WorksheetsEconomics and Personal Finance Review
Total questions: 78
Worksheet time: 43mins
Derrick worked his entire life at a car manufacturing facility owned by Big Block Cars, Inc. He is now seventy-three years old and enjoying his retirement. His main source of income is the money he receives from 401(k) from his time at Big Block Cars.
How would an extended period of unexpected inflation affect Derrick?
The taxes on his retirement would increase.
The taxes on his retirement would decrease.
It would reduce the value of his source of income
It would increase the value of his source of income.
For most individuals, which of the following is MOST LIKELY to increase earnings over the long-term?
. finding a second job
working longer hours
becoming an entrepreneur
investing in skill development
On what would property tax revenue MOST LIKELY be spent in the United States?
retirement benefits
public schools
Social Security
the Armed Forces
Cameron owns a small business and is looking for a new bank to hold his business deposits. He also wants to take out a loan to purchase some necessary equipment and would prefer to get a loan from the bank that he deposits his money with. He expects to keep an average of $25,000 on deposit and will need a loan of $250,000. After doing some research, Cameron created a table of the average interest rates various banks offered on deposits and the average amount they charged on loans.
Which bank should Cameron patronize?
Bank 1
Bank 2
Bank 3
Bank 4
In which situation would the borrower likely benefit the most?
Kiara takes out a five-year car loan with a fixed interest rate just before a long period of rapid inflation.
Paige takes out a five-year car loan with a variable interest rate just before a long period of rapid inflation.
Sondra takes out a five-year car loan with a fixed interest rate just before a long period of rapid deflation.
Gina takes out a five-year car loan with a fixed interest rate just before a long period of rapid deflation.
Mateo is a pizza delivery driver and is paid by the hour. He was forced to take two weeks off of work due to a serious illness and cannot afford his rent. He owns his car, but has no other significant assets. Should he seek a loan from a payday loan company or a title pawn lender? Why?
He should go to a payday loan company because he will have to put up his car as collateral and risk losing it at a title pawn lender.
He should go to a payday loan company because such companies are owned by their members and usually offer inexpensive loans.
He should go to a title pawn lender because payday loan companies generally charge more interest than other types of lenders.
He should go to a title pawn lender because such companies offer many helpful services to customers including debit and credit cards.
Based on the data in the table, which of the following statements is the MOST reasonable?
The more education one has, the higher the salary one can expect to earn.
All jobs require the same type of human capital.
People with higher levels of education work hard, and people with lower levels do not
High levels of formal education are needed for all jobs.
Based on the information in the table, which career choice has the highest level of salary?
Office Clerk
Police Officer
Attorney
Art Director
Based on the information in the table, which career choice has the lowest level of education required?
Office Clerk
Police Officer
Attorney
Art Director
An automobile insurance policy is LEAST LIKELY to cover expenses arising from which of the following?
theft
collisions
natural disasters
routine maintenance
Raul has purchased fire insurance for his home, but he has decided not to purchase vision insurance. What is the MOST LIKELY reason for his decision?
Raul reduced the risk of his home catching on fire by purchasing fire insurance, but was not worried about reducing the risk of vision problems.
Fire insurance is very expensive and Raul did not have enough money to pay for vision insurance after purchasing fire insurance for his home.
There is nothing Raul can do to reduce the risk of his home catching on fire, but Raul can practice good hygiene to reduce the risk of vision problems.
The cost of repairing Raul's home after a fire is greater than the cost of fire insurance, but Raul's yearly eye checkups cost less than vision insurance.
Logan earns compound interest on his savings. Based on this, which of the following statements is true?
Logan's money grows faster and faster as the years go on.
Logan needs to make very large deposits in order to expect much of a return.
The longer Logan can postpone saving money, the better off he will be.
The more years Logan has to save, the less effective it is.
Ashley recently secured a $5,000 loan from a bank with a 5% annual interest rate. Barry is applying to borrow that same amount from the bank. Under which circumstances would Barry MOST LIKELY get a higher interest rate for his loan?
