Wise Financial Literacy Test UPDATED
Questions and CORRECT Answers
Earned income - CORRECT ANSWER - Income derived from active participation in a
trade or business, including wages, salary, tips, commissions and bonuses.
unearned income - CORRECT ANSWER - Any 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 - CORRECT ANSWER - The ability to convert an asset to cash quickly and with
minimal impact to the price
liquidity examples - CORRECT ANSWER - cash, most stocks, money market instruments
and government bonds
money market accounts - CORRECT ANSWER - it is the organized exchange on which
participants can lend and borrow large sums of money for a period of one year or less
bonds - CORRECT ANSWER - it 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 - CORRECT ANSWER - A 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 - CORRECT ANSWER - The 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 - CORRECT ANSWER - A 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 - CORRECT ANSWER - Its 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 - CORRECT ANSWER - the value of the best alternative that must be
given up when scarce resources are used for one purpose instead of another
inflation - CORRECT ANSWER - a general increase in prices and a corresponding
decrease in money's purchasing power
Consumer Price Index (CPI) - CORRECT ANSWER - a measure of the overall cost of the
goods and services bought by a typical consumer
Inflation - CORRECT ANSWER - An increase in the overall price level.
Who gets hurt the most from inflation - CORRECT ANSWER - Those with fixed incomes
(retired people)
who gets hurt the least from inflation - CORRECT ANSWER - borrowers and producers
Treasury department - CORRECT ANSWER - responsible for issuing all treasury bonds,
notes, and bills.
Pay yourself first - CORRECT ANSWER - Put money into savings each month as if it
were a bill. At least 10% of your income should go into savings. It's
Questions and CORRECT Answers
Earned income - CORRECT ANSWER - Income derived from active participation in a
trade or business, including wages, salary, tips, commissions and bonuses.
unearned income - CORRECT ANSWER - Any 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 - CORRECT ANSWER - The ability to convert an asset to cash quickly and with
minimal impact to the price
liquidity examples - CORRECT ANSWER - cash, most stocks, money market instruments
and government bonds
money market accounts - CORRECT ANSWER - it is the organized exchange on which
participants can lend and borrow large sums of money for a period of one year or less
bonds - CORRECT ANSWER - it 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 - CORRECT ANSWER - A 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 - CORRECT ANSWER - The 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 - CORRECT ANSWER - A 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 - CORRECT ANSWER - Its 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 - CORRECT ANSWER - the value of the best alternative that must be
given up when scarce resources are used for one purpose instead of another
inflation - CORRECT ANSWER - a general increase in prices and a corresponding
decrease in money's purchasing power
Consumer Price Index (CPI) - CORRECT ANSWER - a measure of the overall cost of the
goods and services bought by a typical consumer
Inflation - CORRECT ANSWER - An increase in the overall price level.
Who gets hurt the most from inflation - CORRECT ANSWER - Those with fixed incomes
(retired people)
who gets hurt the least from inflation - CORRECT ANSWER - borrowers and producers
Treasury department - CORRECT ANSWER - responsible for issuing all treasury bonds,
notes, and bills.
Pay yourself first - CORRECT ANSWER - Put money into savings each month as if it
were a bill. At least 10% of your income should go into savings. It's
