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

What is the general relationship between risk and reward?

the higher the risk, the higher the potential reward

Which will result from an increase in the demand for software programmers?

an increase in the wage of software programmers

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

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

risk, rate of return, liquidity

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

define the problem, list alternatives, and state criteria.

One consequence of scarcity is that:

people have to make choices among alternatives.

Human capital can be defined as:

Skills acquired through learning and volunteering

Which of the following is typically true?

People's choices have consequences for the future.

If Joe buys more auto insurance this year than last year, then Joe has decided that:

benefits of more auto insurance are greater than the costs

The government uses most of the money collected from taxes to

Provide goods and services for the public.

If Reno's cost of living index is 100 ($30,000 salary) and Boston' is 115 ($32,000 salary)

You will have more spending power in Reno

What is the difference between gross and net pay?

Net pay is gross pay minus deductions.

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

lets compound interest work in your favor

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Personal Finance Final Exam Review Part 1

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Answers

1
Which strategy is most likely to improve most people's financial situation over a lifetime?
using credit to spend more than a person earns
saving early in life when a person begins earning an income
Praying Aunt Sue dies soon and leaves you a lot of money
making financial decisions quickly based on intuition
2
Human capital consists of:
plant and equipment.
stocks and bonds.
knowledge and skills.
savings and investments.
3
What is the general relationship between risk and reward?
the higher the risk, the lower the potential reward
the higher the risk, the higher the potential reward
the amount of risk does not influence potential reward
there is a relationship, but it is uncertain
4
Which will result from an increase in the demand for software programmers?
an increase in the wage of software programmers
a decrease in the supply of software
a decrease in the price of software
an increase in unemployed software programmers
5
What is the opportunity cost to the individual who chooses to drop out of high school?
The lower interest rates one is charged for credit.
The higher income they could have earned in the job market
The payments made to companies hiring drop-outs.
The higher taxes one pays for leaving school early.
6
What are the three most important criteria to consider when investing?
risk, rate of return, liquidity
leverage, margins, credit
collateral, access to accounts, dividends
size, insurance, taxes
7
Liquidity risk is highest for which type of investment?
individual stocks
mutual fund
real estate
savings account
8
The first three steps of economic decision-making are to:
draw conclusion, construct models, and make generalizations.
gather facts, form a theory, and conduct a simulation.
define the problem, list alternatives, and state criteria.
identify assumptions, make a policy, evaluate the policy.
9
Making contact with people who may connect you to a potential employer is called
recruiting
networking
connecting
logrolling
10
Joe values (in order) a car, a boat, a cabin. He buys the car. Which is the opportunity cost?
boat and cabin
cabin
car
boat
11
Joe works full-time at Bob's Diner. Who pays the FICA contributions on Joe's wages?
Joe's employer only
Joe and his employer
Joe only
the federal government
12
A typical characteristic of entrepreneurs is that they:
enjoy working under supervision
would rather save than invest
are willing to take risks.
like to work part-time
13
One consequence of scarcity is that:
there is full employment of resources.
people have to make choices among alternatives.
the production of goods and services is constant.
products which are plentiful have relatively high prices.
14
Human capital can be defined as:
Money earned through human labor
type of work a person performs
Skills acquired through learning and volunteering
Fees paid to a college or university to take classes there
15
Which of the following is typically true?
People do not respond to prizes.
Everyone is always a winner.
People's choices have consequences for the future.
Correct choices have no costs.
16
Using rule of 72, how long will it take your money to double if deposited in an account at 7.2%
7.2 years
20 years
14.4 years
10 years
17
An example of a want and a need, in the correct order, is:
New automobile & basic clothing
A vacation & designer clothing
Basic clothing & adequate shelter.
Dishwasher& adequate shelter
18
What is the net pay? 30 hrs/week @ $10/hr Deductions - $50 fed, $20 state, $30 FiCA.
$200
$250
$300
$230
19
If Joe buys more auto insurance this year than last year, then Joe has decided that:
he will drive more safely in the future
more auto insurance will reduce his risk of an accident
benefits of more auto insurance are greater than the costs
this added insurance will help his savings grow faster
20
The government uses most of the money collected from taxes to
Finance the Internal Revenue Service.
Provide goods and services for the public.
Encourage private enterprise.
Establish food networks.
21
Which is an element of a financial goal?
Time bound.
Specific.
Realistic.
All of these
22
If Reno's cost of living index is 100 ($30,000 salary) and Boston' is 115 ($32,000 salary)
Spending power is the same for both cities
You will have more spending power in Reno
You will have more spending power in Boston.
Not enough information
23
What is the difference between gross and net pay?
Net pay is gross pay minus saving.
Net pay is gross pay minus deductions.
Gross pay is net pay minus saving.
Gross pay is net pay pay minus deductions.
24
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
lets compound interest work in your favor
is easier to save when you first begin earning income
locks in higher interest rates when you buy on credit.
25
How much money will you have if you put in savings $500 at 5% compound interest for 2 years?
more than $550
less than $550
exactly $505
exactly $550

Personal Finance Final Exam Review Part 1 Flashcards | StudBud