He has a lower income and fewer debts than Ashley
He has a higher income and less assets than Ashley.
He has a higher income and more assets than Ashley.
He has a lower income and greater debts than Ashley.
Which of the following borrowers is likely to receive the lowest interest rate for a bank loan of $50,000?
an investor who plans to buy many shares of stock in a new corporation
a business owner who needs to raise money to pay off another large loan
a homeowner who wants to build an addition to her house that will increase its value
an individual who desires to open a restaurant in a neighborhood with significant competition
Which of the following must a person under the age of twenty-one provide proof of in order to be approved for a credit card?
a source of income
a savings account
a high school diploma
a utility or phone bill
How is compound interest different from simple interest?
Compound interest can only be applied annually
Compound interest pays on both principal and accumulated interest.
Compound interest does not pay on principal, only on accumulated interest.
Compound interest returns a smaller income to the investor than simple interest.
Which of the following investments consists of multiple securities?
mutual fund
common stock
corporate bond
savings deposit
Which characteristic of corporate stock distinguishes it from a corporate bond?
Corporate stock has a set maturity date.
Corporate stock is a securitized instrument.
Corporate stock can increase in value over time.
Corporate stock represents shares of business ownership.
Which of the following BEST describes how credit unions affect the national economy?
They offer financial services to people with a common bond.
They loan money to banks and other financial institutions.
They offer loans to struggling government institutions.
They audit and evaluate stock markets.
Why are banks willing to pay people for keeping money in savings accounts?
because it forces depositors to assume all of the financial risks
because banks can invest that money and create profits for the bank
because banks are rewarded by the federal government for having the greatest number of depositors
because banks are able to inspect the money for counterfeits and maintain the value of real money
How does opening a certificate of deposit benefit the bank?
It allows the bank to know exactly how long it can use the money.
It keeps the bank from paying interest to Matt's mom.
It means the bank can charge fees for keeping the money.
It gives the bank more money than if Matt's mom had opened a money market.
Matt's mom also has some money she wants to put in a bank. She will not need to use that money for about three years. Why might a certificate of deposit be good for Matt's mom?
She will earn a higher amount of interest.
She has to put a certain amount in the account.
Her account may be charged a fee.
Her money will be easy to take out.
Matt has saved $2,500 from mowing lawns, helping around the house, and his allowance. He wants to put this money in a bank. He doesn't think he will need to use the money right away, but he isn't sure. Which account would earn the highest amount of interest, but still allow him to take out money on a monthly basis if he needs to?
certificate of deposit
checking account
money market
savings account
Diego and Luna both work on a fishing boat. On average, Diego catches 20 fish per day, while Luna averages 15 fish per day. After they have both worked for their particular company for a month, Diego is offered a raise of $4 an hour, while Luna's wages remain the same. Which of the following BEST explains the company's justification for this?
Diego is working harder to please his bosses than Luna is.
Luna is not meeting the company's expected level of productivity.
Diego is contributing more to the company's revenue than Luna.
Luna is preventing other workers from being as productive as expected
In order to protect against a risk of accidental property damage, a consumer would MOST LIKELY purchase which of the following?
an annuity
a mortgage
an insurance policy
a security agreement
A bank customer seeks to borrow a large sum of money. On her application, she indicated that she has a full-time job with a high salary. This resulted in her receiving a loan interest rate that was below the average. Which of the following BEST explains this result?
She demonstrated an ability to repay the loan.
She indicated that her need for the loan is low
She demonstrated that the loan would be put to good use.
She indicated that she has other sources of financial assistance.
Elena purchased several items of clothing for $120. She used a credit card to pay for her purchase. What is the BEST way to reduce the cost of using a credit card for this purchase?
pay slightly more than the minimum payment each month
pay the entire balance due before the grace period expires
pay the minimum payment each month until the balance is paid in full
. pay the minimum payment as soon as the credit card statement is received
A progressive tax is one where individuals with higher incomes pay
a flat rate rather than a share of their income.
the same share of their income as those lower incomes.
a larger share of their income than do those with low incomes.
a smaller share of their income than do those with low incomes.
