People, money, psych final
Terms in this set (90)
During expansion, which of the following is high?
The economic phase with conditions making it easy for consumers to buy homes, cars, and other goods is called
The statistic that measures the value of all goods and services produced in the United States is the
gross domestic product
The rate of increase in prices of items purchased by an individual is called the
personal inflation rate
Which of the following is an example of a financial opportunity cost?
____ is the current value of an asset that will be received in the future.
Occasionally, the economy will dip into a trough before it has reached a new peak after a previous trough. This phenomena is called a
The tendency for people to value some dollars (like casino winnings) less than other dollars (like paycheck money) and thus waste them is called:
Epley, Mak, and Chen set up an experiment where students were told they were receiving a $25 windfall as part of a research project and could spend as much as they wanted at a "lab store" filled with small campus bookstore items. They were told that any money they didn't spend would be sent to their address in the form of a check. But half the students were told the $25 was a "bonus" and half were told the $25 was a rebate. Which choice describes what happened next?
84% of students who were told it was a bonus spent some or all of their $25 windfall
Mental accounting can make you:
all of the above
all of these
According to Money Habitudes, the person who says "I really don't want to worry about money; God will provide" best fits the _________________ habitude:
To set the stage for financial success, one must
identify financial values and goals
Disposable income is income
after all employer withholding including taxes
Discretionary income is used to pay for things like
The process of recording the sources and amounts of dollars earned and spent is called
Zhong and Leonardelli asked 30 people to recall an instance where they were socially excluded, and another to remember a time when they felt included. Then they asked their subjects to guess the temperature of the room. What happened?
The ones remembering social exclusion guessed the room as colder than it was.
The study and explanation of how the structures and functions of the brain affect our financial decisions is called:
The reflexive system of the brain:
Is the source for emotions like disgust, fear, and greed.
Tversky and Johnson had subjects read depressing, anxiety-inducing, uplifting, or neutral news stories and then asked them to estimate the number of people who die each year as a result of traffic accidents, leukemia, and homicide. What happened?
A and C above
Which of the following is the best example of a well-stated financial goal?
Buy a $3,000 computer in 18 months
The first step in the budgeting process is
setting financial goals
A balance sheet includes ____, ____, and ____.
assest; liabilities; net worth
A cash-flow statement is also known as a(n) ____ statement.
income and expense
Assets on the balance sheet are valued at their
fair market value
Which of the following is classified as a tangible asset?
Rent and insurance payments are examples of
Food, clothing, and entertainment are examples of
Forgetting money that's already been spent is called:
sunk cost fallacy
What do behavioral economists call our feelings about loss?
Taxable income is determined by subtracting all but which of the following from gross income.
____ taxes are based on one's ability to pay.
Adjustments to gross income
all of these
Qualifying contributions to personal retirement accounts are subtracted as
adjustments to income
Total itemized deductions must be ____ to reduce your tax liability.
greater than your standard deduction
Iris Rosales is an unmarried college student age 21, and is claimed as a dependent on her married parents' tax return. What is the maximum number of personal exemptions Iris can legally claim on her own tax return?
The penalty for tax evasion can include
all of these
A way to defer income taxes to later years is to
all of these
Which of the following demonstrates the "Lake Wobegon Effect"?
In a 1981 survey of Swedish drivers, 90% considered their driving above average.
The tendency to overestimate our abilities and underestimate the amount of time it takes for us to do something is called:
Of these four items, which is most aptly described as a need?
A consumer can save money by
all of these
Buying without fully considering priorities and alternatives is called
Which is not a step in the planned buying process?
purchasing on credit
Most people should not make buying decisions for expensive purchases
inside a retail store or in a showroom
Using the decision-making grid below, calculate the total score for Appliance "D."
The term used to describe righting a wrong is
The Fderal Trade Commission's "cooling off" rule allows you to
cancel a contract to purchase an item costing over $25 that is signed away from the dealer's normalplace of business within three days.
When you have a consumer complaint, it is important to deal with ____ before moving to other channels.
the actual seller
Dan Arielyand a colleague hired on as waiters in a pub in North Carolina. Half their customers were to tell them their beer order out loud; the other half received order forms to order their beer. What happened?
The customers who gave their beer order aloud ordered a wider range of beers.
