Economics - Financial Literacy Exam
questions with verified answers
What should you do in order to get spending under control? - correct answer ✔✔ create a
budget of current income and expenses
Why is comparison shopping for a car necessary? - correct answer ✔✔ the price of a car can
vary
Why do financial planners stress the importance of starting to save and invest early? - correct
answer ✔✔ the power of compounding and appriciation
What is an important feature of a good financial goal? - correct answer ✔✔ a specific time
frame
What causes purchasing power to decrease when there is more money to buy goods? - correct
answer ✔✔ inflation
How can someone achieve their goal of buying a house? - correct answer ✔✔ Follow a budget
that allows for savings
What should you decide before buying a new cell phone? - correct answer ✔✔ Is this a need or
a want
What is an example of financial advice? - correct answer ✔✔ "A penny saved is a penny
earned."
, What is an example of a fixed expense? - correct answer ✔✔ Rent, cell phone bill, car payment
What is an example of a mandatory deduction from a paycheck? - correct answer ✔✔ federal
withholding tax and FICA
When should someone contribute to a retirement plan? - correct answer ✔✔ as young as
possible
What is someone's main source of income? - correct answer ✔✔ Wages or salary
Who is responsible for the collection of federal taxes? - correct answer ✔✔ The International
Revenue Service (IRS)
What is the equation of a balanced budget? - correct answer ✔✔ total expenses + savings =
total income
Why do financial advisors recommend that a person save 10% of each paycheck? - correct
answer ✔✔ to build wealth and income
Define the "time value of money" - correct answer ✔✔ money received today is worth more
than the same amount received in the future
What can you do when you receive a gift card? - correct answer ✔✔ Use it from the specific
company or store that it's related to
What document will allow you to have your assets distributed? - correct answer ✔✔ A will
What is an example of long-term debt? - correct answer ✔✔ A student loan
questions with verified answers
What should you do in order to get spending under control? - correct answer ✔✔ create a
budget of current income and expenses
Why is comparison shopping for a car necessary? - correct answer ✔✔ the price of a car can
vary
Why do financial planners stress the importance of starting to save and invest early? - correct
answer ✔✔ the power of compounding and appriciation
What is an important feature of a good financial goal? - correct answer ✔✔ a specific time
frame
What causes purchasing power to decrease when there is more money to buy goods? - correct
answer ✔✔ inflation
How can someone achieve their goal of buying a house? - correct answer ✔✔ Follow a budget
that allows for savings
What should you decide before buying a new cell phone? - correct answer ✔✔ Is this a need or
a want
What is an example of financial advice? - correct answer ✔✔ "A penny saved is a penny
earned."
, What is an example of a fixed expense? - correct answer ✔✔ Rent, cell phone bill, car payment
What is an example of a mandatory deduction from a paycheck? - correct answer ✔✔ federal
withholding tax and FICA
When should someone contribute to a retirement plan? - correct answer ✔✔ as young as
possible
What is someone's main source of income? - correct answer ✔✔ Wages or salary
Who is responsible for the collection of federal taxes? - correct answer ✔✔ The International
Revenue Service (IRS)
What is the equation of a balanced budget? - correct answer ✔✔ total expenses + savings =
total income
Why do financial advisors recommend that a person save 10% of each paycheck? - correct
answer ✔✔ to build wealth and income
Define the "time value of money" - correct answer ✔✔ money received today is worth more
than the same amount received in the future
What can you do when you receive a gift card? - correct answer ✔✔ Use it from the specific
company or store that it's related to
What document will allow you to have your assets distributed? - correct answer ✔✔ A will
What is an example of long-term debt? - correct answer ✔✔ A student loan
