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Practice Test Answers

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1
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Based on the receipt, what is the sales tax rate in Sacramento, California?

A
8 point 5 percent
B
6 point 2 5 percent
C
10 point 8 5 percent
D
10 percent
2
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A student who is interested in becoming an air traffic controller will make

A
less money than an athletic trainer and will have a harder time finding a job.
B
more money than an athletic trainer but will have a harder time finding a job.
C
less money than an athletic trainer but will have an easier time finding a job.
D
more money than an athletic trainer and will have an easier time finding a job.
3

Which explains Lauren’s error?

A
Lauren made an error in step 1 because she should not include entertainment in her expenses.
B
Lauren made an error in step 2 because she does not need to total the expenses.
C
Lauren made an error in step 1 because she should not include tips and commissions in her income.
D
Lauren made an error in step 3 because she should have subtracted the expenses from the income.
4

What does purchasing insurance for a business reveal about the business owner’s attitude toward financial risk?

A
It shows that the owner expects financial risk and is eliminating it by making an insurance company liable.
B
It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.
C
It shows that the owner is willing to share ownership of the business to reduce financial risk.
D
It shows that the owner is willing to budget for short-term financial risks to avoid long-term risks.
5

Bankruptcy is considered a last resort because it stays on someone’s record for

A
four to seven years.
B
seven to ten years.
C
one to four years.
D
eleven to fourteen years.
6

The best reason to record income at the top of a budget is

A
to easily add expenses to it.
B
to see that is is more important than expenses.
C
to know how much money is available.
D
to avoid spending too much money.
8

What is the job outlook for a US postal worker?

A
The career is shrinking and will provide fewer opportunities over time.
B
The career is shrinking and will provide more opportunities over time.
C
The career is growing and will provide fewer opportunities over time.
D
The career is growing and will provide more opportunities over time.
9

Credit unions differ from retail banks because they are

A
owned by their employees.
B
owned by shareholders who purchased stock.
C
owned by their members.
D
owned and managed by private corporations.
10

Quincy listed his assets and liabilities. Cash Rent Stocks Jewelry Student Loan Utilities Which are Quincy’s assets? Choose three correct answers.

A
cash
B
student loan
C
rent
D
stocks
E
jewelry
11

What is the definition of gross income?

A
amount of income saved per year
B
amount received after deductions
C
amount earned before deductions
D
amount of tax deducted from income
12

Which describes a type of tax that people pay on money they earn?

A
flat tax
B
progressive tax
C
income tax
D
purchase tax
13

What is the definition of liability?

A
the amount a consumer must pay after an incident before the insurance company starts paying
B
intentionally destroying something in order to collect insurance
C
a responsibility to pay for or fix a problem
D
the monthly amount paid for insurance
14

The best way to research an expensive product is to

A
watch many television commercials.
B
make a purchase and test it out.
C
read consumer information magazines.
D
visit multiple company websites.
15

Jessica is trying to get a credit card. She has a credit score of 790. How is Jessica’s lender likely to view this credit score?

A
Jessica is high risk and will pay her outstanding balances on time.
B
Jessica is low risk but will not pay her outstanding balances on time.
C
Jessica is low risk and will pay her outstanding balances on time.
D
Jessica is high risk but will not pay her outstanding balances on time.
16

The Smith family is deciding whether to buy a new washer or a gym membership. Which is the best example of a wise family spending decision?

A
The family meets to go over the budget and decide which item to buy.
B
The mother signs up for the gym and decides to get into shape.
C
The father sees a sale on washers and decides to buy one on the spot.
D
The family meets to discuss desires and decides to finance both items.
17

Which is considered a good credit practice?

A
Borrow more than one can afford to repay.
B
Pay more than the minimum amount that is due.
C
Use the credit card with the highest interest rate.
D
Make late payments.
18

A credit score tells a lender how

A
trustworthy someone is as a lender.
B
quickly someone will repay a loan.
C
much money someone will earn in the future.
D
trustworthy someone is as a borrower.
19

Which is an example of a short-term investment?

A
retirement fund
B
savings account
C
savings bond
D
checking account
20

Why were savings and loans (S&Ls) originally established?

A
to help people buy homes
B
to help people invest in the stock market
C
to help people save money
D
to help people invest in small businesses

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