Financial Literacy Exam questions
with verified answers
Consumer - ANS ✔✔A person or organization that uses a product or service
Credit - ANS ✔✔The granting of a loan and the creation of debt; any form of deferred payment
Debt - ANS ✔✔An obligation of repayment owed by one party (the debtor/borrower) to a
second party (the creditor/lender); in most cases this includes repayment of the original loan
amount plus interest
Economy - ANS ✔✔A system by which goods and services are produced and distributed
Financial Literacy - ANS ✔✔The knowledge and skillset necessary to be an informed consumer
and manage finances effectively
Loan - ANS ✔✔A debt evidenced by a "note," which specifies the principal amount, interest
rate, and date of repayment
Loan shark - ANS ✔✔A person or business that offers loans at extremely high interest rates
Personal Finance - ANS ✔✔All of the decisions and activities of an individual or family regarding
their money, including spending, saving, budgeting, etc.
Interest - ANS ✔✔A fee paid by a borrower to the lender for the use of borrowed money;
typically interest is calculated as a percentage of the principal (original loan amount)
,Recession - ANS ✔✔A period of temporary economic decline during which trade and industrial
activity are reduced; generally identified by a fall in gross domestic product (GDP)
Which of the following is not a factor in becoming money smart?
A. Have knowledge of basic math
B. Learn the language of money
C. Manage your behavior with money
D. Learn how to read your credit card statements - ANS ✔✔D. Learn how to read your credit
card statements
True or False: True financial security is achieved when your money begins to generate an
income; your money starts working for you - ANS ✔✔True
During the Great Depression, New Deal policymakers came up with mortgage (home loans) and
consumer lending policies that convinced commercial banks that:
A. Consumers would not be willing to use credit, since borrowing money for large purchases
had not previously been an option for the middle class
B. They would not be able to compete with loan sharks in the industry of consumer lending
C. Consumer credit could be profitable
D. Consumer credit was not a profitable industry - ANS ✔✔C. Consumer credit could be
profitable
When it comes to managing money, success is about ___% knowledge and ___% behavior.
A. 50, 50
B. 60, 40
C. 80, 20
D. 20, 80 - ANS ✔✔D, 20, 80
,Which of the following is a consequence of spending more than you make?
A. Missed opportunity to save and invest
B. Stress
C. A cycle of debt
D. All of the above - ANS ✔✔D. All of the above
True or False: Since you are a teenager, what you do now with money will have little effect on
your financial future - ANS ✔✔False
True or False: Everyone should have the same financial plan. A budget that works for one person
should be sufficient for everyone - ANS ✔✔False
When it comes to personal finance, the math is easy. Whatʹs challenging is managing your
___________.
A. Income
B. Friends
C. Bank account
D. Behavior - ANS ✔✔D. Behavior
Which of the following statements best explains why income alone does not determine wealth?
A. Investing is the only factor that contributes to wealth building
B. Income alone does determine a personʹs wealth
C. Only people who are natural savers can become wealthy
D. How much money a person makes does not dictate his or her spending and saving behavior -
ANS ✔✔D. How much money a person makes does not dictate his or her spending and saving
behavior
, True or False: Most Americans avoid the use of credit when it comes to buying big-ticket items
like a car or furniture for their home - ANS ✔✔False
True or False: Expensive houses and new cars are a true indication of wealth - ANS ✔✔False
True or False: Most Americans today are wealthy and will have financial security when they
retire - ANS ✔✔False
Which of the following is not a true statement?
A. Americans learned to borrow amidst post-WWII prosperity
B. The credit industry in America has not changed much since 1917
C. After 1970, consumer debt skyrocketed
D. As banks made higher profits, they were willing to lend more money to consumers - ANS
✔✔B. The credit industry in America has not changed much since 1917
Which of the following best explains why students should learn about personal finance?
A. Learning to manage money at this stage can eliminate financial mistakes and promote huge
financial benefits for the future
B. Personal finance skills are better learned through trial and error
C. Personal finance skills are highly complex and require a great deal of time to learn
D. Learning to manage money will help you achieve a profitable career - ANS ✔✔A. Learning to
manage money at this stage can eliminate financial mistakes and promote huge financial
benefits for the future
Which of the following is not a benefit of understanding your own money personality?
