Budget Challenge Quiz Ch 1-4

When it comes to private party transactions, the principle that often applies is caveat emptor. What does that mean? ● The buyer must do their own research and due diligence. ● The buyer must have the cash on hand in order make the purchase. ● The seller must guarantee the quality and condition of the product sold. ● The seller must be licensed and authorized to complete the transaction.

● The buyer must do their own research and due diligence.

Juan earned $100,000 last year. Approximately how much was withheld from his pay for FICA? ● $500 ● $4000 ● $7,650 ● $25,000

$7,650 (7.65%)

CHAPTER 3

EMPLOYMENT QUIZ

Which is the best strategy to avoid late fees and negative impacts to your credit score? ● Protect your personal data from identity theft. ● Purchase insurance for your valuable possessions. ● Have bills automatically paid from a bank account. ● Consider the opportunity cost of financial decisions.

Have bills automatically paid from a bank account.

Which best explains the concept of time value of money? ● Inflation means it is better to spend money now than invest it for the future. ● Borrowing money is a good idea because you are able to pay it off over time. ● Taking additional time to pay off debt means lower interest and more flexibility. ● Money received now is worth more than the same amount received in the future.

Money received now is worth more than the same amount received in the future.

How is the credit card used during the simulation? ● Monthly charges of $600 to $900 are automatically made. ● It can only be used for emergencies and unexpected events. ● Students have the choice of whether to use a credit or debit card. ● Students can elect to use it or their checking account to pay bills.

Monthly charges of $600 to $900 are automatically made.

Which is a benefit of using payment apps and online payment services? ● Not all vendors and retailers accept payment apps for purchases. ● The companies can collect and sell data about your spending habits. ● They typically charge fees that are paid by the user, recipient, or both. ● Most allow the transfer of funds between friends and family at no charge.

Most allow the transfer of funds between friends and family at no charge.

Why do some people use check cashing stores to cash payroll checks instead of a depository institution like a bank or credit union? ● Most depository institutions will take a percentage of your check in order to cash it. ● Depository institutions typically charge account holders a fee for cashing payroll checks. ● Most depository institutions require customers to have an account in order to cash a check. ● Most depository institutions only accept payroll checks or other large checks as direct deposits.

Most depository institutions require customers to have an account in order to cash a check.

If Jonah wasn't saving his paycheck for college, he would use it to buy a used car. What concept does the used car represent for Jonah? ● caveat emptor ● compound interest ● expense ratio ● opportunity cost

Opportunity cost

CHAPTER 2

PLAYING BUDGET CHALLENGE

Sales and service contracts may be several pages long and contain fine print. What should you do before signing any type of contract or agreement? ● Make any purchase with a credit card so you can always get a refund if dissatisfied. ● Read it to make sure you understand all the costs, commitment, and terms of service. ● Ask the salesperson if there is anything in the agreement you should be concerned about. ● Have it reviewed by a lawyer or attorney to make sure it contains nothing unacceptable.

Read it to make sure you understand all the costs, commitment, and terms of service.

Which is true of making vendor selections? ● It is the most important part of the simulation. ● They are made at the start of the simulation. ● Vendor choices can be changed at any time. ● Vendors change frequently during the simulation.

They are made at the start of the simulation.

Cara writes an e-check on Monday to pay a bill in the simulation. What is the earliest it will be applied to the vendor account? ● Monday ● Tuesday ● Wednesday ● Thursday

Tuesday

What will happen at the simulation end? ● Your penalty points will be restored. ● You will be asked to complete a survey. ● You will be required to contact the Help Desk. ● Your trophy points will be added to your overall score.

You will be asked to complete a survey.

Which of the following expenses would be considered a "need" instead of a "want"? ● dinner at a popular new restaurant ● monthly electric and natural gas bill ● replacing the ugly living room sofa ● renewal of your fitness club membership

monthly electric and natural gas bill

Which would most likely be a contracted hourly employee? ● nurse ● teacher ● store manager ● car salesperson

nurse

A person who has a high credit score will ● pay a higher interest rate on consumer loans. ● have more difficulty getting a credit card. ● pay less for credit than those with lower scores. ● not need a down payment for a home mortgage.

pay less for credit than those with lower scores.

