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Credit And Insurance
Test Description: Econ mini unit #4
Instructions: Answer all questions to get your test result.
1) What is someone’s net worth?
A
The value of all of their assets, minus liabilities like loans and other expenses
B
How much cash they have on hand and in the bank
2) What happens if you don’t pay off your credit card balance by the end of the month?
A
You will owe the balance plus interest, and your available balance will be less that amount
B
Your credit card will be canceled
3) Why should you avoid making only the minimum payment on your credit card?
A
You will have more money to spend without consequences.
B
You will accrue interest debt on the money you are not paying back, which will compound over time
4) What is compound interest?
A
Compound interest gets applied to the original balance plus all accumulated interest.
B
Compound interest results in less debt for borrowers and less profit for investors
5) What is simple interest?
A
When an account uses simple interest, interest compounds over time on the original balance plus accumulated interest
B
When the interest rate only applies to the principal (original) balance or amount.
6) How can you use compound interest to build wealth?
A
Use your credit card a lot and accumulate debt by only paying the minimum payment
B
You earn interest on the original investment, then you earn interest on that amount + the interest you earn
7) The purpose of insurance is to ______
A
Transfer risk and protect yourself from unforeseen events
B
Pay people to perform tasks for you
8) What is an insurance ‘premium’?
A
The amount of your own money you have to pay for health expenses before your insurance starts to pay
B
The amount you pay to have health insurance every month.
9) What is an insurance ‘deductible’?
A
The amount of your own money you have to pay for health expenses before your insurance starts to pay
B
The amount you pay to have health insurance every month.
10) What is an insurance ‘limit’?
A
The amount you pay to have health insurance every month.
B
The highest amount your insurance will pay for a medical expense
11) What determines your insurance premium?
A
The predicted likelihood of you having an event that will lead to loss or expenses
B
Everyone pays the same amount for insurance premiums
*select an answer for all questions
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