Personal Finance Final Exam
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Question 1: The ability to prepare a spreadsheet is an example of a soft skill.
Answer: F
Question 2: Statistics show that the amount and type of education you complete does not significantly affect the amount of money you earn.
Answer: F
Question 3: When demand for a product exceeds its supply, businesses will begin charging lower prices for the product.
Answer: F
Question 4: The United States has a market economy, which is based on the laws of supply and demand.
Answer: T
Question 5: The decline (recession) stage of the business cycle represents the lowest point on the business cycle graph.
Answer: F
Question 6: If you cannot answer a question on a job application or if it isn’t applicable, it is acceptable to write “N/A” on the answer blank.
Answer: T
Question 7: Tips given to a person for performing a service are not subject to federal income taxes.
Answer: F
Question 8: Workers are taxed on most of the benefits they receive from employers.
Answer: F
Question 9: Interest and dividends are forms of earned income that are taxable.
Answer: F
Question 10: Gambling winnings are subject to income tax but not social security tax.
Answer: T
Question 11: Consumers are said to be economizing when they are seeking to get the highest value for the money spent.
Answer: F
Question 12: Economists believe there is no direct relationship between inflation and employment.
Answer: F
Question 13: Bait and switch is considered an unethical sales technique, but it is not illegal.
Answer: F
Question 14: Higher productivity lowers the cost of each unit produced.
Answer: T
Question 15: Having a company representative give out free samples in a store is an example of direct advertising.
Answer: T
Question 16: Although people’s financial resources are limited, their wants and needs are unlimited and growing.
Answer: T
Question 17: If you spend less money on an item than you planned to spend, this is an unfavorable variance in your budget analysis.
Answer: F
Question 18: Financial goals should be set before personal goals, because your personal goals will be dependent on them.
Answer: F
Question 19: Because most people do not have enough resources to meet all their needs and wants, they must make choices.
Answer: T
Question 20: With a full endorsement, anyone who finds the endorsed check can cash it.
Answer: F
Question 21: A CD is a great savings option if you want to have immediate access to the money.
Answer: F
Question 22: Debit cards carry all the same protections provided with credit cards.
Answer: F
Question 23: Medicaid is a government-sponsored health insurance program for senior citizens.
Answer: F
Question 24: The beneficiary is the person covered by a life insurance policy.
Answer: F
Question 25: An umbrella policy is so named because it provides liability coverage above that of your homeowner’s and car insurance.
Answer: T
Question 26: Insurance providers are not allowed to charge higher or lower premiums based on marital status.
Answer: F
Question 27: A buying plan focuses only on items that you can afford to buy now.
Answer: F
Question 28: Service credit is often provided by utility companies and doctors.
Answer: T
Question 29: Finance charges increase the cost of items purchased by a credit card.
Answer: T
Question 30: No interest is charged on the unused portion of a line of credit.
Answer: T
Question 31: Long-term debt is a loan that is payable over a period longer than a year.
Answer: T
Question 32: Amortization is the process of dividing your debt obligation, plus interest, into increasingly smaller monthly payments over a set period of time.
Answer: F
Question 33: Many car buyers seek to obtain a preapproved loan so that they know the maximum amount they will be able to borrow in advance.
Answer: T
Question 34: If something major happens to a leased car, such as engine failure, the lessee usually must pay for it.
Answer: F
Question 35: A lease payment on a car is typically much more than a monthly car loan payment.
Answer: F
Question 36: A landlord must keep tenants’ security deposits in a separate account and refund any nonused portions.
Answer: T
Question 37: An unsecured loan must be backed by collateral.
Answer: F
Question 38: Debt represents future earnings already spent.
Answer: T
Question 39: You should establish and maintain an amount of unused credit available for use in emergencies.
Answer: T
Question 40: A loan shark offers illegal  loans at very high interest rates.
Answer: T
Question 41: Cash advances obtained through your credit card usually have a high fee of 6 percent or more but carry a lower interest rate than regular credit card purchases.
Answer: F
Question 42: A consumer has 90 days from the day a bill is received to file a dispute.
Answer: F
Question 43: If you order your credit report online, you can have access to it within minutes.
Answer: T
Question 44: As a rule of thumb, an emergency fund of $1,000 is sufficient to cover many types of unplanned expenses.
Answer: T
Question 45: Liquidity is a term used to describe how quickly your money can trickle away to nothing if you fail to meet your savings and investment goals.
Answer: F
Question 46: In general, the greater the potential return, the higher the risk.
Answer: T
Question 47: A bear market exists when stock prices are consistently rising.
Answer: F
Question 48: Using the strategy of dollar-cost averaging relieves the investor of having to study the stock market to try and determine the best time to buy stocks.
Answer: T
Question 49: You can lose part of your principal if you withdraw funds from a CD early.
Answer: T
Question 50: Most financial experts believe that buying your own home is the best investment you will ever make.
