Personal Finance and Economics Modules 1-6

Sarah has a job paying $35,000.00 a year and gets paid twice a month. What is a reasonable amount of money she can expect to receive for each paycheck?

$1,014. 75

At the time Mark's braces were put on, Mark's parents decided to pay half the total cost up front. How much do they need to set aside, per month, to be able to pay the remaining $1,600, in eight months?

$200

Up to how much of your money is insured by the FDIC or NCUA when it is kept in a financial institution?

$250,000

How much money will you contribute to Social Security if your gross pay is $500.00?

$31.00

Sharon's total assets are $2, 200 and total liabilities are $1,500. What is her net worth? Is Sharon solvent or insolvent?

$700; solvent

Who is responsible for filing a tax return?

Employee

What should the body of a cover letter include?

Express your interest in the company.

Where does the largest amount of Federal tax revenue come from?

Federal income tax

Which amendment to the U.S. Constitution established personal property rights laws in regards to the federal government?

Fifth

Increasing government spending to try to reduce unemployment is an example of _____.

Fiscal policy

What are a house payment and insurance examples of?

Fixed expense

What is one possible advantage to having a trade surplus in the U.S.?

Foreigners compete with U.S. consumers to purchase U.S. goods

Your friend quits work to go back to school and obtain another degree. After he graduates, he is only able to find part time work at McDonalds for the first few years. While he is working at McDonalds he is ____________________.

Frictionally unemployed

Which item includes a tax in the price of the good?

Gasoline

In a command economy, who owns the factors of production?

Government

You will normally make a choice if you expect the marginal benefits to be _______ the marginal costs.

Greater than

Winter is almost here, and with it, holiday spending. Consumers are planning to spend more money this season on gifts and decorations. With the national savings rate at a low 3.6%, much of this spending is being financed by emergency savings funds. What is the best way to handle holiday spending?

Budget carefully and plan ahead.

Which defines a market economy?

Business activity and resources are not regulated by the government.

How can a country maximize the benefits of trade?

By specializing in goods it produces best

You invite all of your friends to come study for the SAT with you. Under which of the factors of production would the room you reserved most likely fall?

Capital

What is it called when one producer has a lower opportunity cost of production than another producer for a product?

Comparative advantage

Allison put $600 in a certificate of deposit (CD) with an interest rate of 4%. In three years she has $674.92. How did she earn the extra $74.92?

Compound interest

The buyer is "in charge" of what is produced in a competitive market economy, through their purchases. This is called the Law of ______.

Consumer Sovereignty

Which BEST describes the calculation of GDP?

Consumer Spending + Investment Spending + Government Spending + (Exports- Imports)

In a market economy, households have the power to decide what businesses produce. This is called _________.

Consumer sovereignty

In the circular flow model, households are responsible for ___ while businesses are responsible for ___.

Consumption, production

After the 2008 economic meltdown, finances were very uncertain, making saving money extremely important. To help with this, certain rates were changed which affect everyone's paychecks. Social Security taxes were temporarily reduced and minimum wage was increased. This means that there was more take-home money in a paycheck which is perfect for saving. Which is the best way to deal with financial uncertainty?

Create a savings fund to cover costs in case of an emergency.

Mike and Molly really like their financial institution. They are part-owners of the institution and appreciate the great customer service every time they speak with a representative about their financial needs, especially in their share account. They also enjoy the membership that they have at their financial institution. What financial institution have they chosen?

Credit union

Which of the following is an example of an embargo?

Cuba cannot sell items in the U. S.

What happens if the dollar price of a euro increases?

Currency depreciates for the U.S. dollar

What is the equation that describes net exports?

Net Exports = Exports - Imports

What is another name for take home pay?

Net pay

Suppose you decide to work on a school project with your best friend instead of going to the Homecoming Bonfire with your boyfriend or girlfriend. In order to make this decision, which of the following did you need to think about?

Opportunity cost

What is sales tax?

Percentage tax on the sales price of many goods

When looking at a financial aid award letter, which type(s) of aid would you have to pay BACK?

Perkins Loan

Consumer goods and services are bought in which of the following markets?

Product markets

What is a personal property inventory most commonly used for?

Proof of loss from fire, theft, or property damage

Which tax system has a negative effect on low-income individuals?

Regressive

How should you prepare for an interview?

Research the company

Which of the following is NOT considered an employee benefit?

Salary

Which statement best describes the relationship between education and income?

The higher the level of education, the higher the income

Which of the following is NOT an example of how government actions and economic conditions can impact personal financial planning?

The local government uses some of your tax money to build a bench at the bus stop.

The Federal Reserve raises the reserve ratio from 10% to 15%, now requiring that banks keep 15% on hand. What will happen to each new deposit that the bank receives?

The money that is entering the economy will now be less since the ratio reserve requirement is higher.

Which of the following is an example of innovation?

The owner of a dry cleaning business discovers and uses a new way of removing wrinkles from shirts.

How are 529-plan distributions taxed by the federal government if used for qualified educational expenses?

They are not taxed at all.

