W!SE FINANCIAL LITERACY EXAM 160 QUESTIONS & CORRECT
ANSWERS LATEST 2025
Earned Income - ANSWER-Income derived from active participation
in a trade or business, including wages, salary, tips,
commissions and bonuses.
Unearned Income - 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
Exemptions (aka allowance) and how they work - ANSWER-If you are not claimed
as a dependent on another
taxpayer's return, then you can claim one personal tax
exemption. The exemption reduces your taxable income just like a deduction
does, but has fewer restrictions to claiming it. If you are married and file a joint
tax return, both you and your spouse each get an exemption.
Exemptions (aka allowance) and how they work PART 2 - ANSWER-The IRS allows
you to take additional exemptions for each dependent you claim. Frequently, the
source of these exemptions are the children who live with you for more than half
the year, are under 19 years old (or under 24 if a full-time student) and who don't
provide more than half of their own financial support during the tax year.
Liquidity - what does it mean? - ANSWER-The ability to convert an asset to cash
quickly and with
,minimal impact to the price.
Liquidity - what financial products are liquid? - ANSWER-Examples: Cash, Most
stocks, money market instruments and government bonds.
Gift cards - how do they work? - 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.
Gift cards - how do they work - fees? - ANSWER-Prepaid cards, gift cards, and gift
certificates cannot expire within five years of activation or unless the terms of the
expiration are clearly disclosed. The law bans dormancy fees, inactivity fees or
service fees on gift cards unless there has been no activity in a 12-month period
and the issuer clearly discloses all fees before the gift card is purchased.
Gift cards - how do they work - fees? (Exclusions) - ANSWER-Prepaid phone cards ,
re-loadable cards, loyalty
or rewards cards, cards issued for admission to special
events or venues and certificates issued in paper form only are exempt.
Discretionary income and budget surplus - 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 - high rate of counterfeits - 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? - 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 - ANSWER-The second-best alternative (or the value of that
alternative) that must be given up when scarce resources are used for one
purpose instead of another
Who is hurt the most and least with inflation - ANSWER-Inflation is a general
increase in prices and a corresponding decrease in money's purchasing power.
Who is hurt the most with inflation? - ANSWER-Those on fixed incomes (retired
people)
Who is hurt the least with inflation? - ANSWER-Borrowers and producers
Role of the treasury department - ANSWER-The United States Department of the
Treasury is the
ANSWERS LATEST 2025
Earned Income - ANSWER-Income derived from active participation
in a trade or business, including wages, salary, tips,
commissions and bonuses.
Unearned Income - 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
Exemptions (aka allowance) and how they work - ANSWER-If you are not claimed
as a dependent on another
taxpayer's return, then you can claim one personal tax
exemption. The exemption reduces your taxable income just like a deduction
does, but has fewer restrictions to claiming it. If you are married and file a joint
tax return, both you and your spouse each get an exemption.
Exemptions (aka allowance) and how they work PART 2 - ANSWER-The IRS allows
you to take additional exemptions for each dependent you claim. Frequently, the
source of these exemptions are the children who live with you for more than half
the year, are under 19 years old (or under 24 if a full-time student) and who don't
provide more than half of their own financial support during the tax year.
Liquidity - what does it mean? - ANSWER-The ability to convert an asset to cash
quickly and with
,minimal impact to the price.
Liquidity - what financial products are liquid? - ANSWER-Examples: Cash, Most
stocks, money market instruments and government bonds.
Gift cards - how do they work? - 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.
Gift cards - how do they work - fees? - ANSWER-Prepaid cards, gift cards, and gift
certificates cannot expire within five years of activation or unless the terms of the
expiration are clearly disclosed. The law bans dormancy fees, inactivity fees or
service fees on gift cards unless there has been no activity in a 12-month period
and the issuer clearly discloses all fees before the gift card is purchased.
Gift cards - how do they work - fees? (Exclusions) - ANSWER-Prepaid phone cards ,
re-loadable cards, loyalty
or rewards cards, cards issued for admission to special
events or venues and certificates issued in paper form only are exempt.
Discretionary income and budget surplus - 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 - high rate of counterfeits - 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? - 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 - ANSWER-The second-best alternative (or the value of that
alternative) that must be given up when scarce resources are used for one
purpose instead of another
Who is hurt the most and least with inflation - ANSWER-Inflation is a general
increase in prices and a corresponding decrease in money's purchasing power.
Who is hurt the most with inflation? - ANSWER-Those on fixed incomes (retired
people)
Who is hurt the least with inflation? - ANSWER-Borrowers and producers
Role of the treasury department - ANSWER-The United States Department of the
Treasury is the
