Study Skills-Financial Literacy

Which of the following would be considered a want rather than a need for most people?

• Warm clothes in the winter

• b. A place to live

• c. A smartphone

• d. Nutritious Food

Select the answer that best describes what an opportunity cost is:

• a. The amount of money you put into savings each year

• b. The trade-off of making one choice and giving up a different choice

• c. The amount of money a business makes every year from sales

• d. The benefit you gain by choosing one option versus another

You are going to buy a computer, but first you want to do some research to help you select the best model for your needs. Where should you look for the fairest and most reliable information?

• The website of a popular computer company

• b. Advertisements that a computer company puts in a computer magazine

• c. An independent consumer education website that reviews and rates computers

• d. Advice from a salesperson in a computer store who earns commissions on sales.

You are creating a budget for your new business. What should you include?

• a. All income and expenses

• b. Fixed expenses but not income

• c. Income but not variable expenses

• d. Fixed and variable expenses but not taxes

Which of the following is a variable expense for many adults?

• a. Their monthly cost of eating out at restaurants

• b. Their monthly rent payment

• c. The monthly payment on their car loan

• d. Their monthly payment for health insurance

Your friend’s parents are worried about going over their budget for the month. Which expense would you suggest is NOT a need?

• a. Rent payment

• b. Car insurance c.

• Cable service

• d. Groceries

If you know the unit prices of two different brands of an item, you are better able to:

• Compare the prices of the two brands

• Estimate how much of the item you will need

• . Determine which of the two brands is higher quality

• Figure out the discount during a sale on the two items

You received $50 as a birthday gift and chose to spend it on new wallpaper for your room. The opportunity cost of this decision is:

• The price of the wallpaper you bought

• The other items you could have purchased with your $50

• The time you could have spent doing other things

• All of the above

Which of the following is NOT true of a budget? [note capitalization of “NOT”]

• Budgets help you plan how to spend money you earn or receive

• Once a budget is set, it should not be revisited

• A budget can include charitable giving

• Budgets include both income and expenses

Which of the following is NOT a successful budgeting strategy?

• Keep some extra money in your budget for emergencies

• Pay with a credit card if you have a hard time sticking to a budget

• Think about which items are your most important needs

• Revisit your budget regularly and make adjustments