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Duplicate of Financial Literacy Prep for Wise Test
Duplicate of Financial Literacy Prep for Wise Test
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Financial Literacy Review from Everfi
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Answers
1
What is an example of an excise tax?
a driver's license fee
a tax on cigarettes
a highway toll
an income tax
2
Which of these is not an example of international trade?
the USA buying bananas from Honduras
the US buying kiwis from New Zealand
the US buying pineapples from Hawaii
the US buying olives from Greece
3
An installment loan is:
like a credit card where you can purchase items in separate installments
a loan paid off in one lump sum
a loan from your mom that you will pay next month
a loan in which you make monthly payments
4
Demand is
the amount of something that is available
another name for a service
the number of people who want or need something
a name of a coin used in the Caribbean
5
a tax on the value of the property owned by a person
excise tax
property tax
social security tax
sales tax
6
Which of these is a characteristic of a market economy
profits from the slae of goods and services are retained by the business
most economic decisions are based on custom and tradition
business decisions are controlled by the government
land and factories are owned by the government
7
Which of the following describes a command economy?
Business owners are encouraged to make a profit
consumer demand determines the prices of goods and services
labor unions work for improving employee benefits
government owns most of the productive resources
8
Which of the following is NOT a goal of the Federal Reserve?
Reduce property taxes
Stabilize the economy
Reduce inflation
Slow down recessions
9
Identity thieves can use your personal information to
Sign up for electricity service
Open a credit card
Get a cell phone contract
All of the above
10
When the supply of a good is low, and the demand is high, what usually happens to the price of the good?
It goes down.
It depends on the item.
It doesn't change.
It goes up.
11
A worker at Best Buy makes $10 an hour. This worker earns
Tip
Salary
Commission
Wages
12
Where supply and demand curves meet is known as:
equilibrium
connection
coincide
equal
13
Which of the following best describes an entrpreneur?
a person who directs international trade with other countries
a person who works in a factory
a person who starts a business the make a profit
a person who leads the army to victory
14
When the news says the Consumer Price Index (CPI) has risen it means
the stock market is in a profitable period
economy has experienced deflation
gross domestic product has decreased
the cost of many goods and services has increased
15
The best way to investigate fraudulent transactions on your credit card is to:
Keep track of your monthly budget
Review your recent credit card statement
Keep a copy of your bank statements in a safer place
Review all old bank statements
16
When people borrow money from a bank, they pay bank the amount borrowed, plus
principal
interest
taxes
savings
17
CREDIT LIMIT
obtaining money, goods/services with a nominal initial payment
the maximum amount that a borrower can borrow on a loan or credit card
a business that operates as a legal entity separate from its owners
the price of a good or service
18
Pay that is figured under hourly rate
commission
Wage
Bonus
19
Which of the following will charge the highest interest rate and fees?
credit cards
credit unions
pawn shops and payday lenders
Banks
20
The form you complete to determine how much tax to withhold from your paycheck is the_______.
W-2
1040 EZ
1099
W-4
21
What is supply?
how much of a good or service people want to buy
something that people make or grow
how much of a good or service is available to buy
work that people do for other people
22
A voluntary payment offered to an employee based on quality of service
salary
salary
bond
tip
23
Insurance can help you:
protect against unexpected accidents
cover all out of pocket costs
reduce the chances of getting into accident
minimize monthly expenses
24
In 1993, the US, Canada & Mexico signed NAFTA. what was the initial result of the agreeent?
the three countries began trading only with each other
the minimum wage in the US decreased
unemployment and poverty increased in the US and Mexico
buying and selling among the three countries increased
25
Which of the following is not a function of the federal reserve?
A. conducting monetary policy
D. stabilize interest rates
C. set minimum wage
B. manage inflation
26
Which of the following would hurt your credit score
having a variety of credit types
maxing out your credit cards
getting a credit card
having a long credit history
27
Which are the correct orders of investments from Lowest risk to Highest risk?
Saving bond−Diversified mutual fund–Stock
Stock−Savings bond−Diversified mutual fund
Diversified mutual fund−Saving bond−Stock
Savings bond−Stock−Diversified mutual fund
28
Cameron is in school for an engineering degree&is working for a business in his field as a requirement for his degree.
He is working in the gig economy
He is earning commission.
