AnswersHSA 26-27 EconomicsThe Business Cycle

Credit and Loans Answers

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1
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The type of credit people are most likely to use for small purchases during their lifetime is

A
a credit card.
B
a personal loan.
C
an auto loan.
D
a mortgage.
2
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What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

A
$10.00
B
$21.00
C
$33.10
D
$46.41
3

Which statement is true of both mortgages and auto loans?

A
They are riskier than student loans for lenders.
B
They do not require a minimum payment.
C
They are secured loans and generally require a down payment.
D
They have higher interest rates than credit cards.
4

The simple interest on a loan of $200 at 10 percent interest per year is

A
$10 per year until the loan is paid off.
B
$15 per year until the loan is paid off.
C
$20 per year until the loan is paid off.
D
$25 per year until the loan is paid off.
5

In determining whether to issue a loan, banks are not allowed to ask about an applicant’s

A
employment history.
B
date of birth.
C
country of origin.
D
income tax returns.
6

Which describes the difference between secured and unsecured credit?

A
Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
B
Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.
C
Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.
D
Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.
7

[BLANK]

A
good credit
B
a bank account
C
tax returns
8

Consumers who pay more than the minimum payment on credit cards

A
pay less interest in the long run.
B
are able to buy more things.
C
see their credit scores decrease.
D
qualify for mortgages.
9

The chart shows a range of credit scores.

Question illustration
A
find it easy to get a loan.
B
find it hard to get a loan.
C
get a loan with low payments.
D
get a loan with low interest.
10

Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?

A
It shows that Casey prefers a high-interest rate.
B
It shows that Casey is committed to paying off the loan.
C
It shows that Casey may not need a loan at all.
D
It shows that Casey might refinance the loan soon.

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