Lesson 6 Quiz

What is consumer credit?

• Saving money to make a purchase in the future.

• Borrowing money to make a purchase now and pay for it at some future time.

• Lending money to businesses for investment purposes.

• Using cash to make immediate purchases.

Which of the following is NOT an example of consumer credit?

• Home mortgages

• Car loan

• Health insurance

• Credit card purchases

Which type of consumer credit typically carries the highest interest rates?

• Home mortgages

• Car loan

• Personal bank loan

• Credit card loans

According to the learning material, for what reasons should you generally borrow money?

• To spend on vacations

• To acquire something that will appreciate or earn income

• To buy fashionable clothing

• To dine out at expensive restaurants

What should you generally avoid doing with borrowed money?

• Investing in education

• Purchasing assets that depreciate

• Starting a business

• Buying a house that will appreciate in value

What is a potential consequence of borrowing money for things that depreciate?

• Increasing personal wealth

• Running up a lot of extra expenses

• Improving credit score

• Earning additional income

What is one of the advantages of consumer credit?

• Cost of credit

• Impulse buying

• Convenience

• Credit rating

Which of the following is a disadvantage of consumer credit?

• Investments or Capital Improvements

• Emergencies

• Forced Savings

• Impulse buying

What can consumer credit provide in case of large expenditures?

• Collateral

• Forced Savings

• Credit rating

• Investments or Capital Improvements

What might be affected negatively by consumer credit?

• Convenience

• Collateral

• Credit rating

• Emergencies