Introduction to Business

Chapter 25: The Basics of Credit

Chapter Practice Review Quizzes

1
Which term refers to a person who lends money or provides credit?
A)debtor
B)consumer
C)creditor
D)borrower
2
Which term refers to a loan fee, or percentage of the amount borrowed?
A)interest rate
B)interest base
C)consumer credit
D)creditor rate
3
Which term could be used to refer to the use of credit by a manufacturer to finance the development of a energy-efficient truck?
A)commercial credit
B)consumer credit
C)military spending
D)government spending
4
Which is a factor that contributes to a good credit rating?
A)avoiding the use of credit
B)reaching your credit limit
C)using credit in an emergency
D)paying bills on time
5
Which is NOT an advantage of using credit?
A)traveling without large amounts of cash
B)handling emergency financial needs
C)committing future income to debt repayment
D)contributing to the growth of the economy
6
Which might cause your credit rating to be lowered?
A)using credit in an emergency
B)paying late or missing payments
C)using savings instead of credit
D)putting off purchases for a while
7
Which is something you should consider before using credit to finance a major purchase?
A)What is the difference between commercial and consumer credit?
B)What are the costs of using credit to make this purchase?
C)Will the purchase contribute to economic growth?
D)Have you recently used credit to make other purchases?
8
Which might be obtained from a department store?
A)a charge account
B)a credit card
C)a travel and entertainment card
D)a credit union account
9
Which depends on the degree of risk a creditor takes in lending money or selling on credit?
A)whether the loan is short-term or long-term
B)whether the borrower makes full or partial payment
C)the use of a credit card or charge account
D)the cost of the credit to the borrower
10
Which is NOT a way credit card companies earn money?
A)late fees and penalties
B)annual fees
C)interest
D)sales taxes
11
Which type of card often requires payment of the full amount due at the end of each month?
A)single-purpose card
B)travel and entertainment card
C)multipurpose card
D)installment card
12
Which would most likely be issued by a bank?
A)single-purpose card
B)travel and entertainment card
C)multipurpose card
D)charge account
13
Which is true of single-purpose credit cards?
A)Cardholders can pay part or all of the amount owed at the end of each 30-day period.
B)Interest is paid on the original amount financed at the end of each 30-day period..
C)Cardholders must pay the full amount owed at the end of each 30-day period.
D)Single-purpose cards can be used at different stores all over the world.
14
Which type of loan might a farmer use to finance the growing of a crop?
A)single-payment loan
B)installment loan
C)mortgage loan
D)seller-provided loan
15
Where might someone with no credit record or a poor credit rating expect to get long-term credit?
A)a bank
B)a credit card company
C)a payday advance service
D)a consumer finance company
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