The government uses most of the money collected from taxes to

Provide goods and services for the public.

What is the general relationship between risk and reward?

the higher the risk, the higher the potential reward

Which of the following people do you think would need life insurance the most?

A single working mom with two kids

Why is it not a good idea to make early withdrawls from your 401k?

You usually have to pay a strict penalty

combination of letters and numbers

One consequence of scarcity is that:

people have to make choices among alternatives.

Credit history includes

savings and credit card accounts

A warranty from the manufacturer covers

Only what is included in the statement

requires membership but is just like a bank

Is a fee to payday loan company

An example of a want and a need, in the correct order, is:

Dishwasher& adequate shelter, New automobile & basic clothing

A 30-year-old woman has health insurance plan that has a 1,500 deductible. What does this mean?

She pays $1,500 of her medical expenses then insurance pays

An installment loan is

A loan paid off in equal payments over time

What is the difference between gross and net pay?

Net pay is gross pay minus deductions.

Which filing status has the lowest tax rate

Married filing jointly or qualifying widow

Beginning to save while you are young is recommended by financial experts because it:

lets compound interest work in your favor

What are the three most important criteria to consider when investing?

risk, rate of return, liquidity

Depends on amounts owed and payment history

The Better Business Bureau is

A nonprofit consumer organization

What is the opportunity cost to the individual who chooses to drop out of high school?

The higher income they could have earned in the job market

Human capital can be defined as:

Skills acquired through learning and volunteering

Which strategy is most likely to improve most people's financial situation over a lifetime?

saving early in life when a person begins earning an income

Diversification is good because

It spreads the risk of investment

The first three steps of economic decision-making are to:

define the problem, list alternatives, and state criteria.

Your landlord has the right to:

Charge you a late fee if your rent is late

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Personal Finance Final Exam Review

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Financial Literacy test review

