Personal Finance and Economic Literacy Flashcard

Front

When deciding which of the two items to purchase, one should always:

Back

Choose an item after comparing the costs and benefits of both items.

Front

After five years, who has more money if Pat leaves $15 interest in his account each year and Chris takes $15 home to a jar?

Back

Pat.

Front

Which of the following is the primary function of insurance? Making risk disappear., Pooling and sharing risk among the insured., Making someone else pay for an accident or loss., Don’t know.

Back

Pooling and sharing risk among the insured.

Front

Which of the following has historically had the highest rate of return over long periods of time?
Options:
Don’t know.
Bank savings accounts.
Bonds.
Stocks.

Back

Stocks.

Front

Which of the following would be expected to hold its value best during a time of inflation? A house, a corporate bond, a certificate of deposit.

Back

A house.

Front

What is a budget?

Back

A spending plan showing sources and uses of income.

Front

Which of the following would hurt your credit score?
Options:
Getting married.
Paying off student loan debt.
Don’t know.
Closing a long-held credit card account.

Back

Closing a long-held credit card account.

Front

Which of the following loans is most likely to be classified as 'predatory'? A high interest rate on a store credit card. A cash-back home loan with a higher interest rate taken out after a high-pressure sales pitch. A variable interest rate home mortgage that could rise 5 percentage points with inflation. Don’t know.

Back

A cash-back home loan with a higher interest rate taken out after a high-pressure sales pitch.

Front

Which of the following strategies has shown the highest return over a period of years?
Options:
Don’t know.
Buying and holding onto a varied set of stocks, ignoring short-run fluctuations.
Avoiding stocks entirely by keeping money in federally insured bank accounts.
Moving frequently in and out of the stock market to avoid downturns and exploit upturns.

Back

Buying and holding onto a varied set of stocks, ignoring short-run fluctuations.

Front

According to car experts, which of the following ordinarily provides the best value in automobile ownership? Buying a relatively new used car and driving it for a long time. Don’t know. Always buying a new car and driving it only a few years. Buying the cheapest used car available.

Back

Buying a relatively new used car and driving it for a long time.