Unit 2 Exam Review- SS8B

Which is true regarding average income and unemployment for individuals in the US?

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    Those with bachelor's degrees usually have lower incomes than the national average but are less likely to be unemployed.

• Those with bachelor's degrees usually have higher incomes than the national average and are less likely to be unemployed.

• Those with bachelor's degrees usually have higher incomes than the national average but are more likely to be unemployed.

• Those with bachelor's degrees usually have lower incomes than the national average and are more likely to be unemployed.

Which factor would most likely cause Luke to increase his nonessential spending?

• He earns more money.

• He saves for a new car.

• His rent increases.

• He loses his job.

Which is a disadvantage of using credit?

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    It allows one to finance unexpected expenditures, such as car repairs.

• It increases one's debt.

• It reduces one's debt.

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    It makes it possible to consume more today than one could otherwise afford.

What effect might a high credit score have?

• having better chances of winning a college scholarship

• • 
    

    paying more when buying a car

• having more trouble finding an apartment to rent

• getting lower interest rates on loans

What is the impact of a low interest rate on a borrower?

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    The borrower is much less likely to borrow money.

• • 
    

    The cost of borrowing money will be higher.

• It will be easier to get a loan from a lender.

• • 
    

    The cost of borrowing money will be lower.

Harper receives her first credit card and reads that it has an interest rate of 22%. She uses the card to buy $40 shoes. When she receives her bill, she sees that the minimum payment is $20.

What would happen if she paid only $20 rather than the full $40?

• • 
    

    The credit card company would send her a bill stating that she now owes 22% of $40.

• The credit card company would send her a bill the next month for the remaining $20.

• The credit card company would charge interest on the $20 balance, so she would owe more than $20.

• The credit card company would charge her a late fee for not paying the entire amount of $40.

Why is it beneficial to diversify investments?

• It encourages investors to put their money in American companies.

• It enables investors to pay off their debt more quickly.

• • 
    

    It helps investors reduce the risk of losing money.

• It allows investors to receive help from the government.

If a woman buys a house in an area that can experience floods, how would buying insurance help her manage the risk?

• The insurance company will place money in a trust for her to use in case of a flood.

• • 
    

    The insurance company would pay her for a new house to replace the flooded one.

• The insurance company would pay her for damages suffered in the event of a flood.

• The insurance company will study the flooding history of the area and offer advice.

How would good health insurance protect an injured beneficiary against a financial loss?

• The insurance company would return past premiums.

• The insurance company would charge the person responsible.

• The insurance would pay for the medical expenses.

• The insurance would guarantee quality healthcare.

Why is it beneficial to begin investing early for retirement?

• Younger people have fewer expenses, so it is easier to invest.

• You have more time for the investment to earn interest.

• Taxes are lower on investments made by younger investors.

• Investing at a young age raises your credit score.