Economics Unit Three Consumer Economics Exam

Name: _____________________________________________ Hour: ______________________

1. Paul feels that something is wrong with his credit report, whom can he contact to correct it?

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2. Ron wants to purchase a home he really likes that is right next to a factory that is getting ready

to close in a neighborhood that is falling apart, and is next to a neighbor that does not keep up

his yard. Why might this not be a good idea?

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3. Ron’s friend tells him that a good credit score can get him a good APR. What is he

referring to?

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4. Mary wants to become a real estate agent, but is concerned about who to advertise

to, in order to increase her business. What can you tell her?

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5. Ron would like to purchase a home. This would be his first home. His brother Paul thinks that it

is way too difficult to purchase your first home. Would you agree or disagree with Paul, and

why?

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6. Ron, Jr. is getting ready to graduate high school. He has always enjoyed his science

classes and thinks being an engineer would be fun, but his cousin Paulina owns a

surfing shop in Hawaii and has offered him a job. You are Ron’s guidance counselor,

what might you tell him?

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7. Ron would like to look for a mortgage, what are his choices for obtaining one, and what should

he consider in making his choice?

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8. Phil and his wife Mary have been arguing a lot lately about Phil’s impulse spending on materials

for his garage and car, and Mary’s shoe purchases. These habits are straining their finances, and

causing stress in their relationship. What would you recommend they do about this first?

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9. ________ Networking is

A. To link up with your classmates on a social media site in the hopes they may inform you of job openings

B. To forget the people beneath you once you have moved into a higher position, so as to not tarnish your credentials

C. To link up with professionals and others that share or are involved in areas that carry a certain interest for you.

D. To link up with professionals and others in different career paths that are not that interesting to you, so as to keep an open mind

10. Ron’s credit score is not that great. His brother has agreed to cosign on a home loan with him to

improve his chances. What does this do for Ron?

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11. Paul believes in snowballing his debts. What does this mean?

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12. Ron is a bit short on his down payment on his new home, what can he or cannot do, to make up

the difference?

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13. What is a closing, and what happens when it occurs?

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14. After the necessities for living-food, utilities, shelter, transportation, clothing and

healthcare are covered, anything left over is called what?

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15. What type of loan is a home loan, and why is the interest rate for home loans lower than the

rate for loans for things like vacations?

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16. ________ What is a credit score also known as?

A. A FICO score

B. An analysis score

C. A Debt to Income Ratio Score

D. A Life Challenge Score

17. In terms of planning, the statement, “Johnny would someday like to be a dentist” would be

considered a _____________________________

18. In terms of planning, the statement, “Johnny needs to attend Dental School” would be

considered a __________________________________

19. ________ On what basis are real estate agents paid?

A. Flat Rate of $10,000.00

B. A Negotiated Fee

C. Hourly Rate

D. Commission

20. ________ What are the main differences between federal college loans and private college

loans?

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21. ________ An asset is what?

A. Debts owed

B. Cash, or anything owned of value

C. An accounting term for withdrawing from an account

D. An accounting term for balancing a ledger

22. What are the four “C”’s used to determine eligibility for a loan?

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23. What are some examples of costs that are not part of the closing, but are accrued as a result of

closing on a property?

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24. What five factors go into calculating a credit score, and how are they weighted?

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25. Paul is searching for a new mortgage rate. What is this called, and what issues regarding fines

and fees should he be concerned with?

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26. ________ What is mortgage pre approval?

A. This confirms your eligibility to qualify for a mortgage

B. When the lender formally loans the money and you are closing on your home

C. When the lender will provide an estimate of the size of the potential loan, though

the lender does not formally agree to approve the mortgage at this point

D. When a lender invites you to discuss a potential loan

27. Provide some reasons given in class as to why home ownership may be more than renting?

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28. In terms of planning, the statement, “Johnny needs to have his application in by May 24th” would

be considered a _________________________________

29. Every month, Ron takes his checkbook and compares it to his check register. This is known as

what?

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30. A successful life requires ____________________________________.

31. ________ What is an average ideal mortgage rate?

A. 1%

B. 8%

C. 5%

D. 22%

32. ________ Where a set amount of money is borrowed and repaid in fixed monthly payments is

known as a what?

A. Time Share

B. Dividend

C. Installment

D. Annuity

33. ________ What has the traditional down payment on a home been in American history?

A. 10% of the purchase cost

B. 15% of the purchase cost

C. 20% of the purchase cost

D. 50% of the purchase cost

34. ________ What is a balance?

A. The total sum of money you have available to you in your account

B. The total sum of money you have withdrawn from your account

C. The total sum of money you can expect to deposit in your account

D. The total sum of money you have available to you in credit

MARSHALL HIGH SCHOOL ECONOMICS

CONSUMER ECONOMICS UNIT EXAM APPLICATION PROBLEMS

Paul has made a New Year’s resolution to keep better track of, and be smarter in spending his money. Using the following information, help Paul by creating a budget for him. A. Paul makes $700.00 a week at his job B. Paul makes about $200.00 a month repairing lawn mowers on the side C. Paul’s rent is $650.00 a month D. Paul’s cell phone bill is $125.00 a month E. Paul’s electricity is $90.00 a month F. Paul’s satellite TV bill is $89.00 a month G. Paul still owes $300.00 on his motorcycle, he must pat atleast $50.00 a month towards this. H. Paul’s grandmother usually sends him a birthday gift of $200.00 in February each year I. Paul’s usual grocery budget is about $400.00 a month J. Paul’s car loan payment is $175.00 a month, and he needs his car to get to work and the

store K. Paul usually spends $45.00 a week in gas L. Paul would like to take his girlfriend on a nice vacation in July. He estimates this will cost

him about $2000.00 M. Paul usually spends roughly $50.00 a month in car maintenance N. Paul is trying to pay off a $25,000.00 student loan which he must pay at least $250.00 a

month on O. Paul usually spends $25.00 a month in clothes P. Paul spends $20.00 a month on haircuts, which he needs to do to meet his employer’s dress

code Q. Paul spends $26.00 a month in car insurance R. Paul likes to donate $100.00 a month to his church S. Paul likes to eat his lunch at the restaurant next door to his work place Monday through

Friday, and spends about $10.00 a day doing so. T. Paul owes his Dad $1000.00 for a home repair loan he got from him U. Paul currently has $6,000.00 in savings in his emergency fund. V. Paul has a girl he is “talking to” and likes to take her out on Friday nights. They usually go to

a nicer restaurant that averages about $40.00 for the meal, and then to a movie, or a club, which costs about $30.00 for the two of them.

W. Paul usually gets a $600.00 bonus from work in May each year Prepare Paul’s monthly budget using the provided table on the following page utilizing the format learned in class. Be sure to prioritize his spending as learned in class as well! In any category that is supposed to be overfunded, overfund it by 25%.

35. Is Paul’s budget balanced?

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36. What is one easy step he could take to save even more money without shutting anything

off or changing his priorities?

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37. What is the one area that if he cut it out, it would balance his budget?

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38. At the end of July, where does Paul stand with his emergency fund?

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39. Using the register and account statement on the following page, reconcile this account, and

then answer the question, did the account reconcile, why or why not?

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