What is a payday loan?

A short term, high interest loan typically due on the borrower’s next payday.

What is one potential benefit of obtaining a college degree when it comes to job opportunities?

It may increase earning potential.

Which of the following financial objectives is an example of a SMART goal? Options: I want to save money., I plan to buy a new car next year., I will save $500 each month for the next 12 months to build an emergency fund., I hope to become a millionaire someday.

I will save $500 each month for the next 12 months to build an emergency fund.

Which element is necessary for establishing a financial goal?

Set a time limit in which the goal will be achieved.

To support the creation of a realistic budget, a person might: Review past expenses and income to determine spending patterns.

Review past expenses and income to determine spending patterns.

A person might adjust their budget to

Accommodate changes in income or expenses.

What might a person do if they consistently spend less than budgeted? Options: Increase their spending on non-essential goods and services., Ignore their budget., Add the excess funds to their entertainment budget.

Allocate the excess funds towards savings or debt repayment.

Which equation illustrates a balanced budget?

Gross income = variable expenses + fixed expenses.

Which statement best reflects how a person should approach the creation of an emergency fund? Options: As soon as possible, deposit 3-6 months of income in a savings account., Pay off all debts then deposit 3-6 months of income in a certificate of deposit., Invest 6-12 months of income in stocks and bonds before making a major purchase., Keep 3-12 months of income in cash in your home for ease of access.

As soon as possible, deposit 3-6 months of income in a savings account.

Which of the following best illustrates the concept of pay yourself first? Options: Putting a portion of income into savings before paying bills or discretionary expenses., Spending all income on daily expenses and saving whatever is left at the end of the month., Setting up a direct deposit instead of receiving a paper check from your employer., Borrowing money to cover major purchases.

Putting a portion of income into savings before paying bills or discretionary expenses.

What is considered the best way to prevent identity theft?

Shredding documents containing sensitive information.

How might advertising potentially influence a person’s spending?

Creating a sense of urgency to purchase a product.

Which of the following is an example of the Rule of 72? A person invests $1,000 at a rate of 9%. After 8 years the value of the investment is $2,000.

A person invests $1,000 at a rate of 9%. After 8 years the value of the investment is $2,000.

Which investment scenario yields the highest return over 5 years? Options: $1,000 invested at 4% simple interest annually., $1,000 invested at 5% simple interest annually., $1,000 invested at 4% compound interest annually., $1,000 invested at 5% compound interest annually.

$1,000 invested at 5% compound interest annually.

By increasing the interest rate, the Federal Reserves

Discourages spending or borrowing to influence the rate of inflation.

Which of the following statements best describes the benefit of contributing to a 401(k)? Options: 1. 401(k) contributions are taxed immediately, reducing your take-home pay. 2. Contributions to a 401(k) are matched by your employer, up to a certain percentage, increasing your retirement savings. 3. 401(k) contributions have no impact on taxes until retirement age. 4. Contributing to a 401(k) increases your monthly expenses.

Contributions to a 401(k) are matched by your employer, up to a certain percentage, increasing your retirement savings.

Which of the following best describes what financial planning allows a person to do? Manage income and expenses effectively to achieve financial goals.

Manage income and expenses effectively to achieve financial goals.

What is the potential benefit of a Roth IRA?

Tax-free withdrawals in retirement.

Why might a person choose to have an individual retirement account (IRA)?

To save for retirement and potentially receive tax benefits.

Which of the following is a disadvantage of home ownership? Potential increase in property value. Ability to customize and personalize living space. Accumulating equity over time.

Responsibility for maintaining and repairing the home.

Which of the following choices lists assets from MOST liquid to LEAST liquid? Savings accounts, certificates of deposit (CD), real estate. Money market accounts, bonds, checking accounts. Stocks, savings accounts, money market accounts. Bonds, real estate, certificate of deposit (CD).

Savings accounts, certificates of deposit (CD), real estate.

Which of the following reasons might lead someone to decide not to give a gift card to someone? Gift cards may not always be appreciated and may disappoint the recipient. Gift cards must be personalized and require more thought compared to other gifts. Gift cards can expire or include fees that reduce their value over time. Gift cards provide the recipient with unlimited options and flexibility in their purchases.

Gift cards can expire or include fees that reduce their value over time.

A person writes a check for $250. They have no overdraft protection and a current account balance of $175. Their bank will likely

return the check because of insufficient funds and charge a fee.

Which of the following best describes the difference between a debit and credit card?

Debit cards allow you to spend money that you already have in your bank account, while credit cards allow you to borrow money up to a certain amount.

Financial Literacy Flashcard 1.1 Practice

Flashcard

•

Social Studies

•

11th Grade

•

Practice Problem

•

Easy

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Used 1+ times

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47 questions

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FLASHCARD QUESTION

Front

Which of the following is a good example of making a financial 'trade-off'?
Options:
skipping a few classes at school to go shopping at the mall.
skipping a few dinners out to save for a weekend trip.
skipping a few days of work to look for a new job.
trading your U.S. dollars for Euros.

Back

skipping a few dinners out to save for a weekend trip.

FLASHCARD QUESTION

Front

What is the agency responsible for collecting taxes at the federal level?

Back

Internal Revenue Service (IRS).

FLASHCARD QUESTION

Front

If the inflation rate is 3%, how will it affect the purchasing power of someone typically spending $200 on consumer goods?

Back

Their purchasing power will decrease.

FLASHCARD QUESTION

Front

Who in our economy is most impacted by a rising rate of inflation?

Back

Retirees living on fixed incomes.

FLASHCARD QUESTION

Front

If a person increases the number of withholdings on their W4 form, their paycheck will

Back

decrease

FLASHCARD QUESTION

Front

What is the potential advantage of using a direct deposit for receiving a paycheck?

Back

It allows for quicker access to the funds compared to receiving a paper check.

FLASHCARD QUESTION

Front

Which answer choice reflects the mandatory federal payroll deductions that are typically withheld from an employee’s paycheck? Options: Social Security, Medicare, and Federal income taxes., Retirement, health insurance, and life insurance benefits., Medicaid, State, and Federal income taxes., Social Security, Medicare, State and Federal income taxes.

Back

Social Security, Medicare, and Federal income taxes.

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