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- 1. Multiple Choice
An advantage of investing in mutual funds, is that they
guarantee a set rate of return
have low returns for the high risk
are backed by the United States government
provide diversification for a single investment
- 2. Multiple Choice
Coupons, "buy-one, get-one free" deals, sales, and discounts are
positive incentives encouraging people to spend money.
negative incentives encouraging people to spend money.
positive incentives discouraging people from spending money.
negative incentives discouraging people from spending money.
- 3. Multiple Choice
Which of these forms of taxation has been criticized for placing an excessive burden on people with less ability to pay?
luxury taxes
regressive taxes
progressive taxes
inheritance taxes
- 4. Multiple Choice
A tax on retail products based on a set percentage retail cost is called
sales tax.
excise tax.
income tax.
corporation tax.
- 5. Multiple Choice
What is an example of using credit?
A person withdraws money from a bank account using an ATM card.
A person borrows money from a finance company to buy a car.
A person deposits a paycheck into a savings account.
A person pays interest on an existing mortgage.
- 6. Multiple Choice
Homer wants to borrow money from the Springfield Bank to buy a new trampoline. The bank requires collateral for a loan. What is collateral?
a signed statement that the loan will be repaid
an increased interest rate for a high risk loan
something of value which the bank will receive if the loan is not repaid
money deposited in the bank which is greater than the amount of the loan
- 7. Multiple Choice
Bob would like to increase his earnings. The option MOST LIKELY to increase his earnings potential in the long-term is to
spend money to renew current training.
take a similar position with a different company.
spend money for additional training and education.
laterally transfer to a different job within his company.
- 8. Multiple Choice
An insurance policy with a higher premium MOST LIKELY has
a lower deductible.
no liability limit.
a higher deductible.
a lower liability limit.
- 9. Multiple Choice
For investments, how are risk and return related?
When the risk is low, the return is high.
When the risk is high, the return is low.
When the risk is high, the return is high.
When the risk is low, the return cannot be calculated.
- 10. Multiple Choice
Which of the incentives listed is MOST LIKELY a negative incentive used to discourage a specific action?
coupons
parking tickets
frequent flier miles
buy-one, get-one free
- 11. Multiple Choice
Why is there a difference between interest charged and interest earned?
Banks are non-profit institutions.
Banks are profit-making institutions.
Banks must pay more than they receive.
There is no difference between interest charged and interest earned.
- 12. Multiple Choice
How might fiscally responsible individuals use investments to meet financial goals?
Fiscally responsible individuals would not take the risk of investments.
Most investments have a guarantee of high returns in a short period of time.
Individuals delay the satisfaction from purchases now for possible greater returns later.
Investments give individuals greater returns now rather than delaying the satisfaction until a later date.
- 13. Multiple Choice
Jose is applying for an automobile loan. The lender considers Jose creditworthy MOST LIKELY because Jose
has a new job.
has a home mortgage loan.
has many credit cards already.
has made on-time payments to other loans.
- 14. Multiple Choice
Shanna's mortgage company requires insurance coverage. Which type of insurance would she need?
automobile
disability
life
property
- 15. Multiple Choice
Investment in education, training, and skill development has been linked to
declining job satisfaction.
growing financial instability.
increasing earnings for workers.
decreasing political participation.
- 16. Multiple Choice
Which type of insurance pays an insured person an income when that person is unable to work because of accident or illness?
Life Insurance
Health Insurance
Property Insurance
Disability Insurance
- 17. Multiple Choice
Kristi deposits, or invests, her paycheck in a savings account. The bank can then offer some of the money to a borrower in the form of a loan. How can Kristi benefit financially from this relationship?
Kristi can earn interest on her original deposit.
Kristi can feel good that she supported a borrower.
Kristi can choose to invest her money in another bank that doesn't make loans to borrowers.
Kristi can decide to take her money out the savings account before the loan is made to save money.
- 18. Multiple Choice
Sylvia is seriously injured when a tornado strikes, damaging her home, car, and leaving her unable to work for six months. Which insurance policy is she LEAST LIKELY to use in this situation?
disability
health
life
property
- 19. Multiple Choice
Of the following taxes, what is the name for the taxes that all homeowners must pay?
Sales Tax
Income Tax
Excise Tax
Property Tax
- 20. Multiple Choice
The federal personal income tax is an example of what kind of tax?
regressive tax
progressive tax
value-added tax
proportional tax
- 21. Multiple Choice
Which of these is LEAST LIKELY to determine credit worthiness?
payment history
length of employment
personal health history
personal educational background
- 22. Multiple Choice
Mr. Simpson has money which he would like to set aside for future use. He could put it in savings or he could invest it. What is the difference between the two options?
There is a greater risk if money is deposited in a savings account.
An investment has a set interest rate, but a savings account does not.
There is little risk of loss in savings, while investment implies some risk.
Mr. Simpson could increase his funds in a savings account, but not with an investment.
- 23. Multiple Choice
Andre creates a budget for himself. He would like to buy a new video game each month, but doesn't have enough money to do so in his current budget. Which parts of Andre's budget could he increase to have enough money for the new video game each month?
taxes
saving
income
investments
- 24. Multiple Choice
State governments often decide to place a "sin tax" on specific products or goods, like alcohol and tobacco. Which rationale is LEAST LIKELY to encourage governments to adopt a "sin tax"?
"Sin taxes" encourage people to consume less of a good because it is illegal.
"Sin taxes" quickly raise funds through indirect taxes affecting users only.
"Sin taxes" disproportionally affects lower income groups.
"Sin taxes" generate funding for special projects.
- 25. Multiple Choice
Mr. Simpson deposits his money in a savings account at the Springfield Bank. Would he earn more money with simple interest or with compound interest?
Simple interest earns more because simple interest always has a higher rate.
He would earn the same amount, as these are different terms for the same thing.
Simple interest earns more because the interest is determined annually on the original amount.
Compound interest earns more because the amount on which interest is paid increases over time.
- 26. Multiple Choice
The financial institution that generally charges the LOWEST rates on loans is a
credit union.
finance company.
commercial bank.
savings and loan.
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