He is employed as a freelancer
He is working an apprenticeship
29
The biggest difference between a debit card and a credit card is:
A debit card can't be used to rent cars
A debit card doesn't proves you are responsible with money
A debit card only allows you to use money you already have
You can't make online purchases with a debit card
30
You have $20. You can go out to dinner with friends or go to movie . You chose movie, so what is the opportunity cost
the experience you could have had at dinner
the actual cost of the movie ticket
spending the $20
deciding which snacks to buy at the theater
31
Which term best describes the economic situation in which there are unlimited wants but limited resources available
surplus
deficit
scarcity
inflation
32
In macroeconomic, what do we call the lowest point of the Business cycle
A trough
An inflation
The peak
A depression
33
Which of the following are NOT deducted on a typical paystub:
Social security tax
State Income Tax
Medicare tax
Sales tax
34
Which document puts you at the least risk of identity theft?
paycheck stubs
Old tax records
Pre-approved credit card offers
Cash receipts
35
Which of the following is generally true about 401(k) and 403(b) retirement plans?
they restrict when you can withdraw your money
all the above
they are plans offered through employers
they offer some tax benefits
36
intellectual property law is needed to cover :
I II III
I III IV
II III IV
I III IV
37
Pizza Store bought a faster dough maker machine/sales doubled. Which statement describes why?
as a consumer, he wanted to spend less time cooking.
as a consumer, he wanted to have a sucessful restaurant
as a producer, he invested in capital goods to increase production
as a producer, he paid less for ingredients to make a profit
38
Jan pays $70 each month for her auto insurance policy.This regular payment is called a:
claim
premium
co-pay
deductible
39
In which economic system does the government have the most control over a country's economy
command
traditional
market
mixed
40
What type of fiscal policy would Congress use to end a recession, or economic downturn?
reduce taxes
lower federal spending
increase tariffs
raise interest rates
41
Why is rent a fixed cost for a college student living in an apartment?
the monthly rent can be expected to stay the same for the term of the lease
a limited # of people live in the apartment due to the terms of the lease
the landlord may change at any time during the lease
students pay their leases in advance for the entire rental period
42
Which institutions give loans?
all
credit union
pawn shop
payday lender
43
Someone who organizes, manages, and assumes the risk of owning a business
Entrepreneur
Sole proprietorship
Partner
44
It's best to start saving for retirement when you're about 15 years away from retirement
True
False
45
The US government purchases a lot of an item (ex. vaccines), what would be the 1st result on the circular flow of $
labor will decrease
available products will decrease
wages for workers will increase
it would increase revenue for businesses
46
When buying stock in a company, you are:
investing in an index fund
diversifying your portfolio
buying a portion of the company
loaning money to a company
47
Which of the foloowing is most likely to happen as a result of high unemployment
an increase is sales tax revenue
a decrease in the need for social services and welfare
an increase in consumer spending
a decrease in consumer spending
48
What is a credit union?
Where ppl with bad credit acquire loans
It's the same as a bank
a financial institution that focus on mortgages and auto loans
Non-profit financial institution that is owned by its members
49
Which of the following isthe best example passive income?
money that has been inherited
A teacher's paycheck
dividends earned from stock an investor owns
a landlord's profit on rent
50
When you purchase an item in a store, you may be charged__________.
capital gains tax
sales tax
property tax
income tax
51
What is the difference between scholarships and student loans
Scholarships are always based on grades
scholarships have to be paid back
Student loans will have to be paid back after graduation
both are used to help pay for college
52
All of the following are economic indicators that the economy is improving EXCEPT
increase in Gross Domestic Product
decreasing unemployment rates
decrease in the Stock market
increased sales of new housing construction
53
What type of investment has the highest risk?
Stocks
money market account
Savings Account
Bond
54
Which asset is more liquid or easier to spend?
a house
money in a certificate of deposit
stocks
a savings account
55
Which of these actions would most likely result in a decrease in consumer spending
increasing income taxes
decreasing the interest rate
decreasing the reserve requirement for banks
increasing government spending
56
When Rebecca had a child she opened a 529 savings plan. This plan
opened a college savings account with tax breaks for her child
opened a retirement savings account for Rebecca
created life insurance for her baby
made sure her child was covered under life insurance
57
What is a recession?