Answer: T
Question 51: All of the following are examples of hard skills except
Answer: C
Question 52: Factors that affect your earnings potential include
Answer: D
Question 53: A job description may include all except
Answer: D
Question 54: Price increases for a product are most likely to occur when
Answer: B
Question 55: Scholarships are available to students based on
Answer: D
Question 56: Which of the following is true of a subsidized student loan?
Answer: A
Question 57: Which of the following is not good advice regarding resumes?
Answer: B
Question 58: Which of the following is good advice regarding job interviews?
Answer: A
Question 59: The following are examples of pay without work except
Answer: B
Question 60: Which of the following is true of public goods?
Answer: D
Question 61: A property tax is based on the property’s
Answer: A
Question 62: Which of the following is not an optional deduction from your pay?
Answer: B
Question 63: The form used to report taxable income a worker received during the calendar year is
Answer: C
Question 64: An example of a perk is
Answer: D
Question 65: Which of the following is a measure of inflation?
Answer: C
Question 66: When consumers act in their own best self-interests when making purchases, they are engaging in
Answer: A
Question 67: The Consumer Technology Bill of Rights gives consumers the right to
Answer: D
Question 68: Which law requires drug manufacturers to test drugs for safety and effectiveness before they are sold to consumers?
Answer: C
Question 69: Your net worth can be computed as
Answer: C
Question 70: A utility bill (water,electric, gas)  is an example of
Answer: B
Question 71: Standards against which progress is measured in reaching goals are called
Answer: A
Question 72: Goals you wish to achieve in the next two to five years are
Answer: C
Question 73: Which of the following is a common Internet scam in which an e-mail is sent from someone posing as your bank or other legitimate business asking for personal information?
Answer: A
Question 74: The amount of extra money a person has left over after all necessary expenses are met is called
Answer: B
Question 75: What should you do if your budget does not balance?
Answer: D
Question 76: The words “Pay to the order of” are included in which type of endorsement?
Answer: B
Question 77: When a paper check is transformed into a digital image, it is said to be
Answer: C
Question 78: When reconciling a bank statement, the amount of outstanding checks is
Answer: A
Question 79: Which of the following would not be an adjustment to the checkbook register balance on a bank reconciliation?
Answer: C
Question 80: Which of the following is the most liquid?
Answer: A
Question 81: When you set aside a fixed amount of savings on a regular basis over time, it is called
Answer: C
Question 82: Self-insuring is an example of which risk strategy?
Answer: D
Question 83: If your health insurance has a $10,000 stop-loss provision, what percentage of medical expenses will it pay once you have incurred $10,000 in deductibles and copays in a year?
Answer: D
Question 84: Which of the following would not be covered by a regular homeowner’s insurance policy?
Answer: B
Question 85: Which type of insurance coverage protects against damage to your own vehicle when you are at fault in hitting another car?
Answer: B
Question 86: When choosing health insurance coverage a way to save money on monthly premuims is to
Answer: D
Question 87: The type of health care coverage that would pay for the care offered in a nursing home is
Answer: D
Question 88: Which of the following is not one of the five steps of creating a buying plan?
Answer: B
Question 89: Protections offered by many credit card companies include
Answer: D
Question 90: Which of the following is not a result of financial irresponsibility?
Answer: C
Question 91: Late credit card payments can
Answer: D
Question 92: Which of the following is not a benefit of using credit cards?
Answer: D
Question 93: Which of the following is true of a payday loan?
Answer: B
Question 94: Which of the following is true of an FHA mortgage loan?
Answer: D
Question 95: Which of the following is not a right of a landlord?
Answer: A
Question 96: Late fees and over-the-limit fees on your credit card bill can
Answer: D
Question 97: The legal process that allows a lender to take possession of a house because the borrower does not meet his or her mortgage obligations is called
Answer: B
Question 98: Under which type of bankruptcy is all debt erased?
Answer: A
Question 99: Under which type of bankruptcy does the debtor follow a court-approved plan to pay back as much debt as possible over a three- to five-year period?
Answer: C
Question 100: Which of the following methods of avoiding bankruptcy requires you to turn over your checking account and bills to a debt manager?
Answer: B
Question 101: Investing is
Answer: B
Question 102: Short-term goals may involve
Answer: A
Question 103: During retirement, it is likely that
Answer: D
Question 104: An investment portfolio should
Answer: A
Question 105: When a company’s overseas factory is destroyed during protests and rioting, this is an example of
Answer: C
Question 106: When the return on your investment is not keeping pace with the rapidly increasing prices in the general economy, this is a case of
Answer: A
Question 107: Which of the following is most likely to be a medium-term goal?
Answer: B
Question 108: Which of the following is FDIC-insured?
Answer: A
Question 109: Which of the following government securities has a variable interest rate that is adjusted annually based on inflation.
Answer: A
Question 110: When rental income exceeds the cost of ownership, you experience
Answer: A