Financial Literacy Final Review

If Jonah wasn't saving his paycheck for college, he would use it to buy a used car. What concept does the used car represent for Jonah?

• Need

• Want

• Fixed expense

• Variable expense

Answer explanation

The used car represents a want for Jonah because he would choose to buy it instead of saving for college, indicating a desire rather than a necessity.

What is the difference between a "need" and a "want"?

• A need is something essential for survival, while a want is something desired but not essential.

• A need is something desired but not essential, while a want is something essential for survival.

• A need is a luxury item, while a want is a basic necessity.

• A need is something you can live without, while a want is something you cannot live without.

Answer explanation

A need is something essential for survival, while a want is something desired but not essential.

What is a fixed expense?

• An expense that varies each month.

• An expense that remains the same each month.

• An expense that is paid annually.

• An expense that is optional.

Answer explanation

An expense that remains the same each month.

What are the advantages of having a high credit score?

• Higher interest rates on loans.

• Lower interest rates on loans.

• Difficulty in getting approved for credit.

• Higher insurance premiums.

Answer explanation

Having a high credit score leads to lower interest rates on loans, making borrowing more affordable and saving money in the long run.

How can you determine whether you are on track to meet your financial goals?

• By ignoring your budget.

• By regularly reviewing your budget and financial statements.

• By spending more than you earn.

• By not saving any money.

Answer explanation

By regularly reviewing your budget and financial statements, you can determine whether you are on track to meet your financial goals.

What is an emergency fund?

• Money set aside for regular expenses.

• Money set aside for unexpected expenses.

• Money set aside for vacations.

• Money set aside for entertainment.

Answer explanation

An emergency fund is money set aside for unexpected expenses, not for regular expenses, vacations, or entertainment.

What are some strategies to avoid late fees and negative impacts to your credit score?

• Paying bills on time and setting up automatic payments.

• Ignoring bills and paying them whenever convenient.

• Only paying the minimum amount due.

• Using cash for all transactions.

Answer explanation

Paying bills on time and setting up automatic payments helps avoid late fees and negative impacts on credit score.

What is a variable expense? Give an example.

• An expense that remains the same each month; e.g., rent.

• An expense that varies each month; e.g., utility bills.

• An expense that is paid annually; e.g., insurance.

• An expense that is optional; e.g., entertainment.

Answer explanation

An expense that varies each month means it changes in amount regularly, like utility bills. This is the definition of a variable expense.

What are the disadvantages of being a salaried employee?

• No fixed income.

• No benefits.

• No overtime pay.

• No job security.

Answer explanation

The disadvantage of being a salaried employee is that there is no overtime pay, unlike hourly employees who receive additional compensation for extra hours worked.

When is an employer required to pay overtime?

• When an employee works more than 30 hours a week.

• When an employee works more than 40 hours a week.

• When an employee works on weekends.

• When an employee works on holidays.

Answer explanation

When an employer is required to pay overtime when an employee works more than 40 hours a week.