A period of time in which the economy goes up
a period of decreasing unemployment
A period of prosperity
A period of time in which the economy goes down
58
The Federal Reserve performs all of the following duties EXCEPT
provides financial services to govt
oversees banks
collect income tax revenue
regulates interest rates
59
A shift in the supply curve to the rights means:
the amount producers wish to sell at every price decreases
the amount producers wish to sell at every price is the same
All of the above
the amount producers wish to sell at every price increases
60
Which investment offers the lowest risk?
mutual funds
Stocks
Savings Account
Bonds
61
Which of the below statements best describes a social media influencer?
someone who posts on social media
someone who creates a lot of videos
someone who shares ads on social media
Someone who has many followers and tries to get them to buy from sponsors
62
What is a mortgage?
a measure of your credit rating
a measure of the value of a home
A type of rent used to pay for housing
a type of loan used to buy property
63
Renting provides_________flexibility but can lead to_________costs in the long-‐term
greater; lower
less;lower
less;higher
greater; higher
64
Your
net worth
is the difference between the amount you own and the debts you owe.
False
True
65
Which earns you more money on your investments over time?
No interest
it is a gamble
Compound interest
Simple interest
66
A teen saved $500. He hoped to save fora used car. he spent it at the beach & concert. What is opportunity cost?
trip to beach
trip to concert
used car
500
67
Compounding of interest allows a principal amount to grow at a(n) ____ rate than simple interest.
faster
exchange
slower
equal
68
Mrs. Wallen just paid her yearly pool dues of $350. This is a(n)
fixed expense
periodic expense
variable expense
investment
69
An investment portfolio should always be diverse.
True
False
70
The main trade-off that all investors must consider is:
income vs cost
risk vs return
diversity vs uniformity
stocks vs bonds
71
What are pensions and 401ks?
Taxes you pay
college savings plans
Insurance you buy
Ways to save for retirement
72
What is the primary reason a corporation issues/sells stock?
to help investors earn high rate of return
to raise money to grow the company
increase investor awareness of the company
distribute the risk of bankruptcy across investors
73
How will late bill payments affect a person's financial health?
the person will pay more income taxes to the government
the person will not qualify for loas for bigger purchases
the person will earn less annual income
ther person will have more money to spend on other things
74
How often are credit card statements issued?
every month
everytime you use your credit card
each year
6 months
75
The return investment (ROI) from education is typically the highest for:
a college applicant
A high school graduate
Someone with a 2 year degreee
someone with a 4-year degree
76
Committing money to an enterprise in order to earn a financial return is known as___.
salary
Plan of action
wages
Investing
77
What is a benefit of the federal minumum wage law?
employers are encouraged to hire more workers
employers are required to traain more workers
workers are guaranteed a certain income.
workers are allowed to organize into labor unions
78
When would you be charged an overdraft fee?
when you spend more money than what is in your bank account
when you are charged interest on a loan
when you get a mortgage loan
When you open a new credit card
79
What is inflation?
when the interest rates are increased by the Federal Reserve
The rate at which the general level of prices goes down
when the general level of prices goes up
When there is a reduction in the supply of money or credit
80
Which action do corporations offer to make people more willing to invest in their companies?
they offer dividends
they secure asset protection
they extend discounts on products
the offer a savings account
81
Which of the following social media tactics means getting someone to buy because others are buying?
bandwagon appeal
aspirational buying
juxtaposition
flattery
82
Using the FAFSA form,you can apply for:
mortgage loans
the federal work study program
federal student loans
both a and b
83
Which of the following is an advantage of federal student loans?
federal student loans must be paid back while in school
federal student loans have a fixed rate
you don't have to pay back federal loans
federal student loans do not accumulate interest
84
When is the trough
2009
2007
2008
2010
85
How do banks make it easier for people to buy and sell goods
by charging late fees
by collecting property taxes
by provididing checking accounts
by printing money
86
Pay that is fixed amount regardless of hours worked
Bonus
bonus
Salary
Tip
87
What is the safest way to dispose of old bank account statements?
Shred them in a paper shredder
Throw them out in trash
Keep them bundled together in a folder
Put them in the trash unopened
88
The consumer price index (CPI) represents
the average cost of goods and services
the interest charged on reserves loaned to banks
the total number of goods and services produced within a nation
the reserve that banks are required to hold
89
what is a capital gains tax?
a tax on profit from investments
a tax that is specific to each state's capital
an exclusive tax given to the wealthy
a tax on profit from housing investments
90
When you purchase a municipal bond, you are:
loaning money to a local government
diversifying your portfolio
investing in a index fund
loaning money to the federal government
