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Economics and Personal Finance Practice Questions

Total questions: 94

Worksheet time: 58mins

Name
Class
Date
1.

Which action best illustrates opportunity cost when choosing to work overtime on Friday night?

a)

Giving up leisure with friends for extra pay

b)

Spending overtime earnings on weekend groceries

c)

Paying income tax on the larger paycheck

d)

Recording hours correctly in the payroll system

2.

A central bank raises interest rates to curb rising inflation. What immediate effect is most likely on consumer borrowing?

a)

Borrowing decreases due to higher loan costs

b)

Borrowing increases due to cheaper credit

c)

Borrowing rises as savings become less attractive

d)

Borrowing stays unchanged despite rate hikes

3.

You have a choice between placing $1,000 in a certificate of deposit (CD) at 4% annual interest or in a stock mutual fund targeting 8% but with market risk. Which option is more suitable for a short-term, low-risk goal like tuition due in six months, and why?

a)

CD, because principal is secure and rate fixed

b)

Mutual fund, guaranteed to beat inflation

c)

Mutual fund, because fees are lower than CDs

d)

CD, because stock prices always go up fast

4.

Suppose you need to save for a vacation in three months. Which investment is most appropriate for minimizing risk and ensuring your funds are available when needed?

a)

Short-term savings account with fixed interest

b)

Long-term government bond

c)

High-yield stock portfolio

d)

Cryptocurrency investment

5.

When deciding to buy a new laptop instead of repairing your old one, what is the opportunity cost of your decision?

a)

The time spent shopping for a new device

b)

The features of the new laptop

c)

The warranty included with the new laptop

d)

The money you could have saved by repairing

6.

If a central bank lowers interest rates, what is the most likely immediate effect on consumer spending?

a)

Spending increases as borrowing becomes cheaper

b)

Spending decreases due to higher loan costs

c)

Spending remains unchanged

d)

Spending decreases as savings rates rise

7.

What is the most likely effect on savings account interest rates when a central bank increases its policy rate?

a)

Savings account rates remain unchanged

b)

Savings accounts are eliminated

c)

Interest rates on savings accounts rise

d)

Interest rates on savings accounts fall

8.

Which scenario best demonstrates the concept of opportunity cost?

a)

Depositing money into a checking account

b)

Receiving a gift from a friend

c)

Buying groceries with a discount coupon

d)

Choosing to spend money on a concert ticket instead of saving for a new phone

9.

If you want to keep your emergency fund safe and easily accessible, which option is most appropriate?

a)

Long-term corporate bond

b)

Stock market index fund

c)

Real estate investment

d)

High-yield savings account

10.

What is a 'Credit Score'?

a)

The maximum amount of credit a borrower can use

b)

A yearly charge for credit card usage

c)

A measurement of someone's creditworthiness

d)

An initial cash payment for a large purchase

11.

A consumer is someone who

a)

buys something

b)

makes something

c)

offers a service

d)

sells a product

12.

An agreement in which a borrower receives something of value now and agrees to repay the lender in the future, generally with interest

a)

Credit Score

b)

Credit

c)

Annual Percentage Rate (APR)

d)

Credit Bureau

13.

Credit allows for purchases without cash.

a)

True

b)

False

14.
Which factor would most likely lead to an increase in the interest rate on a person's credit card?
a)
number of purchases
b)
late payments
c)
number of cash advances
d)
total amount charged
15.

Money that is paid for the use of money is called ___.

a)

Principal

b)

Liquidity

c)

Risk

d)

Interest

16.
This is the cost of using some other person's or bank's money.
a)
Interest
b)
Bill
c)
Principal
d)
Credit
17.

Interest earned on a savings account is _____

a)

the percentage of money you spend per month

b)

the percentage a financial institution pays you to borrow your money

c)

the percentage of your budget you spend

d)

the percentage of your budget you don’t spend

18.
What is credit?
a)
Free money
b)
Borrowed money
c)
Standard of living
d)
A term that causes tears
19.

_______ is a person who buys goods and services for the satisfaction of his/her wants

a)

Producer

b)

Service provider

c)

Service holder

d)

Consumer

20.

What is known as the fee charged for borrowing money?

a)

Dividend

b)

Interest

c)

Capital Gain

d)

Liquidity

21.
The amount you pay to use someone else's money. It is also the amount of money you earn when allowing others to use your money.
a)
Interest
b)
Late Payment Fee
c)
Line of Credit
d)
Minimum Payment
22.

You bought 2 packs of crayons because it said 20% off if you buy 2 packs. what kind of consumption is this?

a)

need based

b)

personal

c)

discount driven

23.

3. A person who purchases goods and services for personal use

a)

consumer

b)

personal finance

c)

annuity

d)

value

24.

The practice of pressuring consumers to buy more expensive product than what they had intended is called:

a)

jumping prices

b)

trading up

c)

misrepersentation

d)

inflating prices

25.

