Economics Exam Review: Personal Finance

Money deducted from your paycheck for things like Social Security and Medicare is an example of

• Progressive Tax

• Proportional Tax

• Regressive Tax

When you purchase an insurance policy, you are sharing liability. What does this mean?

• The cost is being shared by you and the insurance company

• You are solely responsible for all costs

• The insurance company is responsible for all costs

• You and the insurance company are NOT liable for any costs

Buying stock through mutual funds is less risky than buying individual stock because

• You diversify risk by buying small pieces of many companies

• Inflation is less likely to erode your investment

• Investments are secured by the FDIC

• Individual companies usually go bankrupt

The higher the risk, the ___________ the reward.

• Higher

• Lower

Plan A has a deductible of $5000 and Plan B has a deductible of $1000, which plan is likely to have higher premium payments?

• Plan A

• Plan B

• They should be the same

Which group is most negatively impacted by a regressive tax?

• High income earners

• Low income earners

In voluntary exchange, why do people give something up?

• to increase their self-sufficiency

• to make a rational decision

• to get something they want more

• to allocate scarce resource fairly

We begin a new society on a planet hospitable to humans. We must decide how to allocate our scarce resources. We allow our leader to allocate them as he see fits. This strategy would be considered:

• Lottery

• Sharing

• Authority

• Majority Rule

When you receive a library fine, what behavior are libraries trying to encourage?

• Returning your items on time and in good condition

• Keeping items past the due date

• Improving your literacy

Which is example of "LAND"

• Tractor

• Mechanic

• Sand

• Water Fountain