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Chapter Quiz
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1
Consumer credit is based on:
A)Trusting that people will be able to and are willing to pay bills when they are due.
B)Government bailouts.
C)Bankruptcy protections.
D)Interest rates and the size of the money supply.
2
All of the following are advantages of credit EXCEPT:
A)It allows people to enjoy goods and services now.
B)Credit can be safer to use than carrying cash.
C)Over use of credit can lead to bankruptcy.
D)Proper use of credit can indicate stability.
3
Which of the following is an example of closed-end credit?
A)MasterCard
B)Overdraft protection
C)Visa Card
D)Car loan
4
The total dollar amount paid to use credit is:
A)The interest owed
B)The finance charge
C)The annual fee
D)The overdraft fee
5
All of the following are factors creditors consider to determine credit worthiness EXCEPT:
A)Capacity, can you repay the loan.
B)Collateral, do you have an asset that secures the loan.
C)Race, are you in the preferred group of people.
D)Character, what does your credit history show.
6
A credit bureau is
A)An agency that collects credit information and compiles a credit history for individuals and businesses.
B)A branch of the government that regulates creditors.
C)An agency that determines if credit should be granted to those who apply for it.
D)A branch of the government that extends credit to individuals that cannot get it elsewhere.
7
To minimize your borrowing costs, you can lower the risk to the lender by:
A)Choosing a longer term for the loan.
B)Seeking a fixed rate of interest.
C)Having no down payment.
D)Offering collateral to secure the loan.
8
Simple interest on loans is lowest for:
A)Loan repaid in one lump sum at the end of the term.
B)Declining balance loans.
C)Add-on interest loans.
D)Open-end credit where you carry a balance.
9
The simple interest charge for a $1,500 loan with a 6% interest rate paid in 3 equal installments is:
A)$90
B)$30
C)$60
D)$10
10
What is a warning sign that you are in financial trouble?
A)You borrow money to pay off old debts.
B)You pay above your minimum payments.
C)You are receiving credit card offers in the mail.
D)Your credit limit is increased every year.
11
The difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is:
A)With Chapter 7 you have your debt restructured so you can afford the payments and Chapter 13 is where most of your debt is eliminated.
B)Chapter 7 is for businesses and Chapter 13 is for consumers.
C)Chapter 13 is for businesses and Chapter 7 is for consumers.
D)With Chapter 7 most of your debt is eliminated and with Chapter 13 your debt is restructured so you can afford the payments.





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