WISE financial literacy test Study Guide.

WISE financial literacy test Study Guide. Earned income - answerIncome derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses. unearned income - answerAny income that comes from investments and other sources unrelated to employment services. Examples: interest from a savings account, bond interest, alimony, and dividends from stock liquidity - answerThe ability to convert an asset to cash quickly and with minimal impact to the price liquidity examples - answercash, most stocks, money market instruments and government bonds money market accounts - answerit is the organized exchange on which participants can lend and borrow large sums of money for a period of one year or less bonds - answerit is the organized exchange on which participants can lend and borrow large sums of money for a period of one year or less Gift cards - answerA gift card is a restricted monetary equivalent is issued by retailers or banks to be used as an alternative to a non-monetary gift. Discretionary income and budget surplus - answerThe amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money spent on luxury items, vacations and non-essential goods and services. money orders - answerA certificate that allows the stated payee to receive cash on-demand, usually issued by governments and banking institutions. A money order functions much like a check, in that the person who purchased the money order may stop payment. why does the US currency have value - answerIts value is only based on what we can get in exchange for it. Or put it another way, money has value as long as other people believe the money you give them can be exchanged for the goods and services they desire in the future. opportunity cost - answerthe value of the best alternative that must be given up when scarce resources are used for one purpose instead of another