Chapter 1 REVIEW: Intro to Personal Finance

A fee paid by a borrower to a lender for the use of borrowed money.

• Loan

• Debt

• Interest

• Credit

An obligation of repayment owed by one party (borrower) to a second party (lender).

• Debt

• Credit

• Interest

• Personal Finance

A person or organization that buys/uses goods or services.

• Economy

• Consumer

• Debtor

• Realtor

A debt evidenced by a "note" that specifies the principal amount, interest rate and date of repayment (ex. home loan or mortgage)

• Credit

• Loan

• Certificate of Deposit

• Mutual Fund

The granting of a loan and the creation of debt.

• Credit

• Mortgage

• Interest

• Auto Loan

A system by which goods and services are produced and distributed.

• Consumer

• Government

• Economy

• Personal Finance

The knowledge and skillset necessary to be an informed consumer and manage finances effectively.

• Financial Literacy

• Adulting

• Personal Finance

• None of the above

Learning the language of money is not that important because you will be able to rely on financial planners to manage your money.

• True

• False

Which of the following is NOT a reason credit is marketed so heavily to consumers in the United States?

• There is a strong consumer demand for big-ticket items.

• The credit industry has become extremely profitable.

• The use of credit is not socially accepted in the US.

• After World War I, credit laws were relaxed to create a mainstream alternative to loan sharks to the working class.

During the Great Depression, New Deal policy makers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

• Consumer credit was not a profitable industry.

• Consumer credit could be profitable.

• Consumers would not be willing to use credit since borrowing money for large purchases had not previously been an option for the middle class.

• They would not be able to compete with loan sharks in the industry of consumer lending.