Personal Finance Pretest

Jamal has four things that he could do on Saturday morning...babysit his younger brother while his mom does the grocery shopping, play basketball, go to the library to study for a test on Monday, or go to the movies. The alternatives listed above are in the order in which he would like to do them. Which of the following statements is true?

• He chooses basketball and his opportunity cost is the other three alternatives.

• He chooses basketball and his opportunity cost is babysitting.

• He chooses babysitting and his opportunity cost is the other three alternatives.

• He chooses babysitting and his opportunity cost is basketball.

Which of the following will increase the earnings of software programmers?

• a decrease in the price of software

• a decrease in the supply of software

• an increase in the demand for software programmers

• an increase in unemployed software programmers

A budget includes:

• Monthly income

• Fixed expenses

• Variable expenses

• All of the above

_________________ is a good way to save on monthly expenses:

• Canceling your electric utility

• Canceling your car insurance

• Paying fewer of your monthly bills

• Eating at home

Which of the following is a fixed expense

• Groceries

• A finance charge

• Rent

• Hair care

A key difference between credit unions and banks is:

• Banks usually pay higher interest on savings accounts

• Credit unions are usually member-owned

• Bank debit cards are more widely accepted

• All of the above

A disadvantage of a savings account is that:

• Your money is less safe than in a checking account.

• Interest is the lowest of all forms of saving except holding the money yourself.

• The saver has no record of how much you have deposited.

• The checks you write on the account are less likely to be accepted.

Which is a feature of a debit card?

• Monthly finance charges

• No risk of identity theft

• Transactions are deducted from bank account immediately

• It is paid off at the end of the month

If Michelle saves $2000 per year, beginning at age 21 for ten years and never saves another dollar and leaves her money in an interest bearing account, and Briana begins saving $2000 per year at age 30 and saves until age 65 at the same interest rate as Michelle, who will have more money at age 65?

• Michelle

• Briana

• You can't tell; it depends on the inflation rate.

• You can't tell; it depends on the interest rate.

Beginning to save while you are young is recommended by financial experts because it:

• is easier to save when you first begin earning income.

• is hard to save later in life when you have more income to spend.

• allows you to lock in higher interest rates when you buy on credit.

• lets compound interest work in your favor by earning interest on interest.