Financial Literacy Test 2 questions
and complete solutions
Financial Literacy - ANS ✔✔Basic financial knowledge, including an understanding of banks and
the banking system, financial markets, credit and credit cards, and tax laws, as well as the ability
to apply this knowledge in making decisions about how to spend, earn, or save money today to
build wealth for tomorrow
Net Worth - ANS ✔✔A person's assets, or what a person owns, minus a person's liabilities, or
what a person owes
Saving - ANS ✔✔Income not spent on current consumption or taxes
Spending - ANS ✔✔Using income for current consumption
Wealth - ANS ✔✔The stock of assets or resources that have economic value-that is, that can
produce income in the future. Note that, broadly speaking, many abilities - academic, health,
creative, social, etc. - can be harnessed to produce future income, and thus are also forms of
wealth. Students with these abilities are potentially wealthy even if they cannot afford to buy
the latest electronic device today. To translate this potential into actual income-producing
wealth, and then to manage that wealth, requires financial literacy.
What is human capital? - ANS ✔✔Includes the intellect, knowledge, experience, and attitude
necessary for success
What is human capital? - ANS ✔✔Includes the intellect, knowledge, experience, and attitude
necessary for success
, What are some ways you can develop your human capital? - ANS ✔✔More
education/experience, be adaptable, explore several fields, participate, improve people
skills/public speaking, make connections, publish thoughts, stay healthy, start early
Why should you look at demand when you consider career choices? - ANS ✔✔Declining career
fields will not have many job opportunities and will not pay well where as growing career fields
will have many opportunities and pay well. But the more people want a certain job the more
competition there will be and the higher your human capital will need to be.
What is the general relationship between education and unemployment? - ANS ✔✔Those
without education often have no jobs or lesser jobs compared to those who do have an
education
What things other than demand should you consider when making career choices? - ANS ✔✔If
it can sustain your yearly budget, if it will make you happy
What are some of the major differences between being an employee and being an
entrepreneur? - ANS ✔✔Entrepreneurs have varying job stability, varying success, varying
benefits, work longer hours, lower beginning salaries, and must be prepared for anything.
Employees also have varying job stability and success, but work shorter hours, have
predetermined salaries and benefits, and must do as their employer tells them
What is the role of the entrepreneur in the economy? - ANS ✔✔Create new goods and
services/improve upon existing goods and services, add goods and services/offer
variety/approach familiar problems in a new way, consume resources/hire workers, provide jobs
and help the economy grow
Why does the job market change over time? - ANS ✔✔Need for different types of workers
evolve, economy changes, technology advances
What is the opportunity cost of dropping out of high school? - ANS ✔✔A good education, which
would lead to a better paying job, which would lead to a better life
and complete solutions
Financial Literacy - ANS ✔✔Basic financial knowledge, including an understanding of banks and
the banking system, financial markets, credit and credit cards, and tax laws, as well as the ability
to apply this knowledge in making decisions about how to spend, earn, or save money today to
build wealth for tomorrow
Net Worth - ANS ✔✔A person's assets, or what a person owns, minus a person's liabilities, or
what a person owes
Saving - ANS ✔✔Income not spent on current consumption or taxes
Spending - ANS ✔✔Using income for current consumption
Wealth - ANS ✔✔The stock of assets or resources that have economic value-that is, that can
produce income in the future. Note that, broadly speaking, many abilities - academic, health,
creative, social, etc. - can be harnessed to produce future income, and thus are also forms of
wealth. Students with these abilities are potentially wealthy even if they cannot afford to buy
the latest electronic device today. To translate this potential into actual income-producing
wealth, and then to manage that wealth, requires financial literacy.
What is human capital? - ANS ✔✔Includes the intellect, knowledge, experience, and attitude
necessary for success
What is human capital? - ANS ✔✔Includes the intellect, knowledge, experience, and attitude
necessary for success
, What are some ways you can develop your human capital? - ANS ✔✔More
education/experience, be adaptable, explore several fields, participate, improve people
skills/public speaking, make connections, publish thoughts, stay healthy, start early
Why should you look at demand when you consider career choices? - ANS ✔✔Declining career
fields will not have many job opportunities and will not pay well where as growing career fields
will have many opportunities and pay well. But the more people want a certain job the more
competition there will be and the higher your human capital will need to be.
What is the general relationship between education and unemployment? - ANS ✔✔Those
without education often have no jobs or lesser jobs compared to those who do have an
education
What things other than demand should you consider when making career choices? - ANS ✔✔If
it can sustain your yearly budget, if it will make you happy
What are some of the major differences between being an employee and being an
entrepreneur? - ANS ✔✔Entrepreneurs have varying job stability, varying success, varying
benefits, work longer hours, lower beginning salaries, and must be prepared for anything.
Employees also have varying job stability and success, but work shorter hours, have
predetermined salaries and benefits, and must do as their employer tells them
What is the role of the entrepreneur in the economy? - ANS ✔✔Create new goods and
services/improve upon existing goods and services, add goods and services/offer
variety/approach familiar problems in a new way, consume resources/hire workers, provide jobs
and help the economy grow
Why does the job market change over time? - ANS ✔✔Need for different types of workers
evolve, economy changes, technology advances
What is the opportunity cost of dropping out of high school? - ANS ✔✔A good education, which
would lead to a better paying job, which would lead to a better life
