Deck 21: Consumer Lending and Borrowing

Question 1

The total outstanding debt owed by U.S. households exceeded $7 trillion in 2000.

Answer 1

True

Question 2

A savings plan allowing withdrawals or deposits at any time is known as a money-market deposit account (MMDA).

Answer 2

False

Question 3

The right of rescission gives the consumer pledging his or her home as collateral for a loan the right to cancel or rescind a credit agreement provided the loan qualifies under U.S. law.

Answer 3

True

Question 4

A wrap account allows consumers to roll-over their credit cards.

Question 5

Pension fund reserves in total ranked at the top among all household assets, exceeding $11 trillion by the year 2006.

Question 6

The rapidly rising cost of college tuition, averaging about 6% annually, on average more than twice the yearly rise in the consumer Price Index, has led to a soaring volume of education loans for students.

Question 7

Credit unions are permitted to offer their own version of the NOW account known as the:

A) Share draft
B) Consumer Cash Management Account
C) Super NOW
D) MMDA
E) None of the above

Question 8

An interest-bearing checkbook deposit with up to six preauthorized third-party transfers out of the account, only three of which may be by check, is known as a (or an):

A) Super NOW
B) NOW
C) Share draft
D) Automatic transfer service
E) None of the above

Question 9

Households using credit cards to borrow money rose to over ____ percent during the late-1990s.

A) 50
B) 40
C) 60
D) 80
E) 90

Question 10

Pension fund reserves in total ranked at the top among all household assets, exceeding ________ trillion by the year 2006.

A) $4.5 trillion
B) $8.7 trillion
C) $11 trillion
D) $15 trillion
E) None of the above

Question 11

Recently the Federal Reserve estimated that US households held nearly ______________ in owner occupied housing and consumer durable goods.

A) $25 trillion
B) $14 trillion
C) $32 trillion
D) $20 trillion
E) None of the above

Question 12

In 2006, the total wealth of American households stood at _______________.

A) $51 trillion
B) $40 trillion
C) $75 trillion
D) $64 trillion
E) None of the above

Question 13

Get you to listen my US households climbed above ___________________ and 2006, representing about 4/5 of all household debt.

A) $4 trillion
B) $8 trillion
C) $10 trillion
D) $15 trillion
E) None of the above

Question 14

The rapidly rising cost of college tuition, averaging about ___________________ annually, on average more than twice the yearly rise in the consumer Price Index, has led to a soaring volume of education loans for students.

A) 4%
B) 2%
C) 6%
D) 7%
E) None of the above

Question 15

Which sector of the economy usually provides the greatest amount of loanable funds for borrowers to draw upon? Does this sector make primarily direct loans or indirect loans to borrowers?

Question 16

What is currently the most important financial asset held by U.S. households? Which financial asset is in second place in household (consumer) portfolios? Third place?

Question 17

In what ways do the financial instruments and services listed above benefit consumers?

Question 18

How much money do U.S. households owe today? Do you believe that consumers are too heavily in debt? Why or why not?

Question 19

Into what broad categories is consumer borrowing normally divided? Which category is most important and why?

Question 20

What is the difference between credit cards and debit cards?

Question 21

Why is the distinction between installment users and convenience users of credit cards important? Which are you?

Question 22

What advantage does a credit card grant its owner? A debit card? What are the principal disadvantages of each?

Question 23

What role do you believe inflation plays in the borrowing and savings decisions of households today?

Question 24

What factors do lending institutions usually look at when evaluating a consumer loan application? Why?

Question 25

Who are the principal types of consumer lending institutions in the financial system?

Question 26

Many lenders contend that loans to individuals and families are among the riskiest loans made within the financial system? Do you believe this is true? What kinds of risk do consumer loans present to a lender? How can lenders help combat this risk exposure?

Question 27

What is Truth in Lending? Please describe the law's major provisions and explain why it was enacted in the first place.

Question 28

What protections are offered to individual and family consumers under the Fair Credit Billing Act? The Consumer Leasing Act? The Fair Credit Reporting Act? The Fair Credit and Change Card Disclosure Act? The Financial Services Modernization Act?

Question 29

What are the principal purposes of the Community Reinvestment Act? The Equal Credit Opportunity Act? The Fair Housing Act? The Home Mortgage Disclosure Act? Please assess the benefits and costs of these laws.

Question 30

What changes in consumer rights and required disclosure of information to the consumer occurred when the Financial Institutions Reform, Recovery and Enforcement Act was passed? With passage of the Truth in Savings Act? The FDIC Improvement Act?

Question 31

Why have so many consumer bankruptcies occurred in recent years? How might these bankruptcies be prevented?