2nd Semester Recap

A deficiency in which mineral is the most common cause of anemia (a condition where the blood doesn't have enough healthy red blood cells)?

• Potassium

• Iron

• Zinc

• Magnesium

Answer explanation

A deficiency in iron is the most common cause of anemia, as iron is essential for the production of hemoglobin in red blood cells. Without sufficient iron, the body cannot produce enough healthy red blood cells.

What is the primary purpose of creating a personal budget?

• To track exactly how much money you can borrow.

• To plan how you will spend and save your income.

• To figure out the total amount of tax you owe for the year.

• To choose which stocks or bonds to invest in.

Answer explanation

The primary purpose of creating a personal budget is to plan how you will spend and save your income, helping you manage your finances effectively.

Compound interest is often called 'interest earning interest.' Why is this powerful for saving money long-term?

• It guarantees your savings are completely safe from loss.

• It allows your savings to grow at an accelerating rate over time.

• It reduces the taxes you pay on your income each year.

• It only benefits people who start with a large amount of money.

Answer explanation

Compound interest allows your savings to grow at an accelerating rate because you earn interest on both your initial principal and the interest that accumulates over time, leading to exponential growth.

Your 'Net Pay' (the amount on your paycheck you actually take home) is lower than your 'Gross Pay' (your total earnings) because:

• Your employer miscalculated your hours.

• Money has been deducted for taxes, and possibly things like insurance or retirement savings.

• The bank charged a fee to process your paycheck.

• You already spent some of the money before getting paid.

Answer explanation

Your 'Net Pay' is lower than 'Gross Pay' because money has been deducted for taxes, insurance, or retirement savings, which are standard deductions from your earnings.

Which of the following is best described as a financial 'Need' rather than a 'Want'?

• A brand new video game console.

• Basic transportation to get to school or work.

• Eating out at restaurants multiple times a week.

• The latest designer clothing.

Answer explanation

Basic transportation to get to school or work is a financial 'Need' because it is essential for fulfilling daily responsibilities, unlike the other options which are considered 'Wants'.

What is a credit score primarily used for?

• To determine your eligibility for voting.

• To help lenders decide if you are likely to repay borrowed money.

• To calculate how much interest you earn on your savings account.

• To track your spending habits for budgeting apps.

Answer explanation

A credit score is primarily used by lenders to assess the likelihood that a borrower will repay a loan. This helps them make informed lending decisions.

When you use a debit card to buy something, where does the money typically come from?

• A short-term loan from the bank that you pay back later.

• Your linked checking account.

• A credit line based on your credit score.

• Your investment portfolio.

Answer explanation

When you use a debit card, the money comes directly from your linked checking account, as it withdraws funds immediately to pay for your purchase.

Which of the following is generally considered the riskiest type of debt due to potentially very high interest rates?

• Federal student loans.

• A mortgage for buying a house.

• Credit card debt.

• A car loan from a credit union.

Answer explanation

Credit card debt is considered the riskiest type of debt due to its potentially very high interest rates, which can lead to significant financial strain if not managed properly.

The concept of 'Pay Yourself First' means:

• Spending money on fun activities before dealing with bills.

• Allocating a portion of your income to savings before you budget for other expenses.

• Paying off all your debts before you start saving any money.

• Using your income solely for personal enjoyment.

Answer explanation

The concept of 'Pay Yourself First' emphasizes saving a portion of your income before allocating funds for other expenses, ensuring that savings are prioritized over discretionary spending.

What is the main function of a checking account?

• To earn the highest possible interest rate on your money.

• To hold long-term investments like stocks.

• To provide easy access to your money for regular spending and paying bills.

• To automatically build your credit score.

Answer explanation

The main function of a checking account is to provide easy access to your money for regular spending and paying bills, making it a convenient tool for managing daily finances.