AnswersEconomicsFinancial Literacy

Practice Test Answers

18 verified answers
1
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Which describes a type of tax that people pay on money they earn?

A
flat tax
B
income tax
C
progressive tax
D
purchase tax
2
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In which category do commodities belong?

A
either short- or long-term investment
B
long-term investment only
C
short-term investment only
D
neither short- nor long-term investment
3

Which is an example of a short-term investment?

A
checking account
B
retirement fund
C
savings bond
D
savings account
4

What is the definition of liability?

A
the amount a consumer must pay after an incident before the insurance company starts paying
B
the monthly amount paid for insurance
C
intentionally destroying something in order to collect insurance
D
a responsibility to pay for or fix a problem
5

What is one difference between a vocational school and on-the-job training?

A
A vocational school is usually paid for by the worker. On-the-job training is usually paid for by the employer.
B
A vocational school is usually paid for by the employer. On-the-job training is usually paid for by the worker.
C
A vocational school degree takes weeks or months to earn. On-the-job training takes two years or fewer.
D
A vocational school degree takes one year to earn. On-the-job training takes two or more years.
6

What is the job outlook for a US postal worker?

A
The career is shrinking and will provide more opportunities over time.
B
The career is growing and will provide fewer opportunities over time.
C
The career is shrinking and will provide fewer opportunities over time.
D
The career is growing and will provide more opportunities over time.
7

Credit unions differ from retail banks because they are

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

What is the definition of gross income?

A
amount of income saved per year
B
amount of tax deducted from income
C
amount received after deductions
D
amount earned before deductions
9

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

A
to easily add expenses to it.
B
to know how much money is available.
C
to avoid spending too much money.
D
to see that is is more important than expenses.
10

Which is a kind of federal payroll tax?

A
medicare tax
B
sales tax
C
progressive tax
D
property tax
11

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

A
to help people save money
B
to help people invest in the stock market
C
to help people buy homes
D
to help people invest in small businesses
12

Which is an example of a financial change that would require budgetary consideration?

A
saving a certain amount
B
paying monthly rent
C
purchasing furniture
D
buying a monthly bus pass
13

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 budget for short-term financial risks to avoid long-term risks.
D
It shows that the owner is willing to share ownership of the business to reduce financial risk.
14

Companies report people to credit agencies if they

A
use large amounts of credit at once.
B
fail to use different types of credit.
C
borrow too much money.
D
fail to pay their bills on time.
15

Which living expense needs to be included in the budget of someone renting an apartment?

A
maintenance
B
insurance
C
down payment
D
property taxes
16

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

A
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
B
Personal loans offer lump sums of money, while credit cards 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 are secured for small purchases, while credit cards are unsecured loans for large amounts.
17

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
for a limited time
C
no other diet pill offers
D
our proven supplement
18

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

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

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