PFL Unit 3 Mid-Unit Assessment

Which of the following transactions will REDUCE your checking account balance immediately?

• Writing your monthly rent check which you will mail tomorrow

• Using your debit card to pay for groceries at the supermarket

• Using your credit card to pay for your school books

• Depositing a check at a local bank branch

Which financial product typically pays the highest rate of interest? Why?

• money market account because there is a minimum balance

• Certificate of Deposit because the interest rate is set

• money market account because the interest rate is set

• Certificate of Deposit because it is a contract for a set time and balance.

How does inflation impact the money in your savings account?

• Inflation decreases only the $ you earn in interest

• Inflation increases the value of the money in your account

• Inflation has no impact on $ in your savings account.

• The purchasing power of your money decreases over time

Which of the following statements is TRUE?

• The interest rate on your savings account will remain the same as long as you keep the account open.

• You can choose the interest rate on your savings account, but only once per year.

• The interest rate on your savings account will vary over time and be set by the bank.

• The interest rate on your savings account will vary over time and be set by the government.

Your account was charged $30.00 for an overdraft fee. What is an overdraft fee?

• fee for maintaining your account.

• a bank tax

• a fee for going below the required minimum balance

• a fee for spending more than you have in your account

Matthew saved $1,500 from his summer job as a camp counselor. Which of these savings vehicles would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?

• Traditional savings account

• Checking account

• ESA/529

• Certificate of deposit

Zola just secured her first job after college, and she's heard that it's important to start investing for her retirement. She can afford to put 5% of her monthly salary toward retirement. What type of account should she choose for this goal?

• CD

• HSA

• IRA

• MMA

Which of the following best describes an ESA/529 account?

• A type of retirement account for teens & younger adults

• A special type of saving account for minors

• A tax exempt fund that lets your savings grow for school related expenses

• A special type of saving account for college students only

A decrease from 4% to 2% in the interest rates charged by banks would most likely encourage

• Businesses to open savings accounts

• People to purchase housing.

• People to save money.

• People to keep their money at home instead of at the bank

During a period of recession, the Fed might adjust interest rates, which could cause a trickle-down effect. Which statement would be true?

• The Fed would most likely lower interest rates

• The Fed would most likely increase interest rates to combat inflation.

• The Fed would not touch interest rates because inflation will adjust on its own

• Inflation is not affected by interest rates.