A person or organization that uses a product or service

a)

Consumer

b)

Debt

c)

Company

d)

Personal Finance

26.

Making a good purchasing decision requires __________.

a)

comparing the prices of similar items

b)

reading reviews of the product

c)

waiting until the product is on sale, if possible

d)

All of the above

27.
Why is it important to create a budget?
a)
You earn more money
b)
You get things you want before you get things you need
c)
Helps you plan how you are going to spend your money
d)
They're pointless
28.

What is the primary benefit of using a budgeting app to manage your finances?

a)

To get recommendations on stocks to invest in

b)

To track your spending and help you stick to your budget

c)

To automatically increase your credit score

d)

To transfer money internationally without fees

29.

What is an emergency fund?

a)

A savings account set aside for unexpected situations.

b)

A way to invest for retirement.

c)

Something most people don't need, because emergencies are rare.

d)

An investment account that can grow over time.

30.
At your age, a fully funded emergency fund should be: 
a)
$500 
b)
$1,000 
c)
$100 
d)
$5,000
31.

Which choice or choices best describes the purpose of an emergency fund?

a)

a) An emergency fund prepares you for unexpected expenses.

b)

b) An emergency fund keeps you from borrowing money from friends and family.

c)

c) An emergency fund removes the worry about expenses not in the budget.

d)

d) All of the above are good reasons to have an emergency fund.

32.

A fully funded emergency fund is _______ months

a)

simple interest

b)

compound interest

c)

principle

d)

3-6 months

33.
Experts recommend you save money in an "emergency fund." Which of these represents an expense where the emergency fund would be particularly useful?
a)
Monthly rent
b)
$150 speeding ticket
c)
Occasional fancy dinner or vacations
d)
Car insurance
34.

What tool can help you track your spending and savings?

a)

A shopping list

b)

A budgeting app

c)

A novel

d)

A movie ticket

35.

What does it mean to save money?

a)

To spend money on gadgets

b)

To keep money aside for future use

c)

To donate money

d)

To borrow money

36.

Which of the following is NOT true of a budget? [note capitalization of “NOT”]

a)

Budgets help you plan how to spend money you earn or receive

b)

Once a budget is set, it should not be revisited

c)

A budget can include charitable giving

d)

Budgets include both income and expenses

37.

What is a budget?

a)

A type of savings account

b)

A way to invest for retirement

c)

A fund for emergencies

d)

A financial plan that defines expenses for a period of time.

38.

Michelle works at a bank. Her net income is $3,600 per month. Below is Michelle's budget.


What does Michelle need to do in order to balance her budget?

a)

Spend $50 more on clothes

b)

Only put $350 in her savings

c)

Only spend $75 on entertainment

d)

Only spend $360 on transportation

39.

What plan is used to manage money?

a)

check

b)

checking account

c)

budget

d)

retirement account

40.

DEFINE credit.

a)

Any form of deferred payment.

b)

The loaning of assets.

c)

A score that measures your trustworthiness.

d)

The promise to spend borrowed money.

41.
Which one is considered a danger of using a credit card
a)
no cash needed
b)
leads to overspending
c)
convenient
d)
earns rewards
42.

How does opportunity cost play a role in decision making?

a)

It determines the financial cost of decisions.

b)

It helps in identifying the most profitable alternative.

c)

It considers the value of the best alternative forgone.

d)

It calculates the total cost of all possible alternatives.

43.

If you decide to spend 100onaconcertticketinsteadofinvestingthat100 on a concert ticket instead of investing that 100 in a stock that could potentially return $150, what is the opportunity cost of going to the concert?

a)

$100

b)

$50

c)

$150

d)

$250

44.

What is the primary benefit of using a budgeting app to manage your finances?

a)

To get recommendations on stocks to invest in

b)

To track your spending and help you stick to your budget

c)

To automatically increase your credit score

d)

To transfer money internationally without fees

45.

Inability to satisfy all wants at the same time

a)

scarcity

b)

opportunity cost

c)

consumer sovereignty

d)

demand

46.

Why is it important to understand the fees associated with mutual funds?

a)

Fees can significantly reduce the overall return on investment

b)

All mutual funds have the same fee structure

c)

Fees guarantee higher profits

d)

Lower fees mean higher risk

47.

Choose the type of investment that carries a lower amount of risk.

a)

Certificate of Deposit

b)

Mutual Funds

48.

Which among the following is considered the safest investement?

a)

Mutual Funds

b)

Equities

c)

Real estate

d)

Bank Deposits

49.
3. What kinds of behaviors can PREVENT people from making smart investing decisions?
a)
Staying calm when the market is experiencing a downturn
b)
Buying stocks when prices are low and selling them when they’re high
c)
Exiting the market because that’s what everyone else is doing
d)
Investing in a diversified portfolio instead of trying to beat the market
50.
The lower the risk, the ______ the reward
a)
Higher
b)
Lower
c)
There is no relationship between risk and reward
d)
All of the above
51.

