Personal Finance - Final Exam

A bicycle that normally sells for $150 is on sale for 20% off. How much is the bicycle after the discount?

(a)  

If sales tax is 6%, how much sales tax must you pay on an oven that costs $300?

(a)  

Which of the following best describes discretionary spending?

• Discretionary spending refers to the money available after taxes are removed and any mandatory obligations have been covered.
• Discretionary spending is the same as net income.
• Discretionary spending refers to the money that must be paid.
• Discretionary spending refers to the money spent at a person’s own discretion, specifically on food or entertainment.

Which of the following best describes intrinsic value?

• The price at which an item is bought or sold for
• The value an individual gives an item for personal reasons
• An item’s worth in comparison to something else
• The extent to which a person wants or needs an item

Which of the following best describes relative value?

• The price at which an item is bought or sold for
• The value an individual gives an item for personal reasons
• An item’s worth in comparison to something else
• The extent to which a person wants or needs an item

What is the key to long-term budgeting success?

• Establishing the budgeting habit first, then adjust the spending habits
• Monitoring spending and adjust it as appropriate
• Adjusting spending habits then set a budget based on the adjustments
• Including bills in budgeting plans

Which of the following is NOT true for the envelope budget?

• It utilizes the psychological advantages of paying with cash.
• Most, if not all, discretionary spending is done with cash.
• If a person uses a credit or debit card, he will most likely spend less money than if he used cash.
• Using cash instead of a card naturally limits spending.

Government student loans can be subsidized and unsubsidized. Which of the following best describes the primary difference between them?

• Subsidized loans will always have smaller payments than unsubsidized loans.
• Unlike unsubsidized loans, payments on subsidized loans are tax deductible.
• They both charge interest, but the government pays the interest on subsidized loans while the student is in school.
• If a student receives grant money, their loans are considered subsidized by the grant itself.

What does the acronym FAFSA stand for?

• Federal Association for Financing Student Academics
• Free Application for Federal Student Aid
• Free Aid for Financial Student Assistance
• Federal Application for Free Student Aid

The budgeting process includes three important aspects. Which of the following describes the most important aspect?

• Categorizing spending needs because they must be a top priority
• Categorizing spending wants because they result in dangerous spending
• Assigning limits to categories because budgets are built on limitations
• Committing to the limits and categories decided on