Which is not a common type of paid time off (PTO)? ● vacation days ● sick days ● paydays ● holidays

paydays

Which would be an example of a fixed expense? ● replacing worn out clothing ● paying your auto loan bill ● fixing a broken refrigerator ● buying groceries at the store

paying your auto loan bill

Which will automatically result in you earning positive points? ● paying a bill on time ● paying an overdue bill and late fee ● receiving an employer 401(k) match ● exceeding the limit on your credit card

receiving an employer 401(k) match

Which would be most helpful when deciding how much to have withheld from your next paycheck for your 401(k) contribution? ● recent performance of the S&P 500 Index ● record of past 401(k) contributions ● updated Budget and Cashflow Spreadsheet ● class rank and total points earned so far

updated Budget and Cashflow Spreadsheet

Assuming the same rate of pay, which frequency of pay is best for managing your cash flow? ● weekly ● bi-weekly ● bi-monthly ● monthly

weekly

How many points do you earn when you accomplish a trophy goal? ● 100 points ● 250 points ● 500 points ● 1,000 points

● 1,000 points

What is the approximate percentage of an employee's total compensation that benefits make up? ● 8% ● 15% ● 30% ● 50%

● 30%

Who would benefit the least from setting up EFTs to automatically pay recurring bills? ● A person who doesn't have funds in their account to pay bills when due. ● A person who has ample funds but often forgets to pay their bills on time. ● A person who is interested in keeping track of bill payments with a budget. ● A person who has difficulty with the process of writing and mailing checks.

● A person who doesn't have funds in their account to pay bills when due.

Why do credit unions tend to have lower fees and pay higher rates of return on deposits than commercial banks? ● Credit unions are subsidized by the federal government. ● Credit unions do not have to generate profits for their shareholders. ● Credit unions tend to pay their employees less for comparable work. ● Credit unions have more profitable business customers than commercial banks.

● Credit unions do not have to generate profits for their shareholders.

What is a drawback of jobs that pay salary plus commission? ● They do not provide health insurance. ● Few offer any type of retirement plan. ● Most require a master's degree or higher. ● Earnings can vary from pay period to pay period.

● Earnings can vary from pay period to pay period.

What trophy is earned for transferring $750 into your savings account? ● Credit Health ● Debt Reduction ● Emergency Fund ● Perfect Pay

● Emergency Fund

Which Trophy Goal is not directly affected by your ability to manage your credit card? ● Credit Health ● Emergency Fund ● Perfect Pay ● Credit Card Management

● Emergency Fund

Which is a benefit of being an employee paid commission? ● You receive more paid time off than other types of pay. ● Excellent job performance is rewarded with higher pay. ● The work schedule is typically weekdays 9:00 a.m. to 5:00 p.m. ● Commission is typically paid monthly making budgeting easier.

● Excellent job performance is rewarded with higher pay.

What is financial capability? ● Earning enough money so that you no longer need to worry about how much you spend. ● Possessing the capability and interest to perform tasks that you'd have to pay other people to do. ● Having the knowledge, skills, and motivation to make appropriate decisions about your finances. ● Developing a financial plan and sticking with it regardless of difficulty or changing circumstances.

● Having the knowledge, skills, and motivation to make appropriate decisions about your finances.

Which is a voluntary deduction from pay? ● Social Security ● state income tax ● federal income tax ● Health Savings Account

● Health Savings Account

When would it make sense to use a payday lender or cash advance store? ● Whenever the payday lender runs specials that reduces the cost to use them. ● If there is no better way to secure the funds you need for a required payment. ● Anytime you want to buy something and do not have the cash or a debit card. ● If the alternative would be to make the purchase or payment with a credit card.

● If there is no better way to secure the funds you need for a required payment.

Which is true of overdraft protection (ODP)? ● It is required by law for most accounts. ● It is generally available free for most accounts. ● It requires funds to be available from a linked account. ● It guarantees a check will not be returned for insufficient funds.

● It requires funds to be available from a linked account.

