Economic Concepts Quizs

The 50/30/20 rule in budgeting

• Allocating 50% for needs, 30% for wants, and 20% for savings or debt repayment

• Allocating 50% for savings, 30% for needs, and 20% for wants

• Allocating 50% for wants, 30% for savings, and 20% for needs

• Allocating 50% for debt repayment, 30% for needs, and 20% for wants

Certificate of Deposit (CD) carries the highest risk.

• True

• False

• Moderate

• Low

Progressive taxation and economic inequalities

• By taxing higher incomes at higher rates to redistribute wealth, which may discourage investment.

• By providing tax breaks to the wealthy to encourage spending.

• By implementing a flat tax rate for all income levels to simplify the tax system.

• By increasing taxes on lower incomes to fund social programs.

The "Rule of 72."

• A method to estimate how long it takes for money to double at a given interest rate

• A formula to calculate the future value of an investment

• A guideline for determining the best time to invest in stocks

• A strategy for minimizing tax liabilities on investments

Action to take if you suspect identity theft.

• Contact your bank, credit card company, and credit bureaus immediately.

• Ignore the situation and hope it resolves itself.

• Change all your passwords and wait for a month.

• Report it to your local police station only.

Way to build credit responsibly

• Pay off your credit card balance in full and on time

• Open multiple credit accounts at once

• Only make the minimum payment each month

• Use credit cards for all purchases without a plan

Key step in the car-buying process

• Negotiating the price of the car

• Comparing financing options and interest rates

• Choosing the color of the car

• Selecting the dealership

Checking account offers the highest interest rates.

• True

• False

• Savings account offers the highest interest rates.

• Certificates of deposit offer the highest interest rates.

Money market account offers the highest interest rates.

• True

• False

• It offers moderate interest rates.

• It offers the lowest interest rates.

Deductible in an insurance policy

• The total amount the insurance company pays for a claim.

• The amount you pay out of pocket before insurance covers the rest.

• The percentage of the claim that you are responsible for after the deductible.

• The maximum amount the insurance will pay for a policyholder's claim.