"A man's errors are his portals of discovery" James Joyce
Personal Financial Literacy Quiz:
(Answers with explanations at bottom of page)
1. Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?
a.) Older, working couples saving for retirement.
b.) Older people living on fixed retirement income.
c.) Young couples with no children who both work.
d.) Young working couples with children.
2. Which of the following is true about sales taxes?
a.) The national sales tax percentage rate is 6%.
b.) The federal government will deduct it from your paycheck.
c.) You don't have to pay the tax if your income is very low.
d.) It makes things more expensive for you to buy.
3. Rebecca has saved $12,000 for her college expenses by working part-time. Her plan is to start college next year and she needs all of the money she saved. Which of the following is the safest place for her college money?
a.) Locked in her closet at home.
c.) Corporate bonds.
d.) A bank savings account.
4. Which of the following types of investment would best protect the purchasing power of a family's savings in the event of a sudden increase in inflation?
a.) A 10-year bond issued by a corporation.
b.) A certificate of deposit at a bank.
c.) A twenty-five year corporate bond.
d.) A house financed with a fixed-rate mortgage.
5. Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?
a.) When you need to buy a car to get a much better paying job.
b.) When you really need a week vacation.
c.) When some clothes you like go on sale.
d.) When the interest on the loan is greater than the interest you get on your savings.
6. Which of the following statements best describes your right to check your credit history for accuracy?
a.) Your credit record can be checked once a year for free.
b.) You cannot see your credit record.
c.) All credit records are the property of the U.S. Government and access is only available to the FBI and Lenders.
d.) You can only check your record for free if you are turned down for credit based on a credit report.
7. Your take home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?
a.) Social security and Medicare contributions.
b.) Federal income tax, property tax, and Medicare and social security contributions.
c.) Federal income tax, social security and Medicare contributions.
d.) Federal income tax, sales tax, and social security contribution.
8. Retirement income paid by a company is called:
a.) 401 (k).
c.) Rents and profits.
d.) Social Security.
9. Many people put aside money to take care of unexpected expenses. If Juan and Elva have money put aside for emergencies, in which of the following forms would it be of LEAST benefit to them if they needed it right away?
a.) Invested in a down payment on the house.
b.) Checking account.
d.) Savings account.
10. David just found a job with a take-home pay of $2,000 per month. He must pay $900 for rent and $150 for groceries each month. He also spends $250 per month on transportation. If he budgets $100 each month for clothing, $200 for restaurants and $250 for everything else, how long will it take him to accumulate savings of $600.
a.) 3 months.
b.) 4 months.
c.) 1 month.
d.) 2 months.
ANSWERS: 1) b; 2) d; 3) d; 4) d; 5) a; 6) a; 7) c; 8) b; 9) a; 10) b