Financial Literacy Unit 2 Flashcards

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Questions and Answers

Which of these is an advantage of checking accounts?

No fees for withdrawals

Limited access to funds

Higher interest rates

Convenient ways to deposit or withdraw funds (correct)

Building equity in a home is a good thing because

equity in a home increases the homeowner's assets.

When you buy in bulk, the price per individual item

decreases.

According to the table, what is Omar's bank balance?

$761.25. Signup and view all the answers

What is another name for the actual pricing history for items?

smartphone. Signup and view all the answers

In addition to a fee, which of these is another possible consequence of an overdraft?

The merchant expects repayment and a penalty fee Signup and view all the answers

What is the best reason for Jacinta to have a savings account in addition to a checking account?

A savings account keeps her savings separate from her spending money. Signup and view all the answers

Which option is the most economic sense for Mr. and Mrs. Atoll's party?

One case of 24 sodas at $18.50 Signup and view all the answers

What is not a potential risk of purchasing a used car?

Used cars can have lower initial cost. Signup and view all the answers

What is the best reason for Nina to monitor her bank account statements?

To know how much money she has for budgeting. Signup and view all the answers

How should the columns in a transaction record be labeled?

Check Number, Description, Balance. Signup and view all the answers

What is advertising used for? (Check all that apply)

Increasing product awareness Signup and view all the answers

What does Sara need to open a bank account? (Check all that apply)

Money to start the account Signup and view all the answers

Where do banks get money to lend to borrowers?

Their depositors. Signup and view all the answers

Which of these can be used to access money in a checking account?

Debut card Signup and view all the answers

What does reconciling an account involve?

Checking one's financial records against the bank's. Signup and view all the answers

The most economical way to purchase large items is to buy with

cash. Signup and view all the answers

Which type of account is most suitable for Sofia's needs?

A money market account. Signup and view all the answers

What is one benefit of purchasing saving bonds?

Saving bonds are purchased from the government and guaranteed to increase in value. Signup and view all the answers

Which choice illustrates the most economically sound option for Brad?

Buying both a car and a home Signup and view all the answers

At what point does buying in bulk stop being a wise spending choice?

When the consumer buys more than is needed. Signup and view all the answers

Why do prices increase when demand for a product is high?

Companies know that people will be willing to spend more to get an in-demand product. Signup and view all the answers

What should Malcolm's correct balance be after entering his transactions?

$704.50. Signup and view all the answers

What is the best action for Karina to take after finding the overdraft fee?

Check her records against her bank statement. Signup and view all the answers

What is a major difference between retail banks and credit unions?

Retail banks manage a person's money, while credit unions focus on providing loans. Signup and view all the answers

Study Notes

Banking and Financial Accounts

Checking Accounts: Provide easy access for deposits and withdrawals.
Savings Account: Keeps savings separate from daily spending, promoting better financial habits.
Bank Account Monitoring: Essential for budgeting and preventing overdraft fees.

Equity and Investments

Home Equity: Increases the homeowner's assets, beneficial for financial health.
Saving Bonds: Government-backed, guaranteed to increase in value over time.

Purchasing and Budgeting

Bulk Buying: Typically reduces the price per item, but should not exceed the needed quantity to remain economical.
Buying Strategies: Paying with cash for large items like furniture often leads to better deals.

Charging and Fees

Overdraft Consequences: Involves fees and potential penalties for merchants due to insufficient funds.
Charge Examples: Notably, a $5.00 overdraft fee can occur even with accurate records.

Deposits and Transactions

Bank Sources for Lending: Banks primarily lend money derived from deposits made by customers.
Account Reconciliation: Critical to match personal financial records with bank statements to ensure accuracy.

Consumer Behavior and Advertising

Advertising Purposes: Influences consumer preferences, increases product awareness, and enhances brand visibility.
Economic Choices: Informed decisions in purchasing, like opting for a case of sodas, can save money.

Credit and Loans

Retail Banks vs. Credit Unions: Retail banks focus on managing deposits, while credit unions prioritize providing loans with competitive terms.
Long-term Financial Planning: Individuals like Brad should consider multiple significant purchases to build equity and credit.

Transaction Records

Maintaining Checkbook Ledgers: Requires details such as check number, description, and balance to track spending accurately.
Transaction Accuracy: Regular updates and checks against bank statements can prevent fee surprises.

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Description

Test your knowledge of financial concepts with these flashcards focused on the advantages of checking accounts, building equity, and buying in bulk. This resource is designed to reinforce key ideas and terms related to financial literacy. Perfect for anyone looking to enhance their understanding of personal finance.