Mr. Covello is an insurance agent. He sells a life insurance policy to several relatives. Each relative purchases a life insurance policy for $100,000 but pays a different amount for his policy. Which of Mr. Covello's relatives will have the lowest premium for his policy?
Mr. Covello's 16-year-old grandson
Mr. Covello's 35-year-old nephew
Mr. Covello's 56-year-old brother
Mr. Covello's 74-year-old uncle
Which of the following is NOT one of the three basic functions of money?
a store of value
a unit of account
a form of investment
a medium of exchange
The table illustrates the income tax rates for citizens of Country X. The tax code includes no allowable deductions or exemptions, and all citizens are required to file individual tax returns. What type of tax is Country X's income tax?
It is a flat tax because the rate of increase in the tax rate is the same between each income tax bracket.
It is a regressive tax because low-income citizens are taxed at a lower rate than high-income citizens.
It is a progressive tax because high-income citizens are taxed at a higher rate than low-income citizens.
It is a proportional tax because high-income citizens pay a larger proportion of their income than low-income citizens.
In the United States, the federal excise tax on gasoline is 18.4¢ per gallon. What type of tax is this?
The excise tax on gasoline is a progressive tax because, by percentage, the tax imposes a greater burden on those with low incomes than it does on individuals with higher incomes
The excise tax on gasoline is a regressive tax because, by percentage, the tax imposes a greater burden on those with low incomes than it does on individuals with higher incomes.
The excise tax on gasoline is a progressive tax because, by percentage, the tax imposes a greater burden on those with high incomes than it does on individuals with lower incomes.
The excise tax on gasoline is a regressive tax because, by percentage, the tax imposes a greater burden on those with high incomes than it does on individuals with lower incomes.
Which tax increase imposes a greater burden on low-income individuals than on high-income individuals?
a 5 percent increase in the sales-tax rate on watches, jewelry, and other accessories
a 10 percent increase in the sales-tax rate on food purchased for home consumption
a 20 percent increase in the sales-tax rate on items crafted from natural animal furs
a 40 percent increase in the sales-tax rate on twin-engine business jet airplanes
What is one reason that Amy might consider Martha a more valuable employee than Rory?
Rory is not as productive as Martha.
Martha has a higher human capital than Rory.
Martha has better interpersonal skills than Rory.
Rory acts impulsively and does not follow directions.
What is one reason that Amy might consider Rory a more valuable employee than Martha?
Martha demonstrated that she is not a flexible employee.
Martha demonstrated that she is not a responsible employee.
Rory demonstrated more initiative and selfdirection than Martha.
Rory demonstrated that he is a more productive employee than Martha.
What should Amy do before she next goes on vacation?
Amy should make sure that a sociable employee is in charge of the shop
Amy should make sure that a productive employee is in charge of the shop
Amy should make sure that an employee with leadership skills is in charge of the shop.
Amy should make sure that an employee with high human capital is in charge of the shop.
Jessica, who lives in El Paso, Texas, travels to Berlin, Germany, for the annual Oktoberfest celebration. On her first day in Berlin, Jessica orders a currywurst for lunch and hands the cashier 10 US dollars. The cashier informs her that he cannot accept that currency. Why are Jessica's US dollars not a valid form of currency?
They are not easily divisible
They are not widely accepted.
They do not store value.
They cannot be exchanged.
Property taxes are ad valorem taxes. This means property taxes are based on
the value of the property
the use of the property.
the property owner's income
the property owner's job
Which of these people is MOST LIKELY to be offered a discounted rate on his or her homeowners or renters insurance policy?
