Financial Literacy Lesson 1 -4 review

Select the answer that best describes opportunity cost:

• The amount of money you put into savings every year.

• What you gain as a result of choosing one option versus another; a benefit.

• The amount of money a business makes every year from sales

• What you give up as a result of choosing one option versus another; a trade-off.

Which of the following expenses should be included in a typical budget?

• Luxury vacations
• High-end electronics
• Housing, utilities, groceries, transportation, insurance, discretionary spending.
• Gourmet dining

Which of the following would be considered a want for most people?

• Basic necessities like food and water.
• Luxury items such as vacations or the latest gadgets.
• Everyday clothing and shoes.
• Public transportation costs.

Which of the following is a variable expense for many adults?

• Mortgage payment
• Dining out
• Car insurance
• Rent payment

Which of the following is NOT true of a budget? [note capitalization of “NOT”]

• A budget is inflexible.
• A budget is always adjustable.
• A budget helps in financial planning.
• A budget is a tool for tracking expenses.

Which of the following is NOT a successful budgeting strategy?

• Tracking all expenses

• Setting a realistic budget
• Pay with a credit card if you have a hard time sticking to a budget.

• Regularly reviewing financial goals

A ________________ is usually paid on a biweekly or monthly basis for professional employment

• hourly wage
• bonus
• salary
• commission

What factor has the biggest impact on a credit score?

• Payment history
• Types of credit accounts
• Length of credit history
• Credit utilization

What is the best strategy to avoid paying interest on your credit cards?

• Make only the minimum payment each month.
• Use your credit card for cash advances.
• Ignore your credit card statements.
• Pay your balance in full each month.

Which of the following is not a source of income?

• Salary
• Stipend

• Wage

• Personal expenses