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Questions 50

Answers

1
The government uses most of the money collected from taxes to
Establish food networks.
Finance the Internal Revenue Service.
Encourage private enterprise.
Provide goods and services for the public.
2
What is the general relationship between risk and reward?
the higher the risk, the lower the potential reward
the amount of risk does not influence potential reward
there is a relationship, but it is uncertain
the higher the risk, the higher the potential reward
3
Joe works full-time at Bob's Diner. Who pays the FICA contributions on Joe's wages?
Joe's employer only
the federal government
Joe and his employer
Joe only
4
Which of the following people do you think would need life insurance the most?
A single working mom with two kids
An elderly retired man with a wife who is also retired
A single wealthy businesswoman without dependents
A single college grad without kids starting his first job
5
Why is it not a good idea to make early withdrawls from your 401k?
You cannot put the money back in once you take it out
You usually have to pay a strict penalty
You will lose your tax-deferred status on the entire account
6
Joe values (in order) a car, a boat, a cabin. He buys the car. Which is the opportunity cost?
cabin
boat
car
boat and cabin
7
programs spent learning a trade such as firefighting, medical technology, or IT management.
apprenticeship
internship
occupational training programs
cooperative education
8
A good password:
Is an easiy remember number such as your phone number or SSN
combination of letters and numbers
Should be used for all your online accounts
Should be written down in your wallet
9
Human capital consists of:
water and wood
knowledge and skills.
stocks and bonds.
plant and equipment.
10
One consequence of scarcity is that:
there is full employment of resources.
products which are plentiful have relatively high prices.
people have to make choices among alternatives.
the production of goods and services is constant.
11
Credit history includes
savings and credit card accounts
being a good friend
Library fines
Only positve items, regardless of your borrowing past
12
A warranty from the manufacturer covers
Nothing after sixty days
All moving parts
Only what is included in the statement
Everything that goes wrong for a year
13
this agency educates consumers and businesses about their rights and responsibilities:
Federal Consumer Information Center
Food and Drug Administration
Consumer Product Safety Commission
Federal Trade Commission
14
When is a contract made between a buyer and a seller?
Every time you make a purchase
When you buy something with a credit card
When you buy something online
Only when the purchase is over $50
15
Joy's daughter lived at college for nine months during the year meets what test.
Member of Household
Relationship
Both
Neither
16
A Credit union
Can't keep savings accounts
requires membership but is just like a bank
Is only open to college students
Never has interest rates as good as a bank
17
This number helps you compare loans
APR
GPA
Principal
Credit Score
18
Co-insurance and co-payment refer to the same thing.
False
True
19
Liquidity risk is highest for which type of investment?
real estate
individual stocks
mutual fund
savings account
20
A typical characteristic of entrepreneurs is that they:
would rather save than invest
like to work part-time
are willing to take risks.
enjoy working under supervision
21
Making contacts with people who may connect you to a potential employer is called
recruiting
networking
connecting
logrolling
22
An overdraft fee
Is a fee charged by a business when a check you write bounce
Is the minimum balance required to be held in a bank account
Is a fee to payday loan company
23
An example of a want and a need, in the correct order, is:
Dishwasher& adequate shelter
Basic clothing & adequate shelter.
A vacation & designer clothing
New automobile & basic clothing
24
A 30-year-old woman has health insurance plan that has a 1,500 deductible. What does this mean?
Her insurance company is responsible for paying $1,500
She can deduct $1,500 from the hospital bill.
She pays $1,500 of her medical expenses then insurance pays
The hospital will only charge her $1,500
25
Saving accounts at banks are protected by
Risk and return curves
An annual percentage
FDIC insurance
Mutual fund returns
26
What does ATM stand for?
Automatic Talking Machine
Actual Teller Machine
Automatic Teller Machine
Automatic Telling Machine
27
What will keep you from owing more then what your vehicle is actually worth?
Down Payment
Finance charges
Interest
Insurance
28
An installment loan is
When an item is paid for before is is picked up
A credit card paid off right away
A loan paid off in equal payments over time
29
Using rule of 72, how long will it take your money to double if deposited in an account at 7.2%
7.2 years
14.4 years
20 years
10 years
30
What is the net pay? 30 hrs/week @ $10/hr Deductions - $50 fed, $20 state, $30 FICA.
$300
$250
$200
$230
31
You can best compare credit card offers by looking at these two features
Minimum payment
APR and fees
Introductory rate and credit limit
Principal and interest
32
Which is an element of a financial goal?
Time bound.
All of these
Realistic.
Specific.
33
What is the difference between gross and net pay?
Gross pay is net pay minus saving.
Net pay is gross pay minus saving.
Net pay is gross pay minus deductions.
Gross pay is net pay pay minus deductions.
34
Which filing status has the lowest tax rate
Single
Married filing jointly or qualifying widow
Head of Household
Married filing separately
35
Beginning to save while you are young is recommended by financial experts because it:
is hard to save later in life when you have more income
locks in higher interest rates when you buy on credit.
is easier to save when you first begin earning income
lets compound interest work in your favor
36
What are the three most important criteria to consider when investing?
leverage, margins, credit
size, insurance, taxes
risk, rate of return, liquidity
collateral, access to accounts, dividends
37
Your FICO score
Depends most on new account information
Is better if you have not held credit accounts for very long
Does not depend on your payment history
Depends on amounts owed and payment history
38
The Better Business Bureau is
A company that develops rules to protect consumers
A place to report fraud or identity theft
A government agency in charge of recalls
A nonprofit consumer organization
39
What is the opportunity cost to the individual who chooses to drop out of high school?
The payments made to companies hiring drop-outs.
The lower interest rates one is charged for credit.
The higher taxes one pays for leaving school early.
The higher income they could have earned in the job market
40
learning period including on-the-job training (with pay) and additional coursework at night.
occupational training program
cooperative education
internship
apprenticeship
41
Human capital can be defined as:
Fees paid to a college or university to take classes there
type of work a person performs
Skills acquired through learning and volunteering
Money earned through human labor
42
If Joe buy auto insurance that covers damages to others he causes that insurance is called:
Liability
No-Fault
Collision
43
Which strategy is most likely to improve most people's financial situation over a lifetime?
Praying Aunt Sue dies soon and leaves you a lot of money
making financial decisions quickly based on intuition
using credit to spend more than a person earns
saving early in life when a person begins earning an income
44
Improving your credit score will let you get
Higher interest rates on savings accounts
Neither of the above
Both of the above
Lower interest rates on loans
45
Diversification is good because
It spreads the risk of investment
Interest rates rise and fall
Mutual funds have higher fees than individual stocks
46
When paying bills online, a payee is
Someone you send a payment to
Someone who pays you
A middleman who relays a payment to another party
47
A series of numbers on a check that lets the payee know what institution to withdrawal payment
Account Number
Routing Number
Serial Number
48
The first three steps of economic decision-making are to:
draw conclusion, construct models, and make generalizations.
define the problem, list alternatives, and state criteria.
gather facts, form a theory, and conduct a simulation.
identify assumptions, make a policy, evaluate the policy.
49
How much money will you have if you put in savings $500 at 5% compound interest for 2 years?
more than $550
exactly $550
less than $550
exactly $505
50
Your landlord has the right to:
Charge you a late fee if your rent is late
Nothing at all
Enter your apartment without permission

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