Financial Literacy Quiz

Which of the following is a key component of creating a budget?

• Estimating future stock market performance

• Tracking income and expenses

• Calculating credit scores

• Filing tax returns

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DOK Level 2: Skill/Concept

What is the primary purpose of an emergency fund in financial planning?

• To invest in high-risk stocks

• To cover unexpected expenses

• To pay off long-term debt

• To save for retirement

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DOK Level 2: Skill/Concept

Which of the following is a benefit of diversifying your investment portfolio?

• Guaranteed higher returns

• Reduced risk

• Increased tax liability

• Simplified investment management

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DOK Level 2: Skill/Concept

What is the main advantage of using a credit card responsibly?

• Accumulating debt

• Building a good credit history

• Avoiding all interest charges

• Increasing spending limits

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DOK Level 2: Skill/Concept

Which of the following is a common method for managing credit card debt?

• Ignoring monthly statements

• Making minimum payments only

• Paying off the balance in full each month

• Applying for more credit cards

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DOK Level 2: Skill/Concept

What is the purpose of a W-4 form in the context of taxation?

• To report annual income to the IRS

• To determine the amount of tax to withhold from an employee's paycheck

• To file for a tax refund

• To apply for a tax identification number

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DOK Level 2: Skill/Concept

Which of the following is a characteristic of a Roth IRA?

• Contributions are tax-deductible

• Withdrawals are tax-free after retirement

• There are no income limits for contributions

• Required minimum distributions start at age 70½

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DOK Level 2: Skill/Concept

What is the main goal of financial planning?

• To maximize credit card usage

• To achieve financial goals and security

• To avoid paying taxes

• To increase spending on luxury items

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DOK Level 2: Skill/Concept

Which of the following is an example of a fixed expense in a budget?

• Groceries

• Rent or mortgage payment

• Entertainment

• Clothing

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DOK Level 2: Skill/Concept

What is the primary function of a credit report?

• To provide investment advice

• To track an individual's credit history and current credit status

• To calculate annual income

• To determine eligibility for government benefits

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DOK Level 2: Skill/Concept