Credit Marketing Quiz: Personal Finance Unit 1

Questions and Answers

What is a consumer?

A person or organization that uses a product or service.

Define credit.

The granting of a loan and the creation of debt; any form of deferred payment.

What is debt?

An obligation of repayment owed by one party to a second party.

What does economic refer to?

A system by which goods and services are produced and distributed. Signup and view all the answers

What is financial literacy?

The knowledge and skill set necessary to be an informed consumer and manage finances effectively. Signup and view all the answers

What is interest?

A fee paid by a borrower to the lender for the use of borrowed money. Signup and view all the answers

Define loan.

A debt evidenced by a note which specifies the principal amount, interest rate, and date of repayment. Signup and view all the answers

What is personal finance?

All of the decisions and activities of an individual or family regarding their money. Signup and view all the answers

Which statement is true about learning the language of money?

It is important because you cannot solely depend on financial planners. Signup and view all the answers

Which of the following is NOT a reason credit is marketed heavily to consumers in the United States?

The use of credit is not socially accepted in the United States. Signup and view all the answers

During the Great Depression, what did New Deal policymakers conclude about consumer credit?

Consumer credit could be profitable. Signup and view all the answers

When it comes to managing money, what percentage is success attributed to head knowledge and behavior?

20, 80 Signup and view all the answers

Study Notes

Key Terms in Personal Finance

Consumer: Individual or organization that purchases or uses goods and services.
Credit: Granting of a loan, leading to the creation of debt; involves any form of deferred payment.
Debt: Obligation to repay borrowed money, typically involving the principal amount plus interest.
Economic System: Framework for the production and distribution of goods and services within a society.
Financial Literacy: Essential knowledge and skills required to make informed financial decisions and manage personal finances effectively.
Interest: Fee paid for borrowing money, usually calculated as a percentage of the principal amount.
Loan: A debt documented by a note, outlining the principal, interest rate, and repayment date.
Personal Finance: Encompasses all financial decisions and activities of individuals or families, including spending, saving, and budgeting.

Understanding Credit and Debt

Importance of Credit: Heavily marketed due to strong consumer demand and the profitability of the credit industry; credit has become a social norm in the U.S.
Consumer Credit Evolution: During the Great Depression, policies were developed to make consumer lending viable, helping establish mortgage and other loan options for the middle class.

Financial Knowledge and Behavior

Learning Financial Language: Understanding financial concepts is crucial; reliance solely on financial planners may not be sufficient for effective money management.
Money Management Success: Approximately 20% knowledge (head knowledge) and 80% behavior contribute to successful personal finance management.

Misconceptions about Credit

Social Acceptance of Credit: The belief that credit use is not socially accepted is incorrect; credit is widely utilized and integrated into everyday financial practices.

Financial Literacy Importance

Role in Consumer Behavior: Financial literacy empowers consumers to navigate economic systems confidently and make sound decisions regarding loans, credit, and personal finance management.

Description

This quiz covers key terms and concepts from Unit 1 of the Dave Ramsey Foundations in Personal Finance High School Edition. Learn definitions related to consumer behavior, credit, and debt to enhance your understanding of personal finance.