Personal Finance Quiz

Which of the following methods work as a substitute for cash to pay for things?

• Check

• Credit Card

• Prepaid Card

• Debit Card

• All of the above

Why do you file income tax returns with the IRS on a yearly basis?

• To report income, calculate tax liability, and claim deductions/credits.
• To increase government revenue
• To avoid paying taxes
• To receive a tax refund

Which statement best describes how a progressive income tax system works and how it differs from a proportional tax?

• In a progressive tax system, everyone pays the same tax rate, whereas in a proportional tax system, tax rates increase with income.

• In a proportional tax system, everyone pays the same tax rate, whereas in a progressive tax system, tax rates increase with income.

• A progressive tax system taxes all income at a fixed percentage, while a proportional tax system uses tax brackets based on income.

• Both progressive and proportional tax systems tax higher incomes at lower rates to encourage investment.

What is the difference between your gross income and your net income?

• The amount of taxes paid

• The total income before any deductions

• The income after taxes and deductions

• The difference is the amount after taxes and deductions are subtracted from the total income before any deductions

Which of the following best describes "fiat money," and why is the U.S. Dollar considered fiat currency?

• Money backed by a physical commodity like gold or silver.

• Currency that derives its value from government regulation or law.

• Digital currency, like Bitcoin, not regulated by any government.

• Currency that is no longer in use.

What is inflation, and what causes it?

• A decrease in the purchasing power of money, often caused by an increase in the money supply

• An increase in the prices of stocks and bonds

• A decrease in the rate of unemployment

• An increase in the value of a currency against another

Why is inflation harmful?

• It decreases the value of money

• It increases the value of money

• It does not affect the economy

• It reduces unemployment

What does the federal government (specifically the Federal Reserve) do to control inflation?

• Increase interest rates

• Decrease interest rates

• Print more money

• None of the above

List some of the mandatory deductions that can be taken out of your paycheck

• Federal and state taxes, Social Security, and health insurance

• Gym membership, charity donations, and parking fees

• Internet bill, streaming subscriptions, and grocery expenses

• Vacation savings, pet expenses, and birthday funds

List some of the optional deductions that can be taken out of your paycheck

• Health insurance premiums

• Retirement fund contributions

• Union dues

• None of the above