Which best describes the goal of playing Budget Challenge? ● Employing strategies to win the game. ● Ending the simulation with the most money. ● Learning to become a more financially capable adult. ● Saving enough money to buy the things you really want.

● Learning to become a more financially capable adult.

Why is it necessary to regularly review and revise your budget? ● Most households earn less income as time goes on. ● Life changes will require changes to your financial plan. ● Budgets do not take into consideration variable expenses. ● Fixed expenses will vary significantly from month to month.

● Life changes will require changes to your financial plan.

In what way are employee benefits actually better than wages? ● Most benefits are exempt from federal and state income taxes. ● The total value of benefits is usually greater than the wages paid. ● Wages can be lowered but benefits cannot be changed or adjusted. ● Employees are reimbursed for unused benefits at the end of the year.

● Most benefits are exempt from federal and state income taxes.

How is a mutual savings bank different from a commercial bank? ● Mutual savings banks do not make loans. ● Mutual savings banks provide more services. ● Mutual savings banks are owned by their depositors. ● Mutual savings banks pay lower interest on deposits.

● Mutual savings banks are owned by their depositors.

Which is a disadvantage of being a salaried employee? ● Fringe benefits such as health insurance are rarely provided. ● Pay varies from week to week making budgeting difficult. ● Overtime is rarely paid for working over 40 hours a week. ● Employers may reduce the rate of pay without notice.

● Overtime is rarely paid for working over 40 hours a week.

What should you do if you forget to pay a bill? ● Ask your teacher to consider the reason before assigning a grade. ● Pay other bills with the money you would've used to pay that bill. ● Write a letter to the vendor asking for an extension of the deadline. ● Pay the bill and any late fees and then request a one-time fee waiver.

● Pay the bill and any late fees and then request a one-time fee waiver.

Which is a benefit of using electronic funds transfers (EFTs) to automatically pay a recurring bill such as a utility bill or student loan payment? ● EFTs include automatic overdraft protection for payments as an added benefit. ● EFTs return a percentage of the charge back to the account holder as a reward. ● Paying automatically with an EFT means the payment is less likely to be missed. ● Payments made with an EFT are held until after you have adequate funds to make it.

● Paying automatically with an EFT means the payment is less likely to be missed.

An emergency fund is money set aside to cover the financial cost of an unexpected event. Which would be the best use of your emergency fund? ● Paying for an expensive car repair not covered under warranty. ● Paying for a vacation you have been planning for many years. ● Paying the monthly cable television and internet service bill. ● Paying into an individual retirement account to invest in stocks.

● Paying for an expensive car repair not covered under warranty.

Which is the best strategy to determine if you are on track to meet your financial goals? ● Charge up to your credit limit on a credit card in order to get an increase. ● Compare your spending to that of your friends to determine who is doing better. ● Analyze your spending and saving yearly when you complete your income taxes. ● Regularly review account balances, debt and credit card balances, and net worth.

● Regularly review account balances, debt and credit card balances, and net worth.

What is the best strategy when it comes to paying recurring bills in the simulation? ● Pay some bills late and take advantage of the one-time fee waiver. ● Schedule bill payments in advance and make sure funds will be available. ● Use your credit card to pay recurring bills and earn additional cash rewards. ● Select the earliest due date and pay all your monthly bills on the same day.

● Schedule bill payments in advance and make sure funds will be available.

Which is a drawback of internet only banks? ● Internet banks have higher fees and charges in order to maintain their websites. ● Internet banking can only be done by computer or smart device, not using ATMs. ● Some brick and mortar banks will not accept check payments from virtual banks. ● Some services, such as getting a document notarized, can only be done in person.

● Some services, such as getting a document notarized, can only be done in person.

When evaluating comparable job offers, which is the best guidance to follow? ● Prioritize cash wages above all else as they provide the most flexibility in budgeting. ● Take into consideration the value of all benefits as well as potential incentive-based pay. ● Salary is the best way to be paid, followed by commission, contract hourly, and hourly wage. ● Look closely at involuntary withholding as it varies greatly from organization to organization.

● Take into consideration the value of all benefits as well as potential incentive-based pay.

