SLO review

Interpret which of the following statements best explains why income alone does not determine wealth.

• A. Investing is the only factor that contributes to wealth building.
  
  
  

• B. Income alone does not determine a person’s wealth.

• C. Only people who are natural savers can become wealthy.

• D. The amount of money a person makes does not dictate his or her spending and saving behavior

Describe the main reason of widespread financial insecurity of Americans.

• The saving rate of Americans is low and many borrow in order to spend more than they earn.

• B. Most Americans save a high proportion of their income.

• C. Government programs are unavailable to help people when they are disabled or experience unemployment.

• D. Unemployment rates are high and incomes of Americans are low.

______3) Which of the following is the best reason to save money?

• A. emergency fund

• B. large purchases

• C. lend money to friends

• D. build wealth

___4) This principle suggests that a certain amount of money today has different buying power than the same amount of money in the future, thereby changing the “value” of the money.

• A. time value of money

• B. inflation

• C. opportunity Cost

• D. interest Rate

______5) Decide which of the following account records would have the most current balance.

• A. your monthly bank statement

• B. your own account register

• C. account balance statement from ATM

• D. checkbook

_____6) Distinguish what a credit score is intended to measure.

• A. your financial success

• B. your income level

• C. the risk of not repaying debt

• D. the amount of money you have in the bank

______7) Which of the following things can be done with a credit card but can’t be done with a debit card?

• A. reserve a hotel room

• B. go into debt

• C. purchase tickets

• D. purchase something online

______8) What happens when a company places an ad and offers no interest on your purchase for three years?

• A. they are not interested in making a profit

• B. they are showing their appreciation to you by giving you free money

• C. the cost of financing is built into the price of the item

• D. the ad is free

_9) Which concept is best explained by the statement “Money spent here cannot be spent there”?

 

• A. delayed gratification

• B. significant purchase

• C. law of diminishing return

• D. opportunity cost

______10) Describe liquidity.

• A. the less liquid the investment, less return

• B. the more liquid the investment, less return

• C. the more liquid the investment, more return

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  D. the less liquid the investment, the more return