Financial Literacy Basics: Understanding Your Income

What is a primary source of income?

• Investment returns

• Inheritance

• Employment salary

• Lottery winnings

Which of the following is considered a passive income?

• Salary from a job

• Money earned from a rental property

• Income from a day's work

• A one-time gift

What is the main purpose of creating a budget?

• To spend more money

• To track investments

• To manage income and expenses

• To calculate taxes

Which of the following is a characteristic of a progressive tax system?

• Everyone pays the same tax rate

• Lower-income earners pay a higher percentage of their income in taxes

• Higher-income earners pay a higher percentage of their income in taxes

• Taxes are optional for high-income earners

What is gross income?

• Income after taxes

• Income before any deductions

• Only income from employment

• Income from investments only

Which of the following would be considered a variable expense in a budget?

• Rent

• Car insurance

• Dining out

• Mortgage

How can managing multiple income streams benefit financial stability?

• Increases dependency on a single income source

• Reduces overall income

• Provides financial security through diversification

• Complicates budgeting

What is net income?

• Total earnings from all sources

• Income before taxes

• Income after taxes and deductions

• Only income from investments

Which of the following is not a source of income?

• Salary

• Dividends from stocks

• Loans

• Rental income

What is the purpose of income tax?

• To fund private corporations

• To pay for public services and infrastructure

• To redistribute wealth equally among citizens

• To invest in the stock market