Unit 6 Test: Financial Literacy

Sarah earns $3,200 per month. She spends $1,200 on rent, $400 on groceries, $200 on utilities, and $300 on transportation. How much money does she have left for savings and other expenses?

• $1,100

• $1,400

• $2,100

• $900

If you budget $500 for entertainment and actually spend $650, what is the difference?

• $150
• $50
• $100
• $200

Your monthly income is $4,000, and your fixed expenses are $2,500. If you want to save 20% of your income, how much can you spend on discretionary expenses?

• $800

• $1,000

• $1,200

• $1,500

A person earns $50,000 annually and spends 30% of their income on housing. How much is spent on housing per year?

• $25,000
• $15,000
• $20,000
• $10,000

If your total expenses equal your total income, what is your budget status?

• Variable

• Balanced

• Deficit
• Surplus

What is the definition of a asset?

• An asset is a resource owned by an individual or entity that is expected to provide future economic benefits.
• An asset is a liability that decreases in value over time.
• An asset is a type of debt that must be repaid.
• An asset is a temporary resource that has no economic value.

What does net income refer to?

• The amount you make before taxes

• The total amount deposited into your account

• Your income after taxes and deductions

• Your employer's profit

What is bankruptcy?

• Bankruptcy is a type of investment strategy.
• Bankruptcy is a method of increasing wealth.
• Bankruptcy is a financial term for profit maximization.
• Bankruptcy is a legal status of a person or entity that cannot repay the debts it owes.

What is the primary purpose of a checking account?

• The primary purpose of a checking account is to manage daily financial transactions.

• To save money for long-term investments.
• To provide loans to customers.
• To earn high interest on deposits.

Which of the following is NOT typically a feature of a savings account?

• Interest earned on deposit

• Limited withdrawals per month

• High transactions activity like a checking account

• A place to store money securely