Unit 1 Retirement and Budgeting Quiz 2

Which of the following are TRUE about gross income and net income?

• They are the same thing

• Gross income is the total amount earned AFTER deductions

• Gross income is the total amount earned BEFORE deductions

• Net income is the total amount earned BEFORE deductions

Tax-deferred means...

• You do not have to pay income tax on the money until you begin to withdraw it at retirement

• You pay income tax on the retirement contributions when you deposit them

Which of these accounts do you set up at a brokerage firm or other financial institution?

• 401K

• Pension

• Individual Retirement Account

Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?

• Exactly $102

• More than $102

• Less than $102

• Don’t know

Imagine that the interest rate on your savings account is 1 percent a year, and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?

• More

• Same

• Less

• I don't know

What do we call a fee or a charge that is collected for using someone's money?

• Deposit

• Interest

• Loan

• Cheque

Which of the following scenarios demonstrates a good budgeting practice?

• Tom's monthly income is less than his monthly expenses.

• Jerry’s monthly taxes are equal to her monthly expenses.

• Mickey spends less money each month than he earns at his job.

• Batman spends more money each month than he earns at his job.

After creating his budget, John realized his expenses exceed his income. To resolve this issue he can do which of the following?

• Go on a shopping spree

• Invest more in the stock market

• Work fewer hours

• Eat out less frequently

What is something you already own (positive cash value)?

• asset

• liability

CREDIT CARD BILL

• asset

• liability