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WISE FINANCIAL LITERACY
CERTIFICATION EXAM - REVIEW
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
consumer fraud Ans: when a product or service is illegally used to
deceive you into sending money or signing up for a phony service; scams
frequently start with a fake email, letter, or phone call
identity theft Ans: a form of fraud; thieves use another persona's
personal information in order to steal that person's money or gain access
to other benefits (i.e., credit card fraud, phone and utility theft, and
banking fraud)
Social Security Number Ans: Also known as your SSN; nine digit number
given to U.S. citizens, permanent U.S. residents, and temporary working
residents to track income and wages; used as the primary identification
number for individuals in the United States
phishing scam Ans: a scam where someone tries to deceive you into
providing personal information by impersonating someone, like a bank
representative
cash card Ans: refers to any card that can be used by a cash card reader
and used to pay for products or services at that retailer, such as an ATM
card, pre-paid credit card, or store gift card
cashless society Ans: a society in which consumers pay using credit or
debit cards, electronic funds transfer, or shop online instead of paying by
cash or personal check
gift card Ans: also known as a gift certificate; refers to a prepaid, store-
valued money card issued by the retailer or by a bank that is used as an
alternative to cash for purchases at a particular business
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inflation Ans: a general increase in prices and decline in purchasing
power (value of money) over a period of time
purchasing power Ans: the value of a currency in terms of the amount
of goods or services that one unit of money (or $1.00 in the U.S.) can
buy
store card Ans: a charge card or credit card used to purchase goods in a
particular store and paid with interest at a later date; usually carries an
incentives or rewards program
supply & demand Ans: the theory explaining the interaction between the
supply of a resource and the demand for that resource, or the effect that
the availability of a particular product and the desire for the product have
on price
U.S. Treasury Department Ans: the government department responsible
for issuing all Treasury bonds, notes and bills
upward mobility Ans: the ability to move from a lower to a higher social
class or status, such as from the level of poverty to middle class, usually
in terms of household income and spending power
windfall income Ans: refers to a large profit that occurs unexpectedly
due to fortuitous circumstances, such as an unforeseen inheritance or
winning the lottery
balanced budget Ans: refers to a budget in which revenues, or income,
are equal to expenditures
budget deficit Ans: an indicator of financial health that occurs when
expenditures exceed revenue (income) or, in other words, more money
was spent than the income available
discretionary income Ans: refers to the take-home income, or net pay,
that remains after mandatory deductions (i.e., taxes) and expenditures
on necessary items (i.e., food, shelter) are accounted for in the budget;
also known as spending money or fun money
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disposable income Ans: refers to the take-home income available for
spending or saving after the deduction of taxes and other mandatory
charges; also known as net pay
emergency fund Ans: an account used to set aside funds needed in the
event of a personal financial dilemma, such as the loss of a job, a
debilitating illness, or a major expense; usually recommended to be at
least six months expenses
fixed expense Ans: a budget item that will be the same total amount
from month-to-month regardless of changes in circumstance, such as
rent or installment loan (i.e., student or car) payments
opportunity costs Ans: the benefit, profit, or value of something that
must be given up in order to acquire or achieve something else; the
alternate that was forfeited when a decision was made
surplus Ans: the amount of something left over when requirements have
been met, such as a surplus of income after expenses are paid in a
personal budget
trade off Ans: occurs when you give up the value or added-benefit of
one choice in order to achieve the desired results of another choice;
usually includes an assessment of "pros" and "cons"
variable expense Ans: a budget item that fluctuates from month-to-
month based on volume or usage, such as a water bill or electricity bill
impulse buying Ans: the decision to purchase goods without advance
planning, as a result of a sudden whim or desire
assigned risk pool Ans: refers to a group of people for whom the state
requires an insurance company to provide insurance coverage, such as
for unemployment or automotive (car)
auto (car) insurance Ans: a type of insurance that protects a
policyholder in the case of a car accident; most states require it by law
beneficiary Ans: the person, people, or entity designated to receive the
