Personal Finance Review

Which of the following is a primary function of financial institutions?

• Enforcing tax collection

• Providing services for saving, borrowing, and capital formation

• Setting global economic policies

• Managing international trade agreements

What happens when the amount of savings in an economy increases?

• Inflation rises.

• Capital formation improves.

• The economy becomes stagnant.

• Loan interest rates increase.

How does interest influence saving and investment decisions?

• Higher interest discourages savings.

• Lower interest encourages borrowing for productive use.

• It has no significant impact on capital allocation.

• It only affects consumer loans, not savings.

Which type of account typically offers the highest interest rates for savings?

• Checking accounts

• Money market accounts

• Basic savings accounts

• Certificate of Deposit (CD)

Which of the following is a wise investment strategy for long-term financial growth?

• Frequent day trading

• Creating a diversified portfolio

• Only investing in high-risk stocks

• Keeping all money in cash savings

What is the primary benefit of starting a savings program early?

• Lower monthly contributions

• Greater compound interest over time

• Reduced interest rates on loans

• Immediate access to large sums of money

Reconciling a bank statement involves:

• Calculating future interest.

• Comparing recorded transactions with bank statements.

• Applying for additional credit.

• Transferring funds to savings.

Which of the following is NOT a common type of loan?

• Auto loan

• Mortgage

• Payday loan

• Donation loan

What is one major responsibility when borrowing money?

• Spending freely on luxury goods

• Making regular, on-time payments

• Avoiding all debt at all costs

• Only borrowing from friends or family

How can an individual improve their credit score?

• Avoiding the use of credit entirely

• Making minimum payments on time

• Paying off balances in full regularly

• Applying for multiple credit cards frequently