Competency 1A

Which of the following is an example of a need rather than a want?

• A new smartphone

• Groceries for the week

• A designer handbag

• A video game console

Answer explanation

Groceries for the week are essential for survival and daily living, making them a need. In contrast, a new smartphone, designer handbag, and video game console are all wants, as they are not necessary for basic functioning.

• $200

• $300

• $500

• $1000

Answer explanation

To find the savings, subtract monthly expenses from monthly income: 3000 - 2500 = 500. Therefore, the family can save $500 each month.

Which of the following best describes a value that might influence financial decisions?

• The price of a product

• The quality of a product

• The importance of education

• The availability of a product

Answer explanation

The importance of education influences financial decisions by shaping an individual's understanding of financial concepts, leading to better investment choices and financial planning.

A family decides to cut down on dining out to save money for a vacation. What type of financial decision is this?

• Investment decision

• Budgeting decision

• Credit decision

• Insurance decision

Answer explanation

This decision to cut down on dining out is a budgeting decision, as the family is adjusting their spending habits to save money for a specific goal, which is their vacation.

If a person values sustainability, which of the following purchases might they prioritize?

• A fast fashion clothing item

• A reusable water bottle

• A single-use plastic bag

• A luxury car

Answer explanation

A person who values sustainability would prioritize a reusable water bottle, as it reduces waste and promotes eco-friendly practices. In contrast, fast fashion, single-use plastics, and luxury cars are less sustainable choices.

Which of the following is a want rather than a need?

• Medicine

• Rent payment

• Streaming service subscription

• Electricity bill

Answer explanation

A streaming service subscription is a want because it is not essential for survival, unlike medicine, rent, or electricity, which are necessary for basic living and health.

• $25

• $50

• $75

• $100

Answer explanation

The family has a budget of $200. After spending $150 on movie tickets, they have $200 - $150 = $50 left for other entertainment activities. Therefore, the correct answer is $50.

Which of the following actions demonstrates taking responsibility for financial decisions?

• Ignoring monthly bank statements

• Regularly reviewing and adjusting the family budget

• Spending without tracking expenses

• Relying on credit cards for all purchases

Answer explanation

Regularly reviewing and adjusting the family budget shows active engagement in financial decisions, ensuring awareness of income and expenses, unlike the other options that indicate neglect or reliance on credit.

• 10 months

• 12 months

• 14 months

• 15 months

Answer explanation

To find out how many months it takes to save for a $1200 laptop at $100 per month, divide 1200 by 100. This gives 12 months. Therefore, the correct answer is 12 months.

Which of the following is an example of a financial decision based on a want?

• Buying groceries

• Paying for a gym membership

• Purchasing a new car

• Paying utility bills

Answer explanation

Purchasing a new car is a financial decision based on a want, as it is a luxury rather than a necessity. In contrast, groceries, gym memberships, and utility bills are essential expenses.