. a homeowner who just hosted a very profitable garage sale
a renter who just set up a graphic design business in a spare room
a renter who has had coverage from the same insurance company for 25 years
a homeowner who just bought a safe deposit box to store $50,000 worth of jewelry
Which factor increases a consumer's credit worthiness?
high loan balances
long borrowing history
low personal income
significant financial need
Which factor reduces the credit worthiness of a consumer?
high loan balances
significant savings
significant collateral
high annual income
Use the table of Sara's monthly expenses to answer the question.
Based on the information provided, which of Sara's proposed budgets is most responsible?
If Langston chooses to attend the large university across the state, what should be considered part of the opportunity cost of this decision?
the bachelor's degree in logistics he would earn after four years
the valuable experience working in his field at his mom's logistics company
the higher amount of tuition and fees he would pay at the small college
the generous financial aid package he would receive from the large university
In the production of a wooden chair within the circular flow model, what would the resource market include?
furtniture company
office supply company
trees
wooden chairs
Gross Domestic Product is a method for calculating how much a country produces by adding which four spending categories?
Wages, Rents, Interest, Dividends
Consumption, Investment, Government, Net Exports
Consumption, Investment, Government, Business Revenues
Consumption, Interest Rates, Government, Net Exports
If an economy is currently experiencing a peak or boom, which stage of the business cycle will they experience next?
Expansion
Peak
Contraction
. Trough
Which of the following is not a function of money
medium of exchange
store of value
unit of account
fiscal account
A ____________________ exists when the amount of income received falls short of the amount of expenses paid.
surplus
trough
peak
deficit
The Federal Reserve attempts to stabilize the money supply by using
Debt Policy
. Output-Expenditure Model
Monetary Policy
Fiscal Policy
The economy of Atlantia is defined by the private ownership of the resources of production. Although products and prices are based on market factors, the government intervenes as a regulator to ban harmful products and set a minimum wage. Atlantia is an example of a ________ economy.
market economic system
command economic system
traditional economic system
mixed economic system
The enforcement of contracts and issuing patents to entrepreneurs are examples of the role of government when it is doing what?
resolving market failures
enforcing regulations
protecting property rights
redistributing income
According to the passage, advocates of the USMCA would LIKELY assert that
free digital trade between countries will allow for more innovation and economic growth.
protective tariffs on digital trade will allow for enhanced protection and economic stability.
individual government oversight of digital trade will allow for fairer competition and more stable growth.
increased government involvement in digital trade will allow for more public investment and greater oversight.
What economic principle BEST summarizes the digital trade provisions within the USMCA?
Countries engage in voluntary trade when it is mutually beneficial.
Countries agree to terms of trade based on absolute advantage.
Countries reject trade agreements if they benefit all parties.
Countries question the motivations of overly beneficial trade agreements.
When discussing factors of production, what is an example of physical capital?
Pizza
Oven
Sun
Pepperroni
According to the graph below, what is the quantity at equilibrium?
14
400
600
1200
For Hunts Inc., assuming production began at point B, what is the opportunity cost of producing 30 jars of salsa?
10 jars of salsa
80 bottles of ketchup
20 jars of salsa
40 bottles of ketchup
Bryce was recently laid off from his job on the auto assembly line. The company is making cutbacks due to fears of an oncoming recession. Bryce is experiencing which type of unemployment?
Cyclical
Seasonal
Structural
Frictional
Which of the following are included in the unemployment rate?
adults who have retired
part-time workers seeking full-time jobs
laid-off workers seeking new employment
workers who have given up seeking a new job
What is the main difference between real GDP and nominal GDP?
nominal GDP uses current prices rather constantly changing prices in its calculations
because nominal GDP focuses on the monetary value of goods and services exported from a country but does not account for the costs of imports
real GDP accounts for inflation whereas nominal GDP does not
because nominal GDP adjusts for inflation and does not accurately portray the base monetary value of a nation's economic activity
The Law of Demand says that
if price goes up, the quantity demanded goes up
if price goes down, the quantity supplied goes up
if price goes down, the quantity demanded goes down
if price goes down, the quantity demanded goes up
Which type of market structure is characterized by the smallest number of firms?
oligopoly
monopoly
pure competition
monopolistic competition
What is the most likely cause of a shift from S1 to S3?
