Question 1

(TCO 1) Referring to consumer purchases, an example of a personal opportunity cost is

 buying on credit.

 selecting a commonly known brand.

 the influence of advertising on consumers.

 time used to compare prices.

 government regulation of deceptive business-government activities in an effort to prevent consumer fraud.

Question 2

(TCO 1) If you are seeking reliable product information, the best source is likely to come from

 an advertisement.

 a food product ingredient label.

 friends and relatives.

 salespeople in a store.

 a mail order catalog

Question 3

(TCO 1) The _____ has the purpose of testing products for electrical and fire safety.

 Consumers Union

 Underwriters Laboratories

 Consumer Product Safety Commission

 Better Business Bureau

 Federal Trade Commission

Question 4

(TCO 1) Food labels require

 open dating.

 unit pricing.

 a common product name.

 a generic name.

 large lettering.

Question 5

(TCO 1) Service contracts may not always be the best solution for consumers because of

 poor service from repair companies.

 limited coverage of repairs.

 weak government regulation of service contract companies.

 high costs and a low chance of need.

 the fact that few places are available for repairs.

Question 6

(TCO 1) The purpose of the _____ is to assist with consumer complaints and also to provide consumer information.

 Better Business Bureau

 Federal Trade Commission

 Underwriters Laboratories

 Consumers Union

 Consumer Action

Question 7

(TCO 1) Consumers have an option to go to small claims court to

 regulate fair business activities.

 resolve minor complaints.

 allow consumers with similar complaints to take action as a group.

 provide hearing on proposed consumer protection laws.

 assist low-income consumers who need legal help.

Question 8

(TCO 1) In order for a class action suit to be taken and also to be valid, it must

 be a legal problem against a government agency.

 cover an amount less than the limit set by the state.

 be a case that would not be handled by an attorney.

 involve low-income individuals.

 involve several people with the same problem.

Question 9

(TCO 1) When a used car has an implied warranty, this means that

 major repairs are the responsibility of the seller.

 government agencies will repair safety defects.

 the vehicle must be in operating condition.

 hidden defects will be repaired at no cost to the buyer.

 a vehicle must operate properly for at least 1 year.

Question 10

(TCO 1) When reviewing the Edmund's Guide, you will find information pertaining to

 safety problems of existing vehicles.

 price data.

 sales of stolen vehicles.

 cars available for sale from government agencies.

 car repairs.

Question 11

(TCO 3) Renting has a common opportunity cost of

 interest lost on the down payment.

 interest lost on the security deposit.

 property taxes.

 maintenance costs.

 interest lost on closing costs.

Question 12

(TCO 3) A home owner will often realize a benefit of

 a low security deposit.

 increased property value.

 the amortization of the growth of equity.

 the tax deductibility of the down payment.

 low maintenance.

Question 13

(TCO 3) Lonette and Al received a statement reporting that they paid $6,000 in mortgage interest during the past year. If they are in a 28% tax bracket, this deduction may reduce their taxable income by

 $6,000.

 $1,680.

 $4,320.

 $0.

 $3,000.

Question 14

(TCO 3) The purpose of a real estate agent is to assist an individual in

 obtaining funds for a down payment.

 setting the purchase price.

 offering new home warranties.

 getting a mortgage.

 making important calls.

Question 15

(TCO 3) When a mortgage company charges prepaid interest, this refers to

 escrow.

 a title fee.

 an origination fee.

 points.

 a deed.

Question 16

(TCO 3) An adjustable-rate mortgage may have a rate cap to

 minimize interest costs.

 restrict the amount by which the interest rate can increase.

 increase negative amortization.

 prevent changes in the amount of the monthly payment.

 lower the escrow account.

Question 17

(TCO 3) A _____ mortgage is one that is short term in length, with a very large final payment.

 shared appreciation

 graduated payment

 growing equity

 balloon

 negative amortization

Question 18

(TCO 3) A _____ mortgage is basically a home equity loan.

 shared appreciation

 second

 growing equity

 graduated payment

 buy-down

Question 19

(TCO 3) An appraisal is used to

 eliminate the need for home insurance.

 reduce the amount paid for property taxes.

 qualify for a reduced mortgage rate.

 estimate the current value of a home.

 determine the need for an inspection.

Question 20

(TCO 3) James Monroe lives in a structure that resembles a home, but has only one similar and separate structure attached to his dwelling. What type of housing is James most likely living in?

 A condominium

 A duplex

 A cooperative

 A prefabricated home

 A single family dwelling