consequences.

Question 50

According to John Kenneth Galbraith, wants originate in:

A) advertisement slogans.
B) the personality of the consumer.
C) our biological instincts.
D) a person's peer group.

Question 51

The term used to describe a spending plan that assures what is needed and wanted is attained is:

A) open-credit.
B) budget.
C) consumer trap.
D) installment buying.

Question 52

An example of a discretionary expenditure is:

A) going to the grocery store.
B) replacing children's worn-out clothes.
C) a trip to Disney World.
D) maintaining a car.

Question 53

Americans spend the largest percentage of their income on:

A) food.
B) taxes.
C) housing.
D) medical care.

Question 54

The money management method that is most likely to work in a two-career, highly egalitarian marriage where the spouses have different values about saving and spending is where the:

A) husband makes all money decisions.
B) spouses have separate funds and share financial obligations.
C) spouses have a joint account upon which each can draw.
D) wife makes all money decisions.

Question 55

John Kenneth Galbraith argues that wants are capable of:

A) fulfilling needs.
B) liberalizing values.
C) indefinite expansion.
D) reconciling conflict.

Question 56

One of the propositions in Galbraith's theory of consumer demands is the notion that:

A) tighter credit restrictions will reduce the demand for products and create inflation.
B) the urgency of wants does not diminish appreciably as more of them are satisfied.
C) thrift and saving are gradually replacing buying and spending.
D) advertisers have a moral responsibility to the American public.

Question 57

Saving is really:

A) a discount loan.
B) investment debt.
C) deferred spending.
D) a consumer good.

Question 58

Pooling money is more highly favored by married couples than cohabiting couples, probably because married couples feel more:

A) permanent.
B) in debt.
C) intimate.
D) generous.

Question 59

Which of the following is an example of a company creating a "need" for their product?

A) Charmin maintaining the same production in toilet paper
B) Ford creating a new vehicle that allows you to open the tailgate with your foot
C) Whirlpool offering a sale
D) McDonalds selling Coke Zero

Question 60

Vance Packard attributes the irrational and impulsive buying of family food to:

A) advertising.
B) attitudes.
C) values.
D) anxiety.

Question 61

A more important measure of the economy than the inflation rate is:

A) the stock market index.
B) real per capita income.
C) the cost of living adjustment.
D) discount interest rates.

Question 62

A can of Campbell's vegetable soup cost 10 cents in 1933 and costs $1.19 today. The price of the soup from both 1933 and today is called the:

A) real value.
B) nominal cost.
C) fixed price.
D) inflationary price.

Question 63

Which of the following families is most likely to live in poverty?

A) Jo and Fred, an African American couple in New York City
B) Sue, a single mother with two children
C) Tom and Stacy, who live in rural West Virginia
D) Ricky and his family, recent immigrants from Mexico

Question 64

When Sabrina went to trade in her old car as a down payment on a new one, the salesperson offered her a lot of money for her vehicle. When she was ready to agree to the trade-in terms, the manager informed her that he could let her have the new car, but he could not give her as much for her trade-in as the salesperson had promised. This is an example of:

A) high balling.
B) bait and switch.
C) low balling.
D) the hard sell.

Question 65

Which of the following groups in the United States has the highest median income for married couples?

A) whites
B) blacks
C) Hispanics
D) Asians

Question 66

In a general budget, the savings category is located under the ____ heading.

A) flexible expenditures
B) undirected spending
C) hidden expense
D) fixed payment

Question 67

A salesperson who says that you must buy a sale item today because the price is going up tomorrow is practicing:

A) low balling.
B) bait and switch.
C) the hard sell.
D) high balling.

Question 68

A married couple wanted to buy a mobile home. They were ready to sign a contract after the sales representative offered them a sizeable discount on the model they had selected. The General Manager of the dealership then voided the offer and informed them that they would have to pay an additional two thousand dollars to purchase the home they had fallen in love with. This is an example of:

A) bait and switch.
B) low balling.
C) the hard sell.
D) high balling.

Question 69

The low ball technique is often used in:

A) telemarketing.
B) the stock market.
C) car sales.
D) real estate.

Question 70

The key to making a budget work for you is to review your figures every:

A) week.
B) month.
C) six months.
D) year.

Question 71

Tom has bad credit and would like to fix it. He sees an advertisement from a company that can fix his credit problems. He calls and pays them a large fee to erase his credit history. The company cannot erase his history. Tom has been taken by a ___________ scam.

A) telemarketing
B) hard sell
C) credit repair
D) magazine

Question 72

Large ____ differences between various Hispanic groups account for much of the differences in poverty rates.

A) cultural
B) age
C) education
D) family size

Question 73

Overall, median income of the black population is substantially lowered by:

A) corporate restructuring and downsizing.
B) the high number of female households.
C) high rates of alcohol and drug addiction.
D) negative attitudes toward work.

Question 74

Inflation simply indicates that:

A) the stock market has crashed.
B) unemployment has reached double digits.
C) nominal prices have risen.
D) government bonds are worthless.

Question 75

Edith saw a product on television she wanted. The commercial told her to call a number and that the offer was only good today. Edith called to purchase the product. Edith was victim to which of the following consumer traps?

A) telemarketing
B) bait and switch tactics
C) high balling
D) hard sell

Question 76

The real economic story for African Americans over the last 40 years has been the emergence of:

A) free enterprise zones.
B) the African American middle class.
C) government job training programs.
D) a new entrepreneurial spirit.

Question 77

The following group that will probably be hurt the least by mild inflation is:

A) retirees.
B) disabled persons.
C) middle-class professionals.
D) families on fixed incomes.

Question 78

The United States has experienced almost constant inflation since:

A) the colonial period.
B)1920
C) the Great Depression.
D) World War II.

Question 79

Wise spending is associated with all of the following practices EXCEPT:

A) buying used instead of new items.
B) studying seasonal price fluctuations.
C) selecting off-brand labels.
D) purchasing items when they're on sale.

Question 80

When John responded to a newspaper ad for a $350 washing machine, the salesperson indicated that they had sold out and proceeded to guide him to a much more expensive machine. This is an example of:

A) low balling.
B) bait and switch.
C) hard selling.
D) false advertisement.