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Econ- Chapter 4, Section 1
Test Description: Going into Debt
Instructions: Answer all questions to get your test result.
1) To buy goods and services now with the promise to pay for them in the future:
A
Interest
B
Principal
C
Credit
D
Installment debt
2) The amount originally borrowed in a a loan:
A
Principal
B
Credit
C
Installment debt
D
Interest
3) Amount the borrower must pay for the use of someone else's funds:
A
Credit
B
Installment debt
C
Principal
D
Interest
4) Type of loan repaid with equal payments, or installments, over a specific period of time:
A
Interest
B
Installment debt
C
Credit
D
Principal
5) Manufactured items that have a life span longer than 3 years:
A
Installment goods
B
Durable goods
C
Tangible goods
D
Capital goods
6) Installment debt owed on houses, buildings, or land:
A
Mortgage
B
Principal
C
Credit
D
Interest
7) The largest form of installment debt in this country is: a
A
Mortgage
B
Credit card
C
Car loan
D
Personal loan
8) Why do people go into debt?
A
To conserve cash
B
To save money
C
To buy an item now instead of saving for it
D
To get a pay day advance
9) What question should the decision to use credit be based on?
A
What is my monthly budget?
B
Is the satisfaction I get from the purchase greater than the interest payments?
C
How much can I save?
D
How much does the item cost?
10) Why do banks lend money to people?
A
To increase bank deposits
B
To charge interest for loaning the money and that is profit for the banks
C
To help the economy
D
To ensure there are enough car and home sales
11) Which of the following is an example of a durable good?
A
Hairbrush
B
Blouse
C
Wash machine
D
Gasoline
12) What do you have to pay when you borrow funds?
A
Principal plus collateral
B
Twice the amount of the loan
C
The amount you borrowed
D
Principal plus interest
*select an answer for all questions
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