Final Exam Study Guide Part 2

Which of the following is an example of a post-high school life choice that can be evaluated using a rational decision-making model?

• College

• Middle school

• Elementary school

• Kindergarten

How can individual financial decisions help future generations?

• By creating generational wealth

• By increasing daily expenses

• By reducing job opportunities

• By limiting education

(a)   is considered a type of income.

• Salary
• Grocery bill
• Utility payment
• Rent expense

What is a sample federal individual income tax form?

• 1040

• 1098

• 2106

• 8888

(a)   is a basic component of a paystub.

• Gross pay
• Grocery list
• Car mileage
• Vacation plans

How can a person determine their net worth?

• By subtracting liabilities from assets

• By adding up monthly expenses

• By counting the number of bank accounts

• By checking their credit score

What is a benefit of diversifying investments?

• Reducing risk

• Increasing taxes

• Limiting options

• Decreasing returns

Why is it important to compare the costs and benefits of different savings and investment options?

• To evaluate risk and return

• To increase spending

• To avoid budgeting

• To reduce income

What is one consequence of declaring bankruptcy?

• Improved credit score

• Loss of access to all types of insurance

• Difficulty obtaining credit in the future

• Automatic increase in income

What is the difference between revolving credit and installment credit?

• Revolving credit is paid in fixed monthly payments, installment credit is not

• Installment credit is used for credit cards, revolving credit is for mortgages

• Revolving credit allows repeated borrowing up to a limit, installment credit is repaid in set payments

• There is no difference