AnswersEconomicsFinancial Literacy

Practice Test Answers

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1
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Which detail is most likely to give consumers a false sense of security about using Edgozene?

A
our proven supplement
B
two bottles for 29 point 9 5 dollars
C
for a limited time
D
no other diet pill offers
2
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What is most likely Yuri’s motivation behind buying the pricier pair?

A
emotional spending
B
greedy spending
C
confused sense of needs and wants
D
conspicuous consumption
3

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 is willing to budget for short-term financial risks to avoid long-term risks.
C
It shows that the owner is willing to share ownership of the business to reduce financial risk.
D
It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.
4

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

A
Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases.
B
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
C
Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow.
D
Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.
5

What is the definition of liability?

A
the amount a consumer must pay after an incident before the insurance company starts paying
B
a responsibility to pay for or fix a problem
C
intentionally destroying something in order to collect insurance
D
the monthly amount paid for insurance
6

Companies report people to credit agencies if they

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

Credit unions differ from retail banks because they are

A
owned by shareholders who purchased stock.
B
owned by their members.
C
owned and managed by private corporations.
D
owned by their employees.
8

In which category do commodities belong?

A
neither short- nor long-term investment
B
short-term investment only
C
either short- or long-term investment
D
long-term investment only
9

Which is an example of a short-term investment?

A
checking account
B
retirement fund
C
savings bond
D
savings account
10

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

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

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

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

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