AnswersFL-2102371-Personal Finance and Money ManagementUnit Test

Unit Test — Unit test Answers

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1
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In the formula I=P·r·t, what does r stand for?

A
Rate: the percent that interest is paid annually as a decimal
B
Ratio: the size of the interest interval compared to time
C
Return: how much money you end up earning
D
Reserves: how much money you have in the investment
2
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A principal of $5,350 is placed in an account that earns 3.5% interest. If the interest is compounded annually, how much money will be in the account at the end of 4 years?

A
$5,760.06
B
$5,537.25
C
$6,099.00
D
$6,139.25
3

Approximately how much principal would need to be placed into an account earning 3.575% interest compounded quarterly so that it has an accumulated value of $68,000 at the end of 30 years?

A
$23,706
B
$23,377
C
$52,069
D
$58,944
4

Why is simple interest useful for planning parts of your financial future?

A
Simple interest can endure unforeseen economic changes by fluctuating.
B
Simple interest generates more money than any other source of income.
C
Simple interest grows more quickly if you invest in it longer.
D
Simple interest is very regular and can be calculated in advance.
5

Mary and Lewis each open a savings account at the same time. Mary invests $3,700 in an account yielding 3.2% simple interest, and Lewis invests $3,000 in an account yielding 5.9% simple interest. After fifteen years, who has the greater total amount of money, and how much greater is it?

A
Lewis has $879 more than Mary.
B
Lewis has $179 more than Mary.
C
Mary has $776 more than Lewis.
D
Mary has $345 more than Lewis.
6

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have the greatest accumulated value at the end of one year?

A
An account earning no interest
B
An account earning simple interest
C
An account earning interest compounded annually
D
An account earning interest compounded daily
7

Which banker would a software company most likely visit for help to raise large amounts of capital to acquire, or buy out another company?

A
a community banker
B
an investment banker
C
a commercial banker
D
an executive banker
8

How do central banks govern the banking industry? Check all that apply.by deciding how much banks must keep in reserveby overseeing the nation’s payment systemby supervising the loan process at banksby printing money for distribution to banksby responding quickly to banking crises that occurby auditing banks based on current regulations

b
by deciding how much banks must keep in reserve
b
by overseeing the nation’s payment system
b
by supervising the loan process at banks
b
by printing money for distribution to banks
b
by responding quickly to banking crises that occur
b
by auditing banks based on current regulations
9

Consumers having more money to purchase computers will most likely result in

A
a decrease in prices for computers and computer accessories.
B
an increase in prices for computers and computer accessories.
C
a decrease in prices for computers, but not computer accessories.
D
an increase in prices for computers, but not computer accessories.
10

Typically, high inflation is a sign of

A
a healthy economy because it results from a fall in production costs.
B
a healthy economy because it results from a rise in consumer interest.
C
a struggling economy because wages cannot keep up with the increase in prices.
D
a struggling economy because it results from a fall in consumer interest.
11

Which of the following retirement plans places a maximum amount that an individual can contribute to the fund in a given year at $5,000?

A
401(k)
B
Tax-Deferred Annuity
C
Pension
D
IRA
12

June has a savings account with an annual simple interest rate of 2.6%. She hopes to gain $6,500 in interest over a period of eleven years. To accomplish this, June invested $17,801 in the account, but later realized that this was not enough money. To the nearest dollar, how much more money should June have initially invested to reach her goal?

A
$6,335
B
$3,715
C
$1,409
D
$4,926
13

best

I
Interest enables them to control the economy.
I
Interest helps them to satisfy customers.
I
Interest enables them to stockpile money.
I
Interest helps them cover business costs.
14

Which is an effect of stagflation?

A
Trade with other economies increases.
B
The value of a country’s currency drops.
C
Prices for goods fall sharply and suddenly.
D
The GDP rises along with production levels.
15

Porsha calculates the amount of money she will have at the end of 6 years on a $5,000 investment earning 3.75% interest compounded quarterly. She writes the following expression: Which of the following statements about Porsha's expression is true?

Question illustration
A
Porsha's expression is correct.
B
Porsha's expression should have 1 + 0.009375 in the parentheses.
C
Porsha's expression should have an exponent of 6, not 24.
D
Porsha's expression should have both 1 + 0.009375 in the parentheses and an exponent of 6.
16

Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?

A
Gasoline costs more to produce and purchase than tomatoes.
B
Gasoline is imported from other nations at a higher rate than tomatoes.
C
Americans purchase many more boxes of tomatoes than barrels of gasoline.
D
Americans spend more money on gasoline than tomatoes, on average.
17

Money is invested into an account earning 4.25% interest compounded annually. If the accumulated value after 18 years will be $25,000, approximately how much money is presently in the account?

A
$5,875
B
$11,820
C
$19,125
D
$23,960
18

Which scenario is an example of cost-push inflation?

A
Consumers have more money to buy cars, and the prices of cars and car parts rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
19

An investment of $6,599.20 earns 4.2% interest compounded monthly over 7 years. Approximately how much interest is earned on the investment?

A
$2,250.96
B
$4,308.21
C
$6,762.59
D
$8,850.20
20

Read the graph about mortgage interest rates and housing starts between 1978 and 1983.A conclusion that can be drawn from both graphs by looking at 1983 is that interest rates

Question illustration
d
dropped, which led to more home starts.
p
peaked, while home starts bottomed out.
c
climbed, which led to fewer home starts.
b
bottomed out, while home starts peaked.

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