____ publishes a list of recommended used cars in various price ranges each April.
The dealer cost of new cars averages about ____ percent lower than the sticker price.
The true cost of an automobile to the dealer is
invoice price less any dealer discounts
Owing more on a vehicle loan than the vehicle is actually worth is called being
An automobile buyer can call the National Highway Traffic Safety Administration website www.safecar.gov to get information on government safety test results, recalls, and
____ has (have) historically been favored by Americans as the most preferable housing alternative.
____ are typically characteristic of older homes.
____ rarely appreciate(s) in value.
An increase in the value of a home is called
Homeowners today often spend up to ____ percent of disposable income on housing.
30 to 40
Anna received a brochure in the mail about a work-at-home opportunity promising she could make up to $500 in six months. For $99, she could receive an exclusive mailing list and a set of brochures (oddly just like the one she received). She was told in instructions that if she got all the brochures addressed and mailed out, and sent confirmation to a PO Box, she would receive $50 plus reimbursement for stamps, another mailing list, and another pile of brochures. She sent her $100, mailed out her first set of brochures, sent confirmation to the PO Box, and waited. She never received her check for $50 and she was out $99. What kind of fraud is this most like?
Charging too much for a legitimate good or service is known as:
A deliberate misrepresentation of key facts in order to secure an unfair financial gain is called:
People often get defrauded by people who appear to be "like them" and thus trustworthy (for example, Bernie Maddoff targeted fellow Jews specifically. Which heuristic you've previously learned about does this sound most like:
When an elderly woman was asked why she had put $80,000 of her life savings into an investment boiler room fraud, she said, "The man on the phone sounded like such a nice young man, working his way through college. He couldn't possibly have stolen my money." Which heuristic does this sound the most like?
If you are suspicious about a "great opportunity", which is the best place to contact first(because they'll be able to help you the most)?
state attorney general's office
Which of the following is a ripoff rather than fraud?
A spring break package where you're informed of all the terms of the package --- in fine print.
Which of the following is considered fraud?
taking money for a service, but not performing the service
Some people who have fallen for frauds have previously said, "I'll never fall for a fraud!" What would behavioral economics say about that?
it's overconfidence -- most people think they're smarter than they are
In fraud, people often get involved because their neighbor gets involved, and he/she must know something I don't. What is this called?
Which of the following items is least appropriate to purchase with a credit card unless you will pay the bill in full when the statement is received.
The full additional cost of credit measured in dollars is called the
You are seriously overindebted if your debt payments-to-disposable income ratio is
People slip up in building and maintaining good credit when they
pay more than 14 percent of disposable income toward non-mortgage debt payments
Interest rates that go up and down according to interest rates in the economy as a whole are referred to as
Most credit cards have a grace period only if
you paid the balance in full the previous month
Federal law states that bills must be mailed to cardholders at least ____ days before payments are due.
Single-payment, open-ended, and service credit are lumped together under the category of
If you weigh one piece of information that confirms your suspicions as more important than information that does not confirm your suspicions, you are falling into the heuristic of:
Suppose you start out with a credit card at 18% APR. Later on in your life, you don't even think about changing your credit card because you're used to 18% interest and "that's as good as it gets". Your lack of curiosity about credit card APRs might be due to which bias?
In insurance, risk is defined as the ____ a financial loss will occur.
uncertainty about whether
Fire, theft, illness, and accidents are all examples of
In managing property and liability risk, you should
keep good records that could serve to document insured property losses.
Homeowner's insurance includes
both property coverage and liability coverage
After a Halloween night of madness on Sixth Street, Mark and two friends took Mark's four-wheel-driving Bronco for a midnight tour of campus. The next morning campus police found Mark and his Bronco in the middle of the campus fountain. Damage to the fountain is covered by Mark's ____ insurance, and damage to the Bronco is covered by ____ insurance.
property damage liability; collision
Life insurance needs are ____ until your first child is born, then the need is ____ until the youngest child is ten, and then the need ____ until retirement.
low; high; decreases
The largest final expense for most families would be
The person who receives the proceeds of a life insurance policy at the death of the person whose life is insured is the.
A term life insurance policy will pay out the ____ value if the insured dies during the term of the contract.
The best use of the money saved when you buy term versus cash-value life insurance is for
investing for the future; especially retirement