Economics and Finance Flashcard

Front

Why would a bank require a borrower to have collateral or a cosigner before agreeing to lend funds?

Back

Reduces risk associated with imperfect information

Front

Which best describes how a credit card works?

Back

The credit card company extends you a line of credit. You purchase “stuff” and then have a choice to pay the balance in full or a minimum payment each month.

Front

Specialization in production is important primarily because it accomplishes what?

Back

results in a greater output for society

Front

Individually and collectively, we are forced to make decisions about how to best use our resources because of:

Back

scarcity

Front

In modern economies, credit cards are a ________________ because of their wide acceptance as a method of payment for both goods and services.

Back

medium of exchange

Front

Why is it more difficult to get out of debt when only paying the minimum amount?

Back

The majority of your minimum payment is going toward interest and finance charges and only a small amount toward the principal.

Front

How can charitable giving benefit you financially?

Back

It can provide tax deductions

Front

A credit card has an interest rate of 18% annually. If the balance is $1,000, how much interest will accrue in one year if no payments are made?

Back

$180

Front

Which action can help eliminate credit card debt? Options: Avoid making any payments, Only pay the minimum required, Consolidate debts into a lower-interest loan, Increase your credit limit

Back

Consolidate debts into a lower-interest loan

Front

What does it mean to have a low debt-to-income ratio?

Back

You have little debt compared to your income