Online access to your checking account will show you the current balance. Why is it still important to maintain a checking account register, record checks and deposits, and calculate the account balance? ● The online balance does not include bank fees charged or direct deposits made. ● The online balance does not include checks that have been written but not cashed. ● Financial institutions often make errors when calculating customer account balances. ● Financial institutions require you to reconcile your account in order to maintain service.

● The online balance does not include checks that have been written but not cashed.

Which best describes net pay? ● The pay before any type of withholding is taken out. ● The pay the employee receives or has deposited to their account. ● The pay after mandatory withholding but before voluntary withholding. ● The value of all compensation including any fringe benefits and bonus pay.

● The pay the employee receives or has deposited to their account.

Which is a benefit of debit cards? ● They can be used to purchase goods and services online. ● They are never charged fees at automated teller machines. ● They provide an extended warranty on any goods purchased. ● They allow you to make a purchase now and deposit funds later.

● They can be used to purchase goods and services online.

Which is not a reason individuals and businesses support charities? ● They believe in the charity's mission. ● They have a personal connection to the charity. ● They can receive a share of the charity's profits. ● They can receive a tax benefit by donating to the charity.

● They can receive a share of the charity's profits.

How are charities different than businesses? ● They do not earn or spend money. ● They do not provide goods or services. ● They do not disclose how they use funds. ● They do not pay taxes on money they raise.

● They do not pay taxes on money they raise.

Which is true of credit unions? ● They cannot pay interest on deposits. ● They operate as non-profit organizations. ● They do not provide traditional savings accounts. ● They provide more services than large commercial banks.

● They operate as non-profit organizations.

Erica's employer offers to match her 401(k) contributions up to 4% of her pay. What should she do? ● Avoid making 401(k) contributions because it will increase her taxable income. ● Wait until she has worked at least a year before deciding how much to contribute. ● Contribute only if she is exempt from withholding for Social Security and Medicare. ● Try to contribute at least 4% of her pay to take advantage of the full employer match.

● Try to contribute at least 4% of her pay to take advantage of the full employer match.

Where can you find any quizzes that your teacher has assigned to you? ● Under the Road Test Take Action section ● Under the Written Test Take Action section ● Under the Rank and Stats View Stats section ● Under the Rank and Stats Current Points section

● Under the Written Test Take Action section

What form does an employee use to determine how much should be withheld from their pay for income taxes? ● 401(k) ● FICA ● W-4 ● HSA

● W-4

When opening a regular checking or share draft account, which is the most important consideration for most people? ● What incentives are provided for you to open an account? ● What is the current interest rate paid on funds left in the account? ● What are the terms and interest rates on their certificates of deposit? ● What types of fees are charged for maintaining and using the account?

● What types of fees are charged for maintaining and using the account?

Should a person include "wants" when creating a budget? ● No, budgeting is really about making sure your needs are met. ● No, it will be difficult to balance a budget that includes wants and needs. ● Yes, a budget should be realistic and include things that make us happy. ● Yes, most people can obtain all their wants and needs if they just plan ahead.

● Yes, a budget should be realistic and include things that make us happy.

Should you have your paycheck directly deposited to your financial institution if your employer provides that option? ● No, direct deposits typically take a week or more before you can access your money. ● No, most banks charge an additional fee for accepting deposits directly. ● Yes, it is convenient, and you will have access to your money the day deposited. ● Yes, funds directly deposited earn additional interest and earn bonuses.

● Yes, it is convenient, and you will have access to your money the day deposited.

Individuals who win large lottery payouts: ● are more likely to declare bankruptcy than those who don't. ● are normally able to quit their jobs and live off of their winnings. ● are more likely to start successful businesses than those who don't. ● are usually people who are already well off and don't need the money.

● are more likely to declare bankruptcy than those who don't.