death benefits from a life insurance policy or annuity contract
WISE FINANCIAL LITERACY
CERTIFICATION EXAM - REVIEW
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
consumer fraud Ans: when a product or service is illegally used to
deceive you into sending money or signing up for a phony service; scams
frequently start with a fake email, letter, or phone call
identity theft Ans: a form of fraud; thieves use another persona's
personal information in order to steal that person's money or gain access
to other benefits (i.e., credit card fraud, phone and utility theft, and
banking fraud)
Social Security Number Ans: Also known as your SSN; nine digit number
given to U.S. citizens, permanent U.S. residents, and temporary working
residents to track income and wages; used as the primary identification
number for individuals in the United States
phishing scam Ans: a scam where someone tries to deceive you into
providing personal information by impersonating someone, like a bank
representative
cash card Ans: refers to any card that can be used by a cash card reader
and used to pay for products or services at that retailer, such as an ATM
card, pre-paid credit card, or store gift card
cashless society Ans: a society in which consumers pay using credit or
debit cards, electronic funds transfer, or shop online instead of paying by
cash or personal check
gift card Ans: also known as a gift certificate; refers to a prepaid, store-
valued money card issued by the retailer or by a bank that is used as an
alternative to cash for purchases at a particular business
, Page | 2
inflation Ans: a general increase in prices and decline in purchasing
power (value of money) over a period of time
purchasing power Ans: the value of a currency in terms of the amount
of goods or services that one unit of money (or $1.00 in the U.S.) can
buy
store card Ans: a charge card or credit card used to purchase goods in a
particular store and paid with interest at a later date; usually carries an
incentives or rewards program
supply & demand Ans: the theory explaining the interaction between the
supply of a resource and the demand for that resource, or the effect that
the availability of a particular product and the desire for the product have
on price
U.S. Treasury Department Ans: the government department responsible
for issuing all Treasury bonds, notes and bills
upward mobility Ans: the ability to move from a lower to a higher social
class or status, such as from the level of poverty to middle class, usually
in terms of household income and spending power
windfall income Ans: refers to a large profit that occurs unexpectedly
due to fortuitous circumstances, such as an unforeseen inheritance or
winning the lottery
balanced budget Ans: refers to a budget in which revenues, or income,
are equal to expenditures
budget deficit Ans: an indicator of financial health that occurs when
expenditures exceed revenue (income) or, in other words, more money
was spent than the income available
discretionary income Ans: refers to the take-home income, or net pay,
that remains after mandatory deductions (i.e., taxes) and expenditures
on necessary items (i.e., food, shelter) are accounted for in the budget;
also known as spending money or fun money
, Page | 3
disposable income Ans: refers to the take-home income available for
spending or saving after the deduction of taxes and other mandatory
charges; also known as net pay
emergency fund Ans: an account used to set aside funds needed in the
event of a personal financial dilemma, such as the loss of a job, a
debilitating illness, or a major expense; usually recommended to be at
least six months expenses
fixed expense Ans: a budget item that will be the same total amount
from month-to-month regardless of changes in circumstance, such as
rent or installment loan (i.e., student or car) payments
opportunity costs Ans: the benefit, profit, or value of something that
must be given up in order to acquire or achieve something else; the
alternate that was forfeited when a decision was made
surplus Ans: the amount of something left over when requirements have
been met, such as a surplus of income after expenses are paid in a
personal budget
trade off Ans: occurs when you give up the value or added-benefit of
one choice in order to achieve the desired results of another choice;
usually includes an assessment of "pros" and "cons"
variable expense Ans: a budget item that fluctuates from month-to-
month based on volume or usage, such as a water bill or electricity bill
impulse buying Ans: the decision to purchase goods without advance
planning, as a result of a sudden whim or desire
assigned risk pool Ans: refers to a group of people for whom the state
requires an insurance company to provide insurance coverage, such as
for unemployment or automotive (car)
auto (car) insurance Ans: a type of insurance that protects a
policyholder in the case of a car accident; most states require it by law
beneficiary Ans: the person, people, or entity designated to receive the
death benefits from a life insurance policy or annuity contract