A. Recognizing who you are allows you the opportunity to grow and learn
B.Once you know your money personality, you can develop a financial plan that works for you
with verified answers
Consumer - ANS ✔✔A person or organization that uses a product or service
Credit - ANS ✔✔The granting of a loan and the creation of debt; any form of deferred payment
Debt - ANS ✔✔An obligation of repayment owed by one party (the debtor/borrower) to a
second party (the creditor/lender); in most cases this includes repayment of the original loan
amount plus interest
Economy - ANS ✔✔A system by which goods and services are produced and distributed
Financial Literacy - ANS ✔✔The knowledge and skillset necessary to be an informed consumer
and manage finances effectively
Loan - ANS ✔✔A debt evidenced by a "note," which specifies the principal amount, interest
rate, and date of repayment
Loan shark - ANS ✔✔A person or business that offers loans at extremely high interest rates
Personal Finance - ANS ✔✔All of the decisions and activities of an individual or family regarding
their money, including spending, saving, budgeting, etc.
Interest - ANS ✔✔A fee paid by a borrower to the lender for the use of borrowed money;
typically interest is calculated as a percentage of the principal (original loan amount)
,Recession - ANS ✔✔A period of temporary economic decline during which trade and industrial
activity are reduced; generally identified by a fall in gross domestic product (GDP)
Which of the following is not a factor in becoming money smart?
A. Have knowledge of basic math
B. Learn the language of money
C. Manage your behavior with money
D. Learn how to read your credit card statements - ANS ✔✔D. Learn how to read your credit
card statements
True or False: True financial security is achieved when your money begins to generate an
income; your money starts working for you - ANS ✔✔True
During the Great Depression, New Deal policymakers came up with mortgage (home loans) and
consumer lending policies that convinced commercial banks that:
A. Consumers would not be willing to use credit, since borrowing money for large purchases
had not previously been an option for the middle class
B. They would not be able to compete with loan sharks in the industry of consumer lending
C. Consumer credit could be profitable
D. Consumer credit was not a profitable industry - ANS ✔✔C. Consumer credit could be
profitable
When it comes to managing money, success is about ___% knowledge and ___% behavior.
A. 50, 50
B. 60, 40
C. 80, 20
D. 20, 80 - ANS ✔✔D, 20, 80
,Which of the following is a consequence of spending more than you make?
A. Missed opportunity to save and invest
B. Stress
C. A cycle of debt
D. All of the above - ANS ✔✔D. All of the above
True or False: Since you are a teenager, what you do now with money will have little effect on
your financial future - ANS ✔✔False
True or False: Everyone should have the same financial plan. A budget that works for one person
should be sufficient for everyone - ANS ✔✔False
When it comes to personal finance, the math is easy. Whatʹs challenging is managing your
___________.
A. Income
B. Friends
C. Bank account
D. Behavior - ANS ✔✔D. Behavior
Which of the following statements best explains why income alone does not determine wealth?
A. Investing is the only factor that contributes to wealth building
B. Income alone does determine a personʹs wealth
C. Only people who are natural savers can become wealthy
D. How much money a person makes does not dictate his or her spending and saving behavior -
ANS ✔✔D. How much money a person makes does not dictate his or her spending and saving
behavior
, True or False: Most Americans avoid the use of credit when it comes to buying big-ticket items
like a car or furniture for their home - ANS ✔✔False
True or False: Expensive houses and new cars are a true indication of wealth - ANS ✔✔False
True or False: Most Americans today are wealthy and will have financial security when they
retire - ANS ✔✔False
Which of the following is not a true statement?
A. Americans learned to borrow amidst post-WWII prosperity
B. The credit industry in America has not changed much since 1917
C. After 1970, consumer debt skyrocketed
D. As banks made higher profits, they were willing to lend more money to consumers - ANS
✔✔B. The credit industry in America has not changed much since 1917
Which of the following best explains why students should learn about personal finance?
A. Learning to manage money at this stage can eliminate financial mistakes and promote huge
financial benefits for the future
B. Personal finance skills are better learned through trial and error
C. Personal finance skills are highly complex and require a great deal of time to learn
D. Learning to manage money will help you achieve a profitable career - ANS ✔✔A. Learning to
manage money at this stage can eliminate financial mistakes and promote huge financial
benefits for the future
Which of the following is not a benefit of understanding your own money personality?
A. Recognizing who you are allows you the opportunity to grow and learn
B.Once you know your money personality, you can develop a financial plan that works for you