Which would most likely be paid salary plus commission? ● dental assistant ● mechanical engineer ● automobile salesperson ● utility company electrician

● automobile salesperson

What problem are most people who use payday lenders or cash advance stores trying to solve? ● cash flow ● retirement saving ● risk management ● tax prep

● cash flow

Which should be entered on a Cash Flow Budgeting Tool? ● late penalty points ● charged overdraft fees ● 401(k) account earnings ● unpaid bill penalty points

● charged overdraft fees

Which type of depository institution is most likely to have hundreds of branches throughout the United States? ● credit union ● commercial bank ● mutual savings bank ● savings and loan association

● commercial bank

Which is not a typical fee financial institutions charge? ● account maintenance fee ● direct deposit fee ● non-sufficient fund fee ● overdraft fee

● direct deposit fee

A salaried employee will always have a(n) ● profit-sharing plan. ● employment contract. ● dental and vision insurance. ● option to buy company stock.

● employment contract.

An advantage of direct deposit for the employee is that ● money stays in the employer's bank account longer. ● funds are available to use at the earliest possible date. ● it is easier to find any employer errors in calculating pay. ● it prevents you from knowing what other employees make.

● funds are available to use at the earliest possible date.

Which benefit typically costs an employer the most to provide to their employees? ● health insurance ● week paid vacation ● $50,000 term life insurance ● four days of paid sick leave

● health insurance

Which best describes charities? ● non-profit organizations ● publicly traded corporations ● federal government entities ● state authorized partnerships

● non-profit organizations

In order to earn the Debt Reduction trophy, you must ● pay an additional $500 towards your student loan. ● avoid all credit card charges during the simulation. ● pay off the entire balance of your automobile loan. ● make advance payments on at least three invoices.

● pay an additional $500 towards your student loan.

Which will charge the highest interest rate on a short-term loan? ● commercial bank ● credit union ● payday lender ● saving and loan

● payday lender

Gross pay refers to ● the amount of pay after voluntary deductions are taken out. ● the amount of pay before voluntary deductions are taken out. ● the amount of pay after involuntary deductions are taken out. ● the amount of pay before any deductions or taxes are taken out

● the amount of pay before any deductions or taxes are taken out

A person has $3000 to deposit in a financial institution. Assuming all options were offered by the same institution, which account is likely to pay the highest interest rate? ● savings account ● checking account ● money market account ● three-year certificate of deposit

● three-year certificate of deposit

In which situation would an employer be required to pay overtime? ● An hourly employee works 48 hours in one week. ● An hourly employee works a 12 hour shift. ● A salaried employee works on a Saturday. ● A salaried employee works on a holiday.

An hourly employee works 48 hours in one week.

CHAPTER 4

BANKING

Why is it important to complete and use the Cash Flow Budgeting Tool (CFB)? ● Fifty simulation points are earned upon its completion. ● It reduces your interest rates on most consumer loans. ● Vendor bills will appear automatically in the spreadsheet. ● It allows you to predict future checking account balances.

It allows you to predict future checking account balances.

What is the daily penalty for being over your credit card limit? ● 10 points ● 25 points ● 50 points ● 100 points

100 points

Credit card utilization penalty points are charged once balance exceeds ● 25%. ● 50%. ● 75%. ● 100%.

75%

CHAPTER 1

Keys to Financial Success

You see an online ad from a private seller for a low mileage used car. It is priced at less than half what it would normally sell for. The car looks great in the pictures. What best explains the low price? ● The advertisement is a scam designed to defraud a potential buyer. ● The seller doesn't know how much the car is really worth. ● The car probably needs some maintenance or repairs. ● The seller probably doesn't need the money.

The advertisement is a scam designed to defraud a potential buyer.

Tara doesn't get paid at the end of each month but most of her bills are due during the third and fourth weeks of the month. What term best describes her problem? ● cash flow ● caveat emptor ● compound interest ● variable expenses

cash flow

A person has $3000 to deposit in a financial institution. Assuming all options were offered by the same institution, which account is likely to have the lowest interest rate or pay no interest at all? ● savings account ● checking account ● money market account ● three-year certificate of deposit

checking account

In the Budget Challenge simulation, penalty and reward points are assessed for negative and positive financial behaviors. As an adult these behaviors would most affect your ● credit score. ● 401(k) balance. ● billing cycle. ● vendor registration.

credit score

Which is a variable expense? ● rent ● entertainment ● internet service ● cell phone bill

entertainment