1. Directions

You will read passages on the topic and then answer questions about them. You may find vocabulary at the end of the test. Read the questions carefully before choosing the correct answers.

2. Questions of the test

Question 1. Which of the following is NOT a principle of debt management?
A) Use debts for productive purposes
B) Take on debts that you can reasonably expect to pay back
C) Spend money on unnecessary or frivolous expenses
D) Be aware of the terms and conditions of any loans or credit agreements

Question 2. Which of the following is NOT a way to manage debt?
A) Pay off high-interest debts first
B) Consolidate multiple debts into a single loan with a lower interest rate
C) Ignore the problem and hope it goes away
D) Seek out help from creditors, financial advisors, or debt counseling organizations

Question 3. Which of the following is NOT a way to prioritize debts?
A) Pay off high-interest debts first
B) Pay off small debts first
C) Pay off debts with the highest balances first
D) Pay off debts in the order they were taken out

Question 4. What is NOT a benefit of consolidating multiple debts into a single loan with a lower interest rate?
A) It can make repayment easier and more manageable.
B) It can help to reduce the overall cost of borrowing.
C) It can free up more money for other expenses.
D) It can increase the risk of default.

Question 5. Which of the following is NOT a way to budget for debt repayment?
A) Setting aside a certain amount of money each month for debt repayment
B) Prioritizing debts and allocating a higher percentage of the budget towards high-interest debts
C) Neglecting to budget for debt repayment and hoping for the best
D) Seeking out additional sources of income to help with debt repayment