Study Guide: Financial Literacy Unit 1

What is the definition of 'Hourly Wages'?

• Pay based on hours worked (can include overtime).

• A fixed amount paid regardless of hours worked.

• Payment received once a year.

• Earnings from selling products only.

What is the definition of 'Salary'?

• Fixed pay regardless of exact hours worked.

• Payment based on the number of products made.

• Wages paid only for overtime hours.

• Compensation given as a one-time bonus.

What is the definition of 'Gross Pay'?

• Total earnings before any deductions.

• Total earnings after all deductions.

• Only the amount received as bonus.

• Only the amount received as overtime pay.

What is the definition of 'Net Pay'?

• Actual take-home pay after deductions like taxes, Social Security, etc.

• The total amount earned before any deductions.

• The amount paid for overtime work.

• The gross salary including bonuses and allowances.

What is the definition of 'Earned Income'?

• Money from work (wages, salaries, commissions).

• Money received as a gift from relatives.

• Income from selling personal property.

• Interest earned from a savings account.

What is the definition of 'Unearned Income'?

• Money from passive sources like interest, dividends, rental income, or government benefits.

• Money earned from a full-time job or business.

• Income received from selling personal belongings.

• Wages received for manual labor.

Which of the following is an example of an involuntary (mandatory) deduction?

• Health insurance

• Retirement contributions

• Federal/state income taxes

• None of the above

Which of the following is an example of a voluntary (optional) deduction?

• Social Security

• Medicare

• Retirement contributions (e.g., 401(k))

• Federal/state income taxes

Which of the following is a reason why monthly income may vary?

• Commission-based jobs

• Fixed salary with no bonuses/overtime

• Both A and B

• None of the above

Fixed salary with no bonuses or overtime is generally stable.

• True

• False