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Dollars And Sense Unit 2 Test Review MC
Test Description: Unit 2 Debt Test Multiple Choice Questions
Instructions: Answer all questions to get your test result.
1) Which of the following is NOT a factor in determining a FICO score?
A
using credit cards
B
paying cash for all purchases
C
taking out a mortgage on a house
D
getting a personal loan from the bank
2) Which of the following is not a good idea for getting out of debt?
A
sell something
B
get a part time job or work overtime
C
Borrow money from your parents to pay for the debt
D
quit borrowing money
3) Which of the following items cannot be done with a debit card but can be done with a credit card?
A
Go into debt
B
purchase something online
C
purchase an airline ticket
D
rent a car
4) What factors affect a credit score?
A
duration of debt
B
new debt
C
type of debt
D
all of these
5) Which of the following is not a recommended step in the Drive Free method of purchasing a car?
A
Plan your purchase in advance using the sinking fund method of saving
B
Start with an inexpensive car and gradually move up in car value as your savings increase
C
Place your savings in a mutual fund so that your money can make more money
D
Explore new car dealerships for the best interest rate
6) Which of the following is not recommended in the debt snowball method of getting out of debt?
A
List your debts in order from smallest to largest balance and focus on paying the smallest one first
B
Every extra dollar you get should be thrown at the largest debt first
C
Every time you pay off a debt, you add its old minimum payment to your next debt payment
D
Attack your debt with intensity
7) What is paycheck garnishment?
A
A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck
B
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments.
C
A legal procedure for dealing with debt problems of individuals and businesses
D
Process of taking something back for failure to make payments
8) Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one's spending behavior.
A
Studies show that consumers typically spend more when using credit as opposed to cash purchases
B
Studies show that there is no change in spending behavior whether a person uses cash or credit
C
People typically spend less when they know what they that they are earning credit card rewards
D
Spending behavior does not matter as long as you pay off the credit card balance each month
9) Which of the following is not a credit myth?
A
You have arrived financially once you get approved for a credit card
B
Debt is a tool and should be used to create prosperity
C
Borrowing money can have serious consequences and prevent you from building wealth
D
The lottery and other forms of gambling will make you rich
10) If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
A
Amount of your down payment and employment history
B
History of rental and utility payments
C
None o these; You cannot get a mortgage without a credit history
D
History of payments, down payment, and employment history
11) A credit score is intended to measure:
A
Your income level
B
Your financial success
C
The risk of your not repaying debt
D
The amount of money you have in the bank
12) Individual account information is removed from your credit report seven years after the last activity on the account, except for Chapter 7 bankruptcy, which stays on your credit report for:
A
10 years
B
5 years
C
20 years
D
1 year
*select an answer for all questions
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