WorksheetsBusiness Math Unit 4 Test
Total questions: 25
Worksheet time: 13mins
Name
Class
Date
1.
If a nation agreed to trade with something other than money, like shells or certain stones, would that be legal tender?
a)
Yes, if business owners agreed.
b)
No, legal tender must be paper money.
c)
Yes, if everyone was required to accept it.
d)
No, legal tender must be accepted in all nations.
2.
Why is the US dollar a popular currency for other nations?
a)
Any country in the Americas can use it.
b)
Unlike most currencies, it is quite durable.
c)
It is one of the stronger currencies in the world.
d)
The United States is reluctant to trade in any other currency.
3.
A new nation has emerged and needs to create a currency. Which of these characteristics would make it a medium of exchange?
a)
if other nations begin to use it
b)
if the nation’s economy is based on it
c)
if the currency will hold its value over time
d)
if it is accepted with a known currency, like the dollar
4.
Could perishable goods, like fresh vegetables or dairy products, be a good choice to use as money in a region where they were plentiful?
a)
Yes, food is valuable in all societies.
b)
Yes, anything is good to use as money.
c)
No, money must be either metal or paper.
d)
No, anything used as money should hold its value.
5.
What could you buy with a banknote?
a)
Anything—it is a specific type of credit.
b)
Anything—a banknote is paper currency.
c)
It is used exclusively for bonds and other notes.
d)
It is a type of loan used specifically for property.
6.
What factors make a country’s currency stable?
a)
the country it is from is not having a war
b)
the type of paper products used to make it
c)
the popularity of the nations as a travel destination
d)
the overall economic situation and a solid government
7.
Government bonds do not pay very high interest rates. What advantages do they have for those who invest in them?
a)
The value will vary with the dollar’s exchange rate.
b)
It is beneficial to invest money at a low interest rate.
c)
The money is guaranteed and will earn some interest.
d)
Businesses get tax credits for purchasing government bonds.
8.
Juanita is saving up to buy a new truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. Is this a good use of credit?
a)
Yes, borrowing money is always good for business.
b)
No, a smaller down payment would get her a new truck today.
c)
Yes, it is a major purchase and Juanita has figured out what she can afford.
d)
No, Juanita should save for the full price of the truck no matter how long it takes.
9.
Juanita is saving up to buy a new truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. Does she need to be concerned about her credit score now even though she will not be getting the loan for at least a year?
a)
Yes, how she handles credit today will shape her credit score.
b)
No, credit scores are only used by businesses and their clients.
c)
Yes, every purchase she makes will show up on her credit score.
d)
No, no one will be checking until she actually takes out the loan.
10.
How does the government benefit when individuals purchase government bonds or treasury bills?
a)
The American dollar is stable due to these bonds and bills.
b)
It does not since the government has to pay interest on these.
c)
These are essentially loans to the government, so they provide cash.
d)
These investments mean that the government has to print less money.
11.
Why would a business choose a state bank over a national bank?
a)
Local banks are required to be FDIC insured.
b)
The business plans to expand into other regions.
c)
The business works with a lot of local customers.
d)
Local banks usually have the lowest interest rates.
12.
A small town has a local bank that has been in business for over 50 years. Is this bank required to join the Federal Reserve System?
a)
No, only national banks are required to join.
b)
Yes, if has accounts with more than $250,000 in them.
c)
Yes, banks that are not part of the Fed cannot accept deposits.
d)
No, it has been in business so long that joining the fed is not required.
13.
Why does lowering interest rates help the economy?
a)
All actions by the Fed help the economy.
b)
Low rates are not usually followed by raising rates.
c)
More people borrow when rates are low, so more money is spent.
d)
Interest rates are similar to exchange rates for international currency.
14.
Why is it the Fed’s responsibility to set interest rates, not national banks?
a)
The Fed is responsible for printing all money.
b)
There are not very many national banks, so few are qualified.
c)
The Fed consults national banks, but they do not make the final decisions.
d)
National banks are for profit, so they are not looking at the overall economy.
15.
Why is there more risk for a business when it accepts checks than debit cards?
a)
Checks are paper and debit cards are plastic.
b)
Debit cards are FDIC insured and checks are not.
c)
There is a limit on the amount for checks, not debit cards.
d)
A debit card is approved electronically while checks are not.
16.
Can consumers avoid paying interest on credit cards?
a)
Yes, if they pay the balance off immediately.
b)
No, using credit cards even once generates fees.
c)
Yes, there are many cards that have no interest or fees.
d)
No, credit cards should not be used because of the fees that result.
17.
A business writes a check to a supplier. However, there is an accounting error that the business owner is unaware of and there is not enough money in the account to cover the check. What is the best strategy for avoiding this problem in the future?
a)
Switch to using cash for all business transactions.
b)
Assume it was a one-time problem and keep taking checks.
c)
Insist on electronic payments so there is less opportunity for error.
d)
Stop doing business with this client since the client committed a crime.
18.
Why does the amount of interest go down every month according to this amortization table?
a)
If the principal payment goes up, so does the interest.
b)
Lenders are required to reduce the interest rate as the loan is paid off.
c)
The payments increase as the loan is paid off, so there is less interest.
d)
The principal decreases with every payment, so there is less interest to pay.
19.
Why do customers save money if they pay off a closed ended loan faster than the amortization table requires?
a)
Customers can renegotiate the terms of the loan any time.
b)
It does not since the terms of the loan are defined in the table.
c)
Paying more of the principal reduces the amount of interest due.
d)
A closed ended loan has standard payments that include the principal.
20.
Why is it important that businesses provide an amortization table for any large loan?
a)
It includes every possible expense associated with a loan.
b)
The business can use it to adjust the payments if necessary.
c)
Large loans have very different legal requirements than small loans.
d)
It includes much of the information lenders are legally obligated to provide.
21.
If a person has several credit cards but only has a balance on one of them, how will this impact the individual’s credit score?
a)
It will lower it because it is all open-ended credit.
b)
It will raise it because the person has a lot of credit and little debt.
c)
It will lower it because there is no reason to have so many credit cards.
d)
It will raise it because any time an individual gets credit the score goes up.
22.
What are the potential consequences for a business that fails to properly protect customer credit information?
a)
The business’s own credit score will drop due to unsafe practices.
b)
The business can lose its ability to access credit reports and extend credit.
c)
The business can be liable for any problems that result from its negligence.
d)
The business will not be held responsible if it did not know about the problem.
23.
Elena has a successful appliance store. What is the most important consideration before offering customers a proprietary credit card for purchases in her store?
a)
whether this fits in with her overall marketing strategy
b)
whether this will be for repeat customers or new customers
c)
whether her business has the cash flow to manage partial payments
d)
whether she has the inventory on hand if business improves as a result
24.
A business regularly extends credit to customers for large purchases with a standard interest rate of 5 percent. There is also a $200 installment fee that is added to the total cost of the purchase. The sales people are required to tell customers about this fee before adding it to the bill, but it is not in writing. Does this comply with the Truth in Lending Act?
a)
No, adding any kind fee is deceptive and illegal.
b)
Yes, consumers expect that there will be installment fees.
c)
No, all details of the terms of credit must be documented in writing.
d)
Yes, as long as the customer is informed of all fees, the business has done its duty.
25.
Which of these would improve a person’s credit score?
a)
having many small loans
b)
paying off a significant debt
c)
making several late payments
d)
keeping the same job for many years
100 %
