Foundations in Personal Finance Chapter 7 Test Study Questions

Getting the best deal on a purchase involves . . . Having patience, negotiating and shopping around to find the best deal.
True or False: the mall is a good place to find a deal. False
What three reasons describe why using cash is a great bargaining tool? Cash is emotional, cash is visual, cash has immediacy.
Joe tries to bargain at an electronics store but in unable to negotiate the price down. His next step should be . . . Walk away
True or False: Using a cost-benefit analysis approach to your buying decisions will make you a wise consumer. True
True or False: In addition to economic savings, wise consumers also enjoy improved health and have a positive impact on the larger social and even global environment. True
True or False: Being a wise consumer involves developing a variety of skills, from product research to careful comparative analysis. True
True or False: Your choices as a consumer have no impact on the larger social environment. False
The “If I” take-away techniques involves . . . Negotiating the lowest price possible, then throwing something else into the deal.
The “Lucky Seven” rules can get you incredible deals on the stuff you buy every day, but they will only wok if you . . . Use them.
The Federal Trade Commission found that people who reported having more debt than they can handle were more likely to be victims of consumer fraud involving . . . Credit repair and debt consolidation
True or False: When selling something you own, you should find an uniformed buyer and charge the highest price possible. False
Store return policies must balance customer service and profits. As a consumer, to ensure the best possible store return process, you should . . . Familiarize yourself with the store’s return policy prior to your purchase, hold onto your receipt and keep the labels and price tags on them, return the item to the store as quickly as possible.
When trying to make your money go further, the following is not recommended . . . Buying brand-name products
When buying things at an auction, it is important that you . . . Familiarize yourself with the item you want to purchase (quality, condition, age, etc), don’t get caught up in the excitement and end up paying more than the retail price, set a limit on what you are willing to pay
True or False: Negotiation involves a conversation of back-and-forth, give-and-take True
True or False: If negotiation is done correctly, it will end up being a win-win deal. True
True or False: Just asking for a great deal doesn’t always mean that you’ll get one. True
True or False: A great deal often just happens by accident. False
True or False: Using cash gives you more bargaining power than using credit. True
True or False: Being married (or emotionally attached) to a purchase will cause you to lose bargaining power. True
True or False: Most of the items at a pawnshop are stolen. False
True or False: Learning to be quiet is actually a powerful tool in negotiation. True
True or False: Shopping for bargains is part of a healthy financial plan because it makes your hard earned money go further. True
True or False: In certain circumstances, it is okay to stretch the truth to get a bargain. False
True or False: Excluding the United States, most countries use negotiating as a way of life. True
True or False: Making informed choices as a consumer will usually yield savings. True
True or False: If you are trying to buy something, it’s not your job to come up with a good price. Make the seller work for your business. True
True or False: The good guy, bad guy technique is a negotiating tool that you should be aware of. True
The process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract. Foreclosure
The difference between the wholesale price and retail price . Markup
Having to do with a person’s honesty and moral attributes. Integrity
A type of yard sale with more items, usually the entire contents of a household. Estate sale
Retail store where people sell items and the owner of the shop gets a percentage of the sale. Consignment shop
The process of quantifying costs and benefits of a decision. Cost-benefit analysis
A public sale in which property or items or merchandise are sold to the highest bidders. Auction
To bargain for a lower price. Negotiate
The exchange of goods or services without the use of money. Barter
The ability to walk away from a purchase when negotiating. Walk-away power
What are the benefits of being a wise consumer? In addition to economic savings, wise consumers enjoy improved health and have a positive impact on the larger social and even global environment.
How can “walk-away power” be used as a negotiating tool? You must not be emotionally attached to the purchase. It’s only if you’re prepared to walk away from the purchase that you will have the ability to negotiate.
What role does research play in getting good deals on purchases? Researching a product prior to purchase makes you an informed consumer. Good negotiators are always armed with information about the product.
Why is honesty an important component of bargaining? Answers will vary.
What is the cost benefit of buying slightly outdated products? There is very little difference in quality and performance of slightly outdated products. However, the price difference may be significant.
Would you be willing to buy some off-brand clothing if it meant that you could meet a money goal (like saving for college or a car) more quickly? Answers will vary.
What are the most common types of consumer fraud? Based on a survey by the Federal Trade Commission, the most common types of consumer fraud are: bogus weight-loss products, nonexistent foreign lotteries, unauthorized buyer club enrollments, dishonest prize promotions and fraudulent work-at-home programs.

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