Quiz on Financial Understanding

Jeremy asks his brother to lend him $20. His brother said he would lend Jeremy the $20, but he would have to pay it back with interest. What does Jeremy’s brother mean by this statement?

• Jeremy is expected to pay back exactly $20.

• Jeremy is not expected to pay back the money.

• Jeremy is expected to pay back part of the money borrowed.

• Jeremy is expected to pay back $20 plus an additional amount.

Answer explanation

By stating that Jeremy must pay back the $20 with interest, his brother means that Jeremy will owe more than the original amount borrowed. Therefore, the correct interpretation is that Jeremy is expected to pay back $20 plus an additional amount.

A school district pays each employee for the work the employee does. Which factor would most likely NOT affect the amount of money the school district pays the employee?

• The length of the time the employee has been employed by the district

• The special skills and qualifications the employee has

• The level of education the employee has

• The number of children the employee has

Answer explanation

The number of children an employee has does not influence their salary in a school district. Salary is typically based on employment duration, skills, and education, not personal circumstances like family size.

A snowstorm destroyed most of the oranges in a particular region. This will impact the price of oranges in the area. Which statement best describes the impact?

• The price of oranges will likely increase, because the supply of oranges increased.

• The price of oranges will likely decrease, because the supply of oranges increased.

• The price of oranges will likely increase, because the supply of oranges decreased.

• The price of oranges will likely decrease, because the supply of oranges decreased.

Answer explanation

The snowstorm reduced the supply of oranges, leading to a likely increase in price. When supply decreases and demand remains the same, prices typically rise.

Mr. Baker borrows $4,500 from a bank to open a small business. He pays $6,000 back to the bank. Which of these is the most likely reason Mr. Baker pays back more than the amount he borrowed?

• He was responsible for paying interest on the loan.

• He was responsible for paying sales tax on the loan.

• He miscalculated the amount of money he needed.

• He is making a deposit for future loans.

Answer explanation

Mr. Baker pays back more than he borrowed because he was responsible for paying interest on the loan, which is a common requirement for loans to compensate the lender for the risk and opportunity cost.

Marco works at a grocery store earning an hourly wage. Which statement below is true?

• Marco’s weekly paycheck will always be the same amount.

• Marco will only be paid for the hours he works.

• Marco is a volunteer and will not be paid.

• Marco will not be paid for the first hour he works.

Answer explanation

Marco will only be paid for the hours he works, which means his paycheck can vary based on the number of hours he puts in. The other statements are incorrect as they do not reflect typical employment practices.

Saving money for college is important because –

• college tuition is expensive

• college tuition is inexpensive

• college tuition needs to be paid for before attending

• college tuition money cannot be borrowed

Answer explanation

Saving money for college is crucial because college tuition is expensive. This makes it necessary to plan and save in advance to cover these costs, ensuring that financial burdens are manageable.

Jonathan is helping his grandfather chop firewood. When he is finished chopping the firewood, Jonathan receives a payment of $25 from his grandfather. The physical act of chopping the wood is best defined as –

• income

• career

• labor

• volunteerism

Answer explanation

The physical act of chopping wood is best defined as 'labor' because it involves physical work performed to earn payment, distinguishing it from income, career, or volunteerism.

John and Louis both do the same job at the same company. John’s income is more than that of Louis. Which answer best explains the difference?

• John is younger than Louis.

• John works more hours every week than Louis.

• John’s family is larger than Louis’s family.

• John’s monthly bills are larger than Louis’s.

Answer explanation

John's higher income is likely due to him working more hours each week than Louis, which typically results in greater earnings. The other options do not directly correlate with income differences.

A hurricane destroyed most of the avocado trees in an orchard. This will have an effect on the price of the remaining avocados. Which statement best describes the effect on the price?

• The price will likely increase, because there are more avocados available to buy.

• The price will likely decrease, because there are more avocados available to buy.

• The price will likely decrease, because there are fewer avocados available to buy.

• The price will likely increase, because there are fewer avocados available to buy.

Answer explanation

The hurricane reduced the number of avocado trees, leading to fewer avocados available in the market. With lower supply and constant or increased demand, the price will likely increase.

In August, stores stock high quantities of pencils to sell for Back-to-School sales. This has an effect on the price of the pencils. Which statement best describes the effect on the price?

• Pencils are sold for a lower price, due to the low quantity.

• Pencils are sold for a higher price, due to the low quantity.

• Pencils are sold for a lower price, due to the high quantity.

• Pencils are sold for a higher price, due to the high quantity.

Answer explanation

Pencils are sold for a lower price due to the high quantity available during Back-to-School sales. When supply increases, prices typically decrease to encourage sales.