Share Personal Finance Final Exam Review
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When interest rates increase, how does that affect consumer spending?
Consumer spending stays the same
Has no effect on consumer behavior
People borrow and spend more money
People increase their savings and reduce spending
Which budgeting method allocates income into specific categories like needs, wants, and savings?
zero-based budgeting
line-item budgeting
50/30/20 rule
envelope system
What is a primary benefit of maintaining a good credit score?
Lower interest rates when borrowing money
Unlimited credit card rewards
Guaranteed approval for all loans
Free credit monitoring services
When creating a budget, what should be prioritized first?
Entertainment expenses
Essential living expenses
Luxury items
Investment opportunities
What is a common warning sign of identity theft?
Annual credit reports
Monthly utility bills
Receiving regular credit card sttements
Unexplained withdrawals from bank accounts
How do higher interest rates affect the housing market?
Lowers monthly mortgage payments
Accelerates home construction
Reduces the number of qualified buyers
Increases home affordibility
What is a key advantage of using a credit card for purchases?
Guaranteed fraud protection
No interest charges
Building credit history
Unlimited spending power
Which budgeting practice helps prevent overspending?
Having multiple credit cards
Tracking all expenses
Avoiding budget planning
Using only cash for purchases
How does life insurance protect against financial loss?
It provides retirement income
It provides income replacement for beneficiaries
It pays for property damage
It covers medical expenses
How can consumers best protect against identity theft online?
Using public Wi-Fi networks
Clicking on email attachments
Using strong, unique passwords
Sharing passwords with trusted friends
What effect does a lower credit score typically have on loan applications?
Faster approval process
Higher interest rates
Lower down payment requirements
Better loan terms
Which factor most directly affects the interest rate offered on a personal loan?
Education level
Employment history
Age of applicant
Credit score
What is a primary purpose of creating an emergency fund?
Earning high interest returns
Maximizing tax deductions
Building retirement savings
Avoiding unexpected financial stress
Which insurance feature represents the amount you must pay before coverage begins?
Deductible
Benefit limit
Premium
Copayment
What action should you take if you discover unauthorized charges on your credit card?
Wait for the next statement
Pay the charges and dispute later
Close all credit accounts
Contact the credit card issuer immediately
How does compound interest benefit savers?
Generates interest on previouly earned interest
Reduces tax liability
Eliminates investment risk
Provides guaranteed returns
