AnswersTX-Personal Financial Literacy and EconomicsUnit Test

Unit Test — Unit test Answers

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1
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When depositors put money into a bank, what does the bank do with this money?

A
The bank sends the money to a central bank in Washington, DC.
B
The bank uses the money to make loans to borrowers and earn interest.
C
The bank spends the money on new branches to get more depositors and borrowers.
D
The bank locks the money in a vault and leaves it there until the depositors want it back.
2
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What do borrowers use to secure a mortgage loan? Check all that apply.

A
a credit card
B
a down payment
C
a house
D
land
E
a vehicle
3

Interest paid on a loan is calculated as a percentage of the

A
principal.
B
amount owed.
C
compounded principal.
D
collateral.
4

What is the main way the Fed works to increase employment in the United States?

A
by hiring people to work for the 12 locations of the central bank
B
by encouraging local banks to have job fairs in their communities
C
by helping the economy grow so that businesses can create new jobs
D
by working with businesses to create new jobs in financial markets
5

Why do some lenders require borrowers to secure credit?

A
to prevent defaults
B
to guarantee full repayment
C
to avoid any losses
D
to reduce risk
6

Which statement best describes the difference between a checking account and a savings account?

A
Checking accounts provide customers with interest, while savings accounts do not.
B
Checking accounts are held only by businesses and savings accounts only by individuals.
C
Checking accounts allow customers to easily pay for goods and services, while savings accounts are used to hold money for longer periods of time.
D
Checking accounts require customers to go into a bank branch, while savings accounts are accessed by customers on their mobile phones or computers.
7

Which group is disproportionately affected by predatory lending?

A
White business owners
B
college and graduate students
C
Black and Hispanic people
D
owners of large ranches and farms
8

Government regulations on credit aim to

A
ensure lenders are repaid.
B
help borrowers pay on time.
C
support those borrowing credit.
D
educate lenders about consumers.
9

Which of these is a characteristic of certificates of deposit (CDs)?

A
They are always offered at variable rates.
B
They last for a set period of time.
C
They can be opened with any amount of money.
D
They allow access to the money at any time without penalty.
10

Some savings accounts help depositors earn money. Where does this money come from?

A
from the federal government agency known as the FDIC
B
from the interest that borrowers pay to a bank for a loan
C
from the central banking system, which is called the Fed
D
from other depositors’ money kept in the bank’s vault
11

To create a balanced budget, one must make sure to

A
spend as little as possible.
B
pay credit card payments first.
C
spend less than or equal to income.
D
pay off debts first.
12

Clarissa and Carlos are homeowners who have decided to purchase a piece of land adjacent to their home. The land is for sale for $10,000.Which loan would require them to use their vehicle as collateral?

A
title loan
B
payday loan
C
merchant loan
D
peer-to-peer loan
13

Look at the table below showing an example of a checkbook ledger.

Question illustration
A
$761.25
B
$810.30
C
$814.75
D
$1,186.25
14

[BLANK]

A
cash
B
collateral
C
fees
D
interest
15

What is the major difference between a nationwide bank and a community bank?

A
The community bank offers more services.
B
The nationwide bank services only local customers.
C
The nationwide bank has fewer branches.
D
The community bank services only local customers.
16

Sara is 16 years old and would like to open a bank account. What will she need in addition to her parent or guardian? Select four answers.

A
government-issued ID or birth certificate
B
high school diploma
C
money to start the account
D
social security number or immigration form
E
proof of address
17

What is one benefit of purchasing saving bonds?

A
Saving bonds are purchased from the government and guaranteed to increase in value.
B
Saving bonds are purchased from commercial banks and guaranteed to increase in value.
C
Saving bonds are short term investments backed by the government to protect from loss.
D
Saving bonds are long term investments created to help first time home buyers obtain a mortgage.
18

Milan wants to open a restaurant in his neighborhood, where he’ll serve his family’s favorite Croatian dishes. He’s found a location to rent and needs to purchase the proper equipment, but he has very little money of his own. Milan makes an appointment to talk to someone at the local branch of his bank about getting a loan.

A
auto
B
student
C
mortgage
D
commercial
19

Read the information about two competing credit cards. Credit Card 1Credit Card 2Interest rate0% introductory rate, then 13.8% after one year12.1%Annual feeNoneNo annual fee in the first year, then $30 each year thereafterCredit Card 1 would be the better option if the borrower

A
had major expenses in the first year.
B
spent a lot of money in the second year.
C
used the card regularly in the long term.
D
carried a large balance in the long term.
20

Which is an example of predatory lending?

A
A woman fails to quality for a loan she needs in order to start a new business in her community.
B
A teenager applies for a loan at her local bank branch but is told that she’s too young to apply without a parent’s approval.
C
A Black couple pays a higher interest rate for a mortgage loan than a White couple living in the same city.
D
A Mexican American man opens a savings account, but when interest rates drop nationwide, his account doesn’t earn as much as he had hoped.

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