When bonds mature, how does the federal government pay off bondholders?

They sell more bonds.

Which of the following governmental agencies regulates monetary policy?

U.S. Federal Reserve System

What are lunches, medical bills, personal care items, and clothing all examples of?

Variable expenses

What information do you need to complete your federal income tax return form?

W-2 from each employer

What is true about setting financial goals?

Write your goals down and put them in a place where you can see them.

Article I, Section 10 of the U.S. Constitution would protect your rights in which situation?

You open a new business and need to sign contracts for renting a facility.

Because of a recession, people are cutting back on spending in certain areas. This includes dining-out. Instead of eating at an expensive restaurant, people are enjoying more fast-food restaurants. McDonald's share price, for example, has increased throughout this year because of their inexpensive prices. People are having to choose how to spend their money wisely - which includes deciding what is a want and what is a need. Which of the following could NOT happen if you don't identify your wants vs. your needs?

You run the risk of overspending.

What is one of the disadvantages of keeping financial documents in home files?

Your documents may not be protected against fire, water, or theft.

What's the form you have to fill out to apply for college financial aid from the federal government?

a Free Application for Federal Student Aid (FAFSA)

In economics, what is equilibrium?

Demand is the same as supply

The calculation for determining your net worth is _____.

assets - liabilities

What is NOT true about a budget or spending plan?

gifts and expenses are not considered income, so they shouldn't be incorporated into a budget.

Getting a college education, buying a car, and starting a business are examples of _____.

goals

All of the following may be part of a worker's earned income except ___________________.

health insurance

People who get a college or professional degree increase their _________ and _________.

market value; income potential

What happens to wages paid to workers with particular skills when the demand for workers with these skills increases?

wages go up

Paying yourself first is an example of _____.

ways to increase your savings

A tax deduction reduces

your taxable income

Which services can be used to withdraw money?

ATM, savings accounts, checking accounts

How does a limited liability partnership (LLP) differ from a limited liability company (LLC)?

An LLP can have foreign investors while an LLC cannot.

What is inflation?

An increase in overall prices.

When interests rates ____, the demand for money decreases.

Are high

What does the Federal Deposit Insurance Corporation (FDIC) provide deposit insurance for?

Banks

You work a part-time job and get paid. Then you go to the store to buy a new video game. What type of economy are you participating in?

Market economy

In your personal filing system, you should keep all of the following EXCEPT

Medical receipts for the past 10 years

Suppose it takes a seamstress twelve hours to produce two dresses. What is her labor productivity per hour?

0.167

Cleveland does not know which career path he should take. Which of the following choices BEST list the steps he should take?

1) Take several self assessments, 2) research careers based on likes, dislikes, and abilities, 3) look at the training needed and job outlook

Joe deposits $1,200.00 in his checking account at the bank. If the Federal Reserve has a 10% reserve ratio requirement, how much money can now be created in the economy?

1080.00

You have $2000 in your savings account and have taxable interest. Which form do you need to have when you file your taxes?

1099-INT

What is the number of Federal Reserve Districts in the United Sates, each with its own Federal Reserve Bank?

12

Based on the information in this course, how can a value be described?

A belief or idea you consider important or desirable

Which of the following is a good, not a service?

A computer

What is a price ceiling?

A maximum price, usually set by the government, that sellers may charge for a good.

What type of prices for goods and services normally result from a lack of competition?

Higher prices

Which of the following would NOT be considered an incentive to do your homework?

Homework is practice and does not affect your overall grade.

Why does production increase in the long run?

Improvements in technology

What can the government do to stop rising inflation?

Increase taxes

How has the Internet affected competition between firms?

Increased competition

Which of the following would NOT be associated with the study of global economics?

Individual consumer practices

A proportional tax would NOT take a percentage of income from which group?

Individuals with no income

Why do partnerships have an advantage over sole proprietorships?

It allows for people to combine talents.

Sally currently has $20,000 in her savings account and she has inherited $250, 000 from her aunt. What should she do to ensure that she will have access to her money if the bank goes out of business?

Keep her money in two financial institutions

Which is an example of a variable cost?

Labor

What does a certificate of deposit (CD) usually have?

Limited liquidity

What will a service charge from the bank result in?

Lower balance

What are governments attempting to do by regulating natural monopolies?

Make the firms behave more like a perfect competitor

Which of the following does NOT describe an economic system?

Socialism

Imagine that you decide to spend all of your free time surfing the web for an entire week. During this week-long period, opportunity costs for this decision would ________

Steadily increase

Which of the following is true of a publicly traded corporation?

Stocks can be bought and sold through a stock exchange.

How is personal net worth calculated?

Subtracting total liabilities from total assets

What is the amount of a good or service that businesses have available to sell?

Supply

Which is a good example of a trademark?

Target's red bull's-eye symbol

Which of the following would be considered an asset?

checking account

The _____ is a measure of the changes in prices for commonly purchased goods and services in the United States.

consumer price index

Demand that increases or decreases as the price of an item goes down or up.

elastic demand