Question

1. If a consumer makes monthly payments of $250 to pay off a car loan, what type of credit is she using? (1 point) non­revolving revolving short term unsecured 2. Caitlin wants to buy an airline ticket, but she’s uncomfortable taking that much cash to the counter at the airport. Instead, she uses her credit card. Which advantage of credit is being demonstrated here? (1 point) emergencies building a credit line protection of purchases purchase power 3. Which is an example of a variable expense category? (1 point) car payment gym membership birthday gifts insurance 4. What is a benefit of using a financial tool to track your budget? (1 point) It provides you discounts for the things you buy most often. It gives you a visual of your income and expenses. It keeps all of your personal information protected. It makes banks more likely to offer you low-interest rates. answers b d a c

Answer 1

1. If my memory serves me well, if a consumer makes monthly payments of $250 to pay off a car loan, she is using non revolving credit. Non revolving credit is a type of credit which should be paid off with regular monthly payments. The loan is paid off over time which depends on a contract.

2. The main advantage here is purchase power. In her case, credit car is more comfortable way than cash. With credit card she can afford to buy anything she needs without any problems.

3. In my view birthday gifts is the best example of a variable expense category. Variable expenses are the costs that respond to some activity changes, like shipping costs, packaging and so on.

4. The benefit of using a financial tool to track your budget is that it gives you a visual of your income and expenses. It's very important to have a visual of your money as it allows you to learn how to manage your budget.