Unit 3 Test Review Consumer Math

Front

What is compound interest?

Back

Interest that grows exponentially based on accumulated interest.

Front

What are mandatory payroll deductions?

Back

Deductions such as FICA and federal income tax that are required by law.

Front

How do you calculate FICA deductions?

Back

Multiply gross pay by the FICA rate (7.65%).

Front

What does a budget deficit indicate?

Back

It indicates that expenses exceed income.

Front

How do you calculate interest earned on a savings account?

Back

Multiply the principal amount by the interest rate (APR) for the time period.

Front

What is the formula for calculating simple interest?

Back

Simple Interest = Principal x Rate x Time.

Front

What is the difference between gross pay and net income?

Back

Gross pay is the total earnings before deductions; net income is what you take home after deductions.

Front

What is the purpose of a budget?

Back

To plan and track income and expenses to manage finances effectively.

Front

What is the significance of APR in savings accounts?

Back

APR (Annual Percentage Rate) indicates the yearly interest earned on savings.

Front

What does it mean to have a balanced budget?

Back

Income equals expenses, with no surplus or deficit.