Financial Literacy Practice Exam - 2 of 2

Financial Literacy Practice Exam - 2 of 2

11th Grade

50 Qs

quiz-placeholder

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Financial Literacy Practice Exam - 2 of 2

Financial Literacy Practice Exam - 2 of 2

Assessment

Quiz

Business

11th Grade

Medium

Created by

Adam Hunt

Used 26+ times

FREE Resource

50 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How might a savings account be impacted by inflation over time if interest rates are lower than inflation rates?

The purchasing power of the savings decreases over time

The account earns more interest than the inflation rate

The savings balance remains unaffected

The bank adjusts rates to match inflation automatically

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why is it beneficial to start saving for retirement early?

To avoid penalties for late contributions

To maximize compound interest growth over time

To minimize taxes on investment returns

To achieve higher annual contribution limits

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If you had $10,000 to invest, which would be the best option for long-term growth, and why?

A savings account for stability and no risk

Stocks for higher returns despite potential risk

A certificate of deposit for fixed returns

Real estate for immediate liquidity

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why might someone prefer a Roth IRA over a traditional IRA for retirement savings?

Roth IRA contributions are tax-deductible

Roth IRA withdrawals are tax-free in retirement

Roth IRA accounts require no minimum contributions

Roth IRA funds can only be invested in stocks

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How can diversifying investments reduce risk?

By concentrating funds in high-performing stocks

By spreading funds across different asset types

By investing only in low-risk bonds

By focusing on a single, stable market

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the advantage of 'pay yourself first' when creating a budget?

It ensures savings are prioritized before expenses

It allows for more discretionary spending

It eliminates the need for a detailed financial plan

It focuses only on short-term financial goals

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does compound interest benefit long-term investments?

It reduces the risk of market fluctuations

It generates returns on both principal and prior interest

It provides immediate access to funds when needed

It minimizes taxes on investment earnings

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