AFCPE 2024/25 EXAM QUESTIONS &
ANSWERS SCORED A+
Gross Domestic Product (GDP) Answer - the nations broadest measure of
economic health, it reports how much economic activity (all goods and
services) has occurred within the U.S. boarders within a given period
Index of Leading Economic Indicators (LEI) Answer - a composite index
reported monthly by the conference board that collects relevant economic
data for business, governments, and individuals use
Inflation Answer - a steady and sustained rise in general price levels across
economic sectors; measured by the changing cost over time of a "market
basket" of goods and services that a typical household might purchase
Consumer Price Index (CPI) Answer - a broad measure of changes in the price
of all goods and services purchased for consumption by urban households
Purchasing Power Answer - measure of the goods and services that ones
income will buy
Opportunity Cost Answer - the opportunity cost of any decision is the value of
the next best alternative that must be forgone
Tax-Exempt Income Answer - income that is totally and permanently free of
taxes
, Tax-Sheltered Income (Tax-Deferred) Answer - income exempt from income
taxes in the current year but that will be subject to taxation in a latter tax year
Time Value of Money (TVM) Answer - a method by which one can compare
cash flows across time, either as what a future cash flow is worth today
(present value) or what an investment today will be worth in the future (future
value)
Compounding Answer - when interest on an investment itself earns interest
Employee Benefit Answer - compensation for employment that does not take
the form of wages, salaries, commissions, or other cash payment
Cafeteria Plan (Flexible Benefit Plan) Answer - an employer sponsored plan
that gives the employee a choice of selecting either cash or one or more
qualifying nontaxable benefits
Flexible Spending Account (FSA) Answer - an employer sponsored account that
allows employee-paid expenses for medical or dependent care to be paid with
an employee's pretax dollars rather than after-tax income
Health Savings Account (HSA) Answer - special savings account intended for
people who have a high-deductible health care plan (with annual deductible of
at least $1,000 for individuals and $2,000 for families)
Tax-Sheltered Retirement Plan Answer - employer sponsored, defined
contribution retirement plans including 401(k) plans and similar 403(b) and 457
plans
ANSWERS SCORED A+
Gross Domestic Product (GDP) Answer - the nations broadest measure of
economic health, it reports how much economic activity (all goods and
services) has occurred within the U.S. boarders within a given period
Index of Leading Economic Indicators (LEI) Answer - a composite index
reported monthly by the conference board that collects relevant economic
data for business, governments, and individuals use
Inflation Answer - a steady and sustained rise in general price levels across
economic sectors; measured by the changing cost over time of a "market
basket" of goods and services that a typical household might purchase
Consumer Price Index (CPI) Answer - a broad measure of changes in the price
of all goods and services purchased for consumption by urban households
Purchasing Power Answer - measure of the goods and services that ones
income will buy
Opportunity Cost Answer - the opportunity cost of any decision is the value of
the next best alternative that must be forgone
Tax-Exempt Income Answer - income that is totally and permanently free of
taxes
, Tax-Sheltered Income (Tax-Deferred) Answer - income exempt from income
taxes in the current year but that will be subject to taxation in a latter tax year
Time Value of Money (TVM) Answer - a method by which one can compare
cash flows across time, either as what a future cash flow is worth today
(present value) or what an investment today will be worth in the future (future
value)
Compounding Answer - when interest on an investment itself earns interest
Employee Benefit Answer - compensation for employment that does not take
the form of wages, salaries, commissions, or other cash payment
Cafeteria Plan (Flexible Benefit Plan) Answer - an employer sponsored plan
that gives the employee a choice of selecting either cash or one or more
qualifying nontaxable benefits
Flexible Spending Account (FSA) Answer - an employer sponsored account that
allows employee-paid expenses for medical or dependent care to be paid with
an employee's pretax dollars rather than after-tax income
Health Savings Account (HSA) Answer - special savings account intended for
people who have a high-deductible health care plan (with annual deductible of
at least $1,000 for individuals and $2,000 for families)
Tax-Sheltered Retirement Plan Answer - employer sponsored, defined
contribution retirement plans including 401(k) plans and similar 403(b) and 457
plans
