Financial Literacy Test questions and
answers
Suppose you put $1000 in an account that earns 5% interest per year, every year. You never
invest additional money and never withdraw money or interest payments. So in the first year,
you earn $50 in interest. In year 4, how much will this account earn? - ANS ✔✔More than $50
Suppose you invest $2500 and earn 7% per year on this investment. How many years will it take
for your total investment to be worth $5000? - ANS ✔✔10+ years (more than 10)
Consider the scenario: Jack and Jill are twins. At the age of 20, Jack started contributing $20 a
month to a savings account. After 20 years, at the age of 40, he stopped adding to his savings,
but he left the money in the account. Jill didn't start to save until she was 40. Then, she saved
$20 a month until she retired 20 years later at 60. Suppose both Jack and Jill earned 6% interest
per year on their savings. When they both retired at age 60, who had more money? - ANS
✔✔Jack, due to compound interest
Pam is deciding between 2 options: Option A: Invest $1000 in a certificate of deposit that earns
5% interest. Pam would not add or remove any money from this investment for the next 30
years. Option B: Invest $1000 in a savings account that earns 5% interest. Move the interest
earned on this account every year into a safe at home. Pam would not add or remove any other
money from the savings account or the safe for the next 30 years. At the end of 30 years, which
of these options would provide the most money? - ANS ✔✔Option A, due to compound interest
Suppose that by the year 2020 your income has doubled and prices of all goods have double
too. In 2020, how much will you be able to buy with your 2020 income?2 - ANS ✔✔Stays the
same
Rita must choose between two job offers. She wants to select the hob with a salary that will
afford her the highest standard of living for the next few years. job A offers a 3% raise every
answers
Suppose you put $1000 in an account that earns 5% interest per year, every year. You never
invest additional money and never withdraw money or interest payments. So in the first year,
you earn $50 in interest. In year 4, how much will this account earn? - ANS ✔✔More than $50
Suppose you invest $2500 and earn 7% per year on this investment. How many years will it take
for your total investment to be worth $5000? - ANS ✔✔10+ years (more than 10)
Consider the scenario: Jack and Jill are twins. At the age of 20, Jack started contributing $20 a
month to a savings account. After 20 years, at the age of 40, he stopped adding to his savings,
but he left the money in the account. Jill didn't start to save until she was 40. Then, she saved
$20 a month until she retired 20 years later at 60. Suppose both Jack and Jill earned 6% interest
per year on their savings. When they both retired at age 60, who had more money? - ANS
✔✔Jack, due to compound interest
Pam is deciding between 2 options: Option A: Invest $1000 in a certificate of deposit that earns
5% interest. Pam would not add or remove any money from this investment for the next 30
years. Option B: Invest $1000 in a savings account that earns 5% interest. Move the interest
earned on this account every year into a safe at home. Pam would not add or remove any other
money from the savings account or the safe for the next 30 years. At the end of 30 years, which
of these options would provide the most money? - ANS ✔✔Option A, due to compound interest
Suppose that by the year 2020 your income has doubled and prices of all goods have double
too. In 2020, how much will you be able to buy with your 2020 income?2 - ANS ✔✔Stays the
same
Rita must choose between two job offers. She wants to select the hob with a salary that will
afford her the highest standard of living for the next few years. job A offers a 3% raise every
