Financial Literacy Review Ms. Kohl 2012-13 Answer in True or False format
Budgeting 1. Budgeting only deals with matters of personal spending
2. There is gross income and net income. The difference between the two is that net income is gross income minus payroll deductions.
True - Net income is what is left over after various payroll deductions, including insurance, taxes, etc.
3. Dave makes $400/week. After deducting $60 for federal taxes, $25 for state taxes, and $25 for FICA (Social Security), Dave’s net pay is $300.
False - Dave’s total deductions = $110. $400 - $110 = $290
4. Centoria has a mortgage payment, a car payment, and insurance payments for both every month. These are examples of variable expenses.
5. Variable expenses are items such as restaurant expenses, going to the movies, and food.
True - These are expenses that can be “trimmed” to better fit a budget
6. A good example of a long-term goal is saving to take your “special someone” out for a nice dinner for their birthday.
False - A good example of a long-term goal is saving for your child’s education.
False - Your “net worth” is your total assets minus your total liabilities.
8. Mr. Ursa pays $1160 total for car insurance for a period of 8 months. This is an example of a periodic expense.
True - Items such as insurance payments can be considered “periodic” as long as they aren’t set by the terms of the policy to be monthly payments.
9. Some good rules to follow for your financial life are get an education, spend less than you earn, and create a budget that includes savings and sound financial investments.
10. If you are saving for a down payment on a condo and want to do it within a three-year span, it is considered a minimum payment.
False – Saving for a down payment on property is considered a good short-term goal to achieve.
11. When you have a budget, you are spending as little as possible all the time.
False - When you are budgeting you are planning how to manage your income, saving, and spending.
12. A good example of a liability is a financial obligation that must be paid.
False - Nah, I don’t think so. A good example of an asset that has good economic value as collateral.
14. What is left after you subtract your liabilities from your assets is known as net income.
False - After you subtract your liabilities from your assets, you have your “net worth.”
Economic Questions 15. A good example of “human capital” is knowledge and skills.
True - The knowledge and skills you can contribute to the workplace are good “human capital.”
16. FICA deductions are contributions to Social Security. Only the employee makes FICA contributions.
False - Both the employer and employee make FICA contributions.
17. When enough resources are not available to provide all the goods and resources people want, this is a good example of scarcity.
True - Scarcity, by definition, means there is a finite amount of something available.
False - PACED means develop a Plan, Align goals, Compare goals and plan, Evaluate, and Decide.
20. Ms. Kohl loves to play volleyball and read but has a ton of homework to grade, so she does that. Her “opportunity cost” is that she fulfills her obligations and gets her work done instead of relaxing.
True - You don’t get something for nothing. In this case, she gives up the opportunity to relax to work instead.
22. Scarcity comes about when people want more goods and services than are available.
True - Again, the word “scarcity” means there is not an infinite amount of anything available, whether it’s goods, services, or manpower.
23. When problem solving, the first three steps are identify goals, list criteria, and list alternatives.
False - The first three steps in the Problem-Solving Model are identify the problem, list alternatives, and evaluate.
24. The opportunity cost for saving for the future is the goods and services you can purchase now.
True - Again, you don’t get something for nothing. If you want to save for the future, you have to give up some spending in the present.
Banking Services 25. When you use your debit card for a purchase, it is most like using a loan.