Final Exam Review (EPF)

Question 1

What concept says that money received today is worth more than the same amount of money received sometime in the future?

Answer 1

The Time value of money

Question 2

To determine the time value of depositing $100 in a savings account, what two things does a person need to know?

Answer 2

interest rate and received interest

Question 3

What is interest earned on interest?

Answer 3

compound interest

Question 4

What helps you to calculate how fast your savings will double in value at a given interest rate?

Answer 4

The rule of 72

Question 5

What are the four factors of production?

Answer 5

Land, Labor, Capital, Entrepreneurship

Question 6

What is a centrally planned economy?

Answer 6

Command Economy

Question 7

What type of economy has individuals and private businesses own and control production?

Answer 7

Market Economy

Question 8

What is the study of how individuals and societies satisfy their unlimited wants and limited resources?

Answer 8

Economics

Question 9

What exists when there are not enough resources to satisfy human wants?

Answer 9

Scarcity

Question 10

What two things do you need to consider when making a decision?

Answer 10

Marginal costs and Marginal benefits

Question 11

What is known as the father of economics?

Answer 11

Adam Smith

Question 12

What famous economics book did Adam Smith write?

Answer 12

Wealth of nations

Question 13

What government organization is responsible for distributing new coins and currency into the general economy?

Answer 13

The Federal Reserve

Question 14

Why is depositing money into a bank or credit union usually a better idea than saving your money under a mattress?

Answer 14

Guaranteed interest

Question 15

What institution’s deposits are insured by the NCUA?

Answer 15

Credit unions

Question 16

What can you apply for if you do not have enough money to purchase a car with cash?

Answer 16

Loan

Question 17

When you need to access your money within the next few months, where should you invest your money? The stock market or a savings account?

Answer 17

Savings Account

Question 18

What type of investment represents ownership in a company?

Answer 18

Stock

Question 19

Why does a company issue bonds?

Answer 19

To raise money for expansion

Question 20

What is the relationship between risk and return?

Answer 20

Higher the risk, Higher the return

Question 21

What are corporate profits paid to stockholders?

Answer 21

Dividens

Question 22

What is the federal government that requires all stock issuances be registered?

Answer 22

Securities and Exchange Commision

Question 23

What is the typical retirement age?

Answer 23

65

Question 24

What concept is best described as, “a dollar today is worth more than a dollar tomorrow?”

Answer 24

Time Value of MOney

Question 25

What are the two most important factors in calculating your credit score?

Answer 25

Payment history and amount owed

Question 26

Why is it more difficult for young adults to borrow money?

Answer 26

Less payment history

Question 27

What types of items will you find on your credit report?

Answer 27

Salary

Question 28

Which government run website allows you to download your credit report for free each year?

Answer 28

annualcreditreport.com

Question 29

What is the single best way to improve a credit score?

Answer 29

Make payments on time

Question 30

How does a low credit score impact the interest rates available to the consumer?

Answer 30

increases them

Question 31

What is your creditworthiness measured by?

Answer 31

fico score

Question 32

What debt payoff method pays off the smallest loans first, which can be motivating because you have fewers sources of debt?

Answer 32

snowball

Question 33

What is the largest category of earned income?

Answer 33

salaries and wages

Question 34

Education, training, and experience increase what type of capital?

Answer 34

human capital

Question 35

What are retirement plans, paid vacation, and health insurance plans considered?

Answer 35

benefits

Question 36

Gifts, returns on investments, and inheritance are considered what type of income?

Answer 36

unearned income

Question 37

What is the amount you earn before paying taxes called?

Answer 37

gross pay

Question 38

What is the government agency responsible for processing tax returns? The Internal Revenue Service (IRS) administers and enforces U.S. federal tax laws.

Answer 38

IRS

Question 39

What month is considered tax season?

Answer 39

April

Question 40

What is the amount of tax owed to the government by a taxpayer in a given year?

Answer 40

Tax Liability

Question 41

The amount owed on a homeowner’s insurance premium can be influenced by what factors?

Answer 41

Value of the property, type of property, location of policy

Question 42

What type of insurance covers the possessions of a renter?

Answer 42

renters insurance

Question 43

What is the amount a policyholder must pay before the insurance pays a claim?

Answer 43

deductible

Question 44

What is the purpose of insurance?

Answer 44

Protect assets, shared risk, protect against loss

Question 45

What is insurance frequently described as a method of “sharing the risk?”

Answer 45

Shared with the other policy holders

Question 46

Why would a policy have a high deductible?

Answer 46

Lower premium

Question 47

What is the cost of an insurance policy?

Answer 47

Premium

Question 48

What is the flat-fee paid when you see a doctor?

Answer 48

Lo-pay

Question 49

The law of supply states that producers will ___ the quantity of their supply at high prices.

Answer 49

increase

Question 50

What is the willingness and ability to bring to market specific quantities of goods or services?

Answer 50

supply

Question 51

What is the willingness and ability to buy specific quantities of a good or service?

Answer 51

demand

Question 52

The law of demand states that people will buy more goods or services at ___ prices.

Answer 52

lower

Question 53

How can you identify the equilibrium price and quantity?

Answer 53

interest

Question 54

What is the key signal to buyers and sellers about a good or service?

Answer 54

price

Question 55

What describes the degree to which buyers and sellers respond to price changes?

Answer 55

Elasticity