Unit 7: Personal Finance

Why do economic decisions vary from person to person even under the same circumstances?

• • The value of money is generic.

• • Costs and benefits are subjective.

• • Different people expect different returns.

• • Utility decreases differently for different people.

Which of these statements describes the costs and benefits of taking a college loan?

• • College loans help students with academic and athletic skills overcome financial hardships.

• • College loans require students to work while studying but they cost less than conventional loans.

• • College loans reduce tuition payments but increase total educational costs because of interest payments.

• • College loans help increase future earning power but result in a long-term commitment to monthly payments.

Why does attending college involve an opportunity cost?

• • The money spent on tuition cannot be invested in another way.

• • College only opens up certain job opportunities.

• • It takes a lot of time to earn the money needed to pay for college.

• • College tuition is very expensive.

What kind of contract outlines the obligations of a landlord and his or her renters?

• • bond

• • regulation

• • mortgage

• • lease

Which situation would most likely use fee-for-service insurance?

• • Personal possessions are stolen from an apartment.

• • A person loses their job because of an injury or illness.

• • A person wants to choose their own doctor or hospital.

• • A person causes a car accident that injures other people.

What kind of customer would want collision coverage for his or her auto insurance?

• • someone who has a record of causing accidents that result in high repair bills

• • someone concerned about causing damage to his or her own car

• • someone who has a car that has too little value to be worth repairing after an accident

• • someone worried about getting into an accident with someone who has no insurance

When do people have to make a copay?

• • when their possessions are destroyed in a fire

• • when they go to a doctor because of an illness

• • when they cause a car accident that injures someone else

• • when they take a low-paying job while recovering from an injury

What do banks pay to their savings account customers?

• • commission

• • dividends

• • interest

• • profits

What makes a checking account more convenient than a savings account?

• • You pay smaller fees on a checking account.

• • You earn more interest with a checking account.

• • You can use a credit card to access your money 24 hours a day.

• • You can spend your money without having to withdraw cash first.

With which type of account is an annual fee associated?

• • checking account

• • credit card

• • health insurance

• • home loan