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Financial Literacy — Test Answers

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Changes in monetary policy occur when the Federal Reserve

adjusts business laws to affect the money supply.

adjusts interest rates to affect the money supply.

changes taxation levels to affect the economy.

changes spending levels to affect the economy.

Which statement best describes the role of a credit agency?

It teaches how to make smart financial decisions.

It tracks the use of credit for lenders.

It shows how saving money makes financial sense.

It predicts future earning potential for lenders.

Why do some lenders require borrowers to secure credit?

to reduce risk

to prevent defaults

to avoid any losses

to guarantee full repayment

Which is an example of an income deduction?

retirement savings

an unexpected salary cut

wages lost due to illness

vacation budget

Interest rates are expressed as a percentage of

the loan.

taxes owed.

the profit.

investment fees.

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