Question

21 multiple choice 2 points what is the consequence of defaulting on a financial contract? a) no consequences b) decrease in credit score and potential legal action c) increase in credit score d) decrease in interest rates a b c d 22 multiple choice 2 points what does it mean to make responsible financial decisions? a) spending money impulsively b) making informed choices with your money c) ignoring financial responsibilities d) borrowing money without considering consequences a b c d

Explanation:

• For question 21: Defaulting on a financial contract means failing to meet the obligations (like repayment). Credit bureaus record this, leading to a lower credit score. Lenders or creditors may also take legal action (e.g., debt collection lawsuits). Options A (no consequences) is wrong as there are clear negative outcomes. Option C (increase in credit score) is incorrect as defaults harm credit. Option D (decrease in interest rates) is wrong; defaults may lead to higher rates (if one can get credit at all).
• For question 22: Responsible financial decisions involve careful thought. Option A (spending impulsively) is irresponsible. Option C (ignoring responsibilities) is the opposite of responsible. Option D (borrowing without considering consequences) is reckless. Option B (making informed choices with money) aligns with being responsible (e.g., budgeting, researching before big purchases).

Answer:

1. B. Decrease in credit score and potential legal action
2. B. Making informed choices with your money