test 7 review

What is the primary purpose of saving?

• a) To accumulate wealth quickly
• b) To set aside a portion of income for future use
• c) To spend money on luxury items
• d) To invest in risky assets

Which of the following factors typically influences saving behavior?

• a) Age
• b) Income level
• c) Education and financial literacy
• d) All of the above

Which of the following investment options generally offers the lowest potential returns but also the lowest risk?

• a) Stocks
• b) Bonds
• c) Real estate
• d) Cryptocurrencies

How do financial institutions like banks contribute to economic growth through savings?

• a) By lending out deposited savings to individuals and businesses for investments
• b) By investing all deposited savings in high-risk assets
• c) By encouraging individuals to spend all their savings
• d) By charging high fees on savings accounts

What is the potential drawback of excessive saving for the economy?

• a) It can lead to a decrease in consumer spending, slowing economic growth
• b) It can cause inflation to rise rapidly
• c) It can result in a lack of investment opportunities
• d) It has no potential drawbacks for the economy

What is the concept of "consumption smoothing" in economics?

• a) Maintaining a relatively stable level of consumption over one's lifetime
• b) Spending all income on consumption and not saving
• c) Investing all savings in high-risk assets
• d) Accumulating excessive wealth through saving

What role do governments play in encouraging saving?

• a) Offering tax advantages for certain types of savings accounts
• b) Discouraging saving by increasing taxes on savings
• c) Investing all citizens' savings in high-risk assets
• d) Prohibiting individuals from saving money

What is discretionary income?

• a. The total amount of money you earn before deductions
• b. The amount of money you have left after paying for necessary expenses
• c. The amount of money you need to pay for housing and food
• d. The amount of money you spend on entertainment and dining out

What is the first step in developing a savings plan?

• a. Setting financial goals
• b. Determining how much to save
• c. Understanding your income
• d. Automating the savings process

Which of the following is an example of a long-term financial goal?

• a. Saving for a new laptop
• b. Saving for a vacation
• c. Buying a home
• d. Building an emergency fund