Econ- Chapter 4, Section 1 Question Preview (ID: 60024)
Going Into Debt.
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What do you have to pay when you borrow funds?
a) Principal plus collateral
b) Principal plus interest
c) The amount you borrowed
d) Twice the amount of the loan
What question should the decision to use credit be based on?
a) How much can I save?
b) What is my monthly budget?
c) How much does the item cost?
d) Is the satisfaction I get from the purchase greater than the interest payments?
Why do banks lend money to people?
a) To help the economy
b) To increase bank deposits
c) To charge interest for loaning the money and that is profit for the banks
d) To ensure there are enough car and home sales
Which of the following is an example of a durable good?
a) Wash machine
b) Hairbrush
c) Blouse
d) Gasoline
Why do people go into debt?
a) To buy an item now instead of saving for it
b) To conserve cash
c) To get a pay day advance
d) To save money
The amount originally borrowed in a a loan:
a) Credit
b) Principal
c) Interest
d) Installment debt
Amount the borrower must pay for the use of someone else's funds:
a) Credit
b) Principal
c) Interest
d) Installment debt
Type of loan repaid with equal payments, or installments, over a specific period of time:
a) Credit
b) Principal
c) Interest
d) Installment debt
Manufactured items that have a life span longer than 3 years:
a) Durable goods
b) Capital goods
c) Tangible goods
d) Installment goods
Installment debt owed on houses, buildings, or land:
a) Interest
b) Principal
c) Credit
d) Mortgage
The largest form of installment debt in this country is: a
a) Credit card
b) Car loan
c) Mortgage
d) Personal loan
To buy goods and services now with the promise to pay for them in the future:
a) Credit
b) Principal
c) Interest
d) Installment debt
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