Consumer Economics Flashcards

What is 'identity theft' and how can you protect yourself from it?

Answer: When someone uses your personal information without permission to commit fraud; protect yourself by monitoring accounts and guarding your SSN.

Identity theft involves stealing personal data (SSN, credit card numbers) to open accounts or make purchases fraudulently.

What does it mean to 'live within your means'?

Answer: Spending no more than what you earn, avoiding consumer debt for everyday purchases

Living within your means is a budgeting principle: spending less than or equal to your income and not using debt to fund normal lifestyle expenses.

What is the purpose of a 'credit report'?

Answer: To document a person's borrowing history, including payment record, outstanding debts, and credit inquiries

Credit reports (from Equifax, Experian, TransUnion) document your credit history — lenders use them to assess your creditworthiness.

What is a 'lease agreement' in the context of renting an apartment?

Answer: A legal contract between a landlord and tenant specifying rent, term, rules, and responsibilities

A lease is a legally binding contract stating the rental terms — both parties are obligated to its terms for the duration specified.

What is the primary advantage of using a credit card responsibly (paying the full balance monthly)?

Answer: Building credit history and earning rewards with no interest cost

Paying the full balance each month means no interest is charged while building credit history and potentially earning cash-back or travel rewards.

Which of the following is an example of a 'needs' vs. a 'wants' in personal budgeting?

Answer: Housing (need) vs. streaming subscriptions (want)

Needs are essential for survival and basic functioning (housing, food, utilities, healthcare); wants are extras that enhance life but aren't essential.