Personal Finance Midterm Review

Economic systems are incredibly complex. What is TRUE statement about economic systems?

• Ancient humans engaged in early economics by trading and selling of goods.

• Economies have existed for only the past few centuries.

• An individual who is working, spending, and saving does not play a role in the economy.

• The bartering system has never been a successful way of trading goods and services.

Your classmate Adrian, claims that no ancient civilizations used any types of currency. You disagree with her claim. What is the BEST example you can use to support your claim?

• Cavepeople had a type of currency called the Keno that was made from gold and silver.

• Americans have been using the dollar for thousands of years.

• The Babylonians used actual money in the form of grain called a Shekel.

• Ancient societies all shared the same currency known as the Rubin, a little yellow bean that grew in Mesopotamia.

This year, teachers can earn a $250 tax credit on money they spend in their classrooms. How will this tax credit affect the teachers’ tax returns?

• This credit will put them in higher tax brackets.

• This credit is not big enough to make any impact on the teachers’ taxes.

• The $250 will be subtracted from the teachers’ gross incomes.

• The $250 will come directly off of the amount of taxes the teachers owe.

Income tax is the only type of tax collected in most states within the United States.

• True

• False

Marta and Miguel are being audited by the IRS. An IRS agent is visiting their home, so they can have access to all of their records. Which type of audit does this describe?

• deduction audit

• field audit

• correspondence audit

• office audit

Bill wants to prepare his own taxes but wants a bit more guidance. He wants to file taxes without having to spend much money. What is his BEST option for filing taxes?

• Prepare his taxes on her own.

• Prepare his taxes with using an electronic tax program.

• Hire someone to prepare his taxes.

• Choose to not file taxes this year.

River and Pat are married. They always combine their incomes on one tax return. Which tax status do they choose?

• single

• single

• married, filing jointly

• married, filing separately

As Vincent gets older, he tends to look for high-paying jobs, watch for sales, and search for items and opportunities that invite happiness and fulfillment. What does Vincent’s behavior demonstrate?

• entrepreneurial ability

• the law of supply and demand

• lens of scarcity

• rational self-interest

All individuals in the United States file their taxes under the same status.

• True

• False

What is the main purpose of government regulations of financial institutions?

• to influence spending in different industries

• to protect consumers and their money

• to create market stability

• to make a profit for the government