The introduction of new technology
The increased number of sellers for a particular product
A rise in the tax rate for corporate earnings
. A company finds the cure for cancer
Sandra decided to open a landscaping business. She borrowed some money from her uncle and took out a business loan from Bank of America. She hired two helpers and purchased a lawnmower, leaf blower, and hedge clippers. What is a disadvantage of Sandra’s type of business?
no separation of ownership and control
unlimited liability
ease of organizing the firm
double taxation
A recent online start-up just invested millions of
dollars into new technology for their firm. Which
of the following goals were they MOST likely
trying to achieve?
specialization
economic growth
price stability
economic security
Entrepreneurs seeking to start a new business
face risk because of which of the following?
the significant barriers to entry for most markets
the amount of outside investment that is
required
the amount of personal time and money that is
required
the price-setting power held by existing firms in
most markets
Which of the following statements about the
impact of scarcity in every economic system is
correct?
It imposes limitations not only on households,
businesses, and governments, but on whole
nations.
It imposes limitations primarily on local and state
governments as opposed to the national
government, which is typically unaffected.
Households rarely experience the effects of
scarcity, which primarily affects business and
government affairs.
Businesses benefit from scarcity, which allows
them to expand the reach of their operations,
while scarcity causes households to suffer.
Which of the following is NOT true of incentives's
role in a free market economy?
They may lead to both higher production and
higher consumption.
They reward consumers for brand loyalty and
buying consistency.
They offset opportunity costs for both producers
and consumers.
They serve to motivate individuals by rewarding
efficiency.
Pascal has owned and operated Pascal's Pizza in
Decatur, Georgia, for twenty years. Pascal
occasionally raises the prices of his pizzas to
cover business costs and to earn a profit to
support himself and his family. Why else would
Pascal raise the price of pizza?
Pascal's Pizza was closed for health violations,
driving away customers.
Pascal bought too many perishable ingredients
and has too much pizza.
Pascal opened a second store location and
wants to attract new customers.
Pascal's Pizza's rival, Penny's Pies, closed and
its customers still want pizza.
Which is the BEST definition of marginal benefit?
the additional gain from producing or consuming
one more unit of something
the value of what is given up when a choice is
made between one alternative and another
he trading of one good or service for another
without the use of money
the rise in the average price of all the goods and
services in an economy
Price controls on gasoline often lead to long lines
at gas stations MAINLY because of which of the
following?
Demand for gas increases while supply
decreases.
Competition between oil companies intensifies.
Consumers are motivated to buy less-efficient
cars.
Service stations have to lay off workers.
Which of the following is the most likely reason to
implement an expansionary monetary policy?
to reduce unemployment
to discourage production
to reduce inflation
to raise the minimum wage
When is the market price of a product most likely
to increase?
when demand for the product increases
when a competitor makes a better product
when a cheap substitute for the product appears
in stores
when the cost of raw materials declines
As a program Social Security is designed to
achieve which of the United States economic
goals?
economic freedom
economic security
economic equity
price stability
Marta and Shanika open their own computer repair shop and agree to share the decisionmaking, the profits, and the risks. Marta will manage their parts inventory and all the accounting duties. Shanika will work out front to meet customers when they drop off and pick up their computers. Marta will work on desktop computers while Shanika will repair the laptops. Marta and Shanika’s arrangement is an example o
competition
specialization
incorporation
division of land
Which currency was worth the least in November
2019?
the British pound
the Canadian dollar
the Euro
the US dollar
Government provides public goods like roads and
schools because these goods are
not needed by business owners and individuals.
necessary for national security.
regulated by government.
unprofitable for companies to provide.
Using the diagram from above, how would you
correctly label lines 1 and 7?
payments for products
wage, salary, income
productive resources
payments for resources
This cartoonist probably agrees that businesses would be more productive if the government
set higher ergonomic standards for the workplace
regulated business less
protected business more
provided more public services
