Understanding Money and Spending Concepts

Front

Which of the following best describes discretionary spending?

Back

Discretionary spending refers to the money available after taxes are removed and any mandatory obligations have been covered.

Front

Which of the following is the best explanation for the ultimate purpose of money? Money exists to simplify exchanges. Money exists because people want to accumulate it, thus creating a demand. Money has intrinsic value and worth. Money has value based on what can be purchased with it.

Back

Money exists to simplify exchanges.

Front

If Hunter closes the deal for Leo's Xbox 360, what is the agreed value of the items?

Back

The exact price can’t be determined because it is relative. They are worth more than $75 for Hunter, but at the time, they were worth less than $75 for Leo.

Front

In reference to factors that contribute to standard of living, which of the following best describes the difference between comfort and material goods? Material goods are objects that can be owned, whereas comfort might be the luxury versions or features of those objects. For example, owning a car is having a material good, but owning the latest Mustang with all the bells and whistles would be a comfort.

Back

Material goods are objects that can be owned, whereas comfort might be the luxury versions or features of those objects.

Front

Collin is utilizing the envelope budget and has spent all of his grocery money. He sees spare ribs on sale for $0.50 a pound. What should he do to stick to the envelope budget? Options: Withdraw cash from his savings account, Pass on the sale and stop spending money on groceries, Use his credit card and pay it off later.

Back

Pass on the sale and stop spending money on groceries

Front

Which of the following best describes intrinsic value?

Back

The value an individual gives an item for personal reasons

Front

Which of the following is a fixed expense? Prescription medication, Groceries, Gasoline, Entertainment

Back

Prescription medication

Front

Which of the following is a major advantage that comes from paying for things with cash? Spending is limited to available cash., Excessive spending is more likely to occur if a larger bill must be broken for a minor purchase., People tend to buy more things when using cash., If a person runs out of cash, she can easily make a withdrawal at an ATM.

Back

Spending is limited to available cash.

Front

Which of the following best describes relative value? Options: The price at which an item is bought or sold for, The value an individual gives an item for personal reasons, An item’s worth in comparison to something else, The extent to which a person wants or needs an item

Back

An item’s worth in comparison to something else

Front

Which of the following best describes a living wage? Options: The amount of money a person must earn to live above the poverty line, A wage that supports an average standard of living, The median income across the country, The wages a person needs to pay for housing in his state, The annual salary necessary to disqualify a person from receiving welfare benefits

Back

A wage that supports an average standard of living