AnswersEconomicsFundamental Economic Concepts: Personal Finance

Practice Test Answers

12 verified answers
1
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What is the definition of gross income?

A
amount of tax deducted from income
B
amount earned before deductions
C
amount received after deductions
D
amount of income saved per year
2
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One advantage to buying a CD is that it

A
can be used for long-term retirement.
B
is high risk but backed by the government.
C
can be purchased for different amounts.
D
is high risk but comes with great rewards.
3

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

A
to help people invest in small businesses
B
to help people save money
C
to help people buy homes
D
to help people invest in the stock market
4

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

A
to easily add expenses to it.
B
to avoid spending too much money.
C
to know how much money is available.
D
to see that is is more important than expenses.
5

Most investors approach risky investments by

A
investing less money in low- and medium-risk investments.
B
investing the same way that they do with safer investments.
C
investing more money in the stock of unknown companies.
D
investing less money in high-risk investments.
6

Companies report people to credit agencies if they

A
fail to use different types of credit.
B
borrow too much money.
C
fail to pay their bills on time.
D
use large amounts of credit at once.
7

Which two factors have the greatest influence on risk for an investment? Choose two correct answers.

A
the demand for the investment
B
the need for the investment
C
the duration of the investment
D
the importance of the investment
E
the history of the investment
8

Credit unions differ from retail banks because they are

A
owned and managed by private corporations.
B
owned by their members.
C
owned by shareholders who purchased stock.
D
owned by their employees.
9

Which describes the difference between a personal loan and a credit card?

A
Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.
B
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
C
Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases.
D
Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow.
10

What is one way employers get employees to participate in a 401k?

A
by requiring them to opt in if they want to participate
B
by giving them an annual pay raise
C
by giving them a signing bonus when they participate
D
by requiring them to participate unless they opt out
11

What is most likely Yuri’s motivation behind buying the pricier pair?

A
emotional spending
B
confused sense of needs and wants
C
greedy spending
D
conspicuous consumption
12

Which detail is most likely to give consumers a false sense of security about using Edgozene?

A
two bottles for 29 point 9 5 dollars
B
no other diet pill offers
C
for a limited time
D
our proven supplement

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