Mariam is young, willing to take a moderate amount of risk, but most importantly, wants an investment that is low-cost and diversified. Which is the best investment type for Mariam?

a)

A bond

b)

An individual stock

c)

A savings account

d)

An index fund

52.

Someone is retiring next year. What would be an appropriate amount of risk to take with their investments?

a)

Highest risk; highest growth

b)

Medium risk; medium growth

c)

Lower risk; lower growth

d)

No risk. Just savings accounts

53.

Which is a factor

a)

Human capital

b)

Sunlight only

c)

Gravity

d)

Luck

54.

Opportunity cost

a)

Next best alternative

b)

Total money spent

c)

Bad decision

d)

Savings only

55.

Law of Demand

a)

Price ↑ → Qd ↓

b)

Price ↑ → Qd ↑

c)

Price ↓ → Qd ↓

d)

Qd unchanged

56.

Which shifts dem

a)

Income

b)

Technology only

c)

Number of seller

d)

Resource costs

57.

A price ceiling be

a)

Shortage

b)

Surplus

c)

Equilibrium

d)

Shutdown

58.

A price floor abo

a)

Surplus

b)

Shortage

c)

No change

d)

Market collapse

59.

When supply inc

a)

Decreases

b)

Increases

c)

Stays same

d)

Becomes zero

60.

Unemployment r

a)

Unemployed ÷ Labor Force

b)

Labor Force ÷ Unemployed

c)

Employed ÷ Population

d)

Jobs ÷ Workers

61.

a student who just graduated from college and is waiting to start their new job is...

a)

frictionally unemployed

b)

structurally unemployed

c)

technologically unemployed

d)

cyclically unemployed

e)

seasonally unemployed

62.

35 year old project manager who was let go because his employer went bankrupt. He's applied for several similar jobs but hasn't heard back as of yet.

a)

Employed

b)

Unemployed

c)

Not in the Labor Force

d)

Not Applicable / Not Counted

63.
Seth is laid off from work because he is a life guard at the local water park. He is experiencing what kind of unemployment?
a)
Structural
b)
Seasonal
c)
Frictional
d)
Cyclical
64.

____ employees are paid a fixed amount each pay period.

a)

stock option

b)

business partners

c)

full time

d)

salary

65.

A bear market is a market condition that occurs when investors are pessimistic about the economy and sell stocks.

a)

true

b)

false

66.

What effect does unemployment have on a country's GDP?

a)

It has no effect on GDP

b)

It increases GDP

c)

It decreases GDP

d)

It initially decreases then increases GDP

67.

How do consumers experience excess demand?

a)

As a discount

b)

As a shortage

c)

As a sale price

d)

As a surplus

68.

A new substitute enters the market causing a shift in the demand curve in the graph. What is the new equilibrium point after the substitute enters the market? (Hint: Determine which direction a substitute shifts the demand curve and use that direction to pick the resulting equilibrium point.)

a)

$10 and 1,500

b)

$7.50 and 1,250

c)

$10 and 1,250

d)

$7.50 and 1,500

69.

What happens to the market when the chocolate bars are priced at $1 each?

a)

shortage

b)

surplus

c)

equilibrium

70.

What happens to the market when the chocolate bars are priced at $4 each?

a)

surplus

b)

shortage

c)

equilibrium

71.

A tariff is

a)

Tax on imports

b)

Limit on exports

c)

Ban

d)

Subsidy

72.

Subsidies help

a)

Domestic producers

b)

Foreign sellers

c)

Consumers only

d)

Banks

73.

Floating exchang

a)

Markets

b)

Government

c)

Congress

d)

Courts

74.

Georgia’s Port of

a)

Containers

b)

Oil

c)

Cars only

d)

Coal

75.

FAFSA is used f

a)

College aid

b)

Car loans

c)

Jobs

d)

Housing

76.

Net worth =

a)

Assets - Liabilities

b)

Income - Expenses

c)

Cash only

d)

Gross pay - taxes

77.

Progressive taxe

a)

More

b)

Less

c)

None

d)

Same

78.

Regressive taxes

a)

More

b)

Less

c)

Same

d)

None

79.

Gross pay is

a)

Before deductions

b)

After deductions

c)

Take-home

d)

Only salary

80.

A 1040 form is fo

a)

Income taxes

b)

Rent

c)

Car insurance

d)

Employment

81.

Identity theft is

a)

Stealing personal info

b)

Car theft

c)

Loan fraud only

d)

Hacking internet only

82.

Phishing uses

a)

Fake emails

b)

ATM theft

c)

Dumpster diving

d)

Cash scams

83.

BBB helps with

a)

Consumer complaints

b)

Paychecks

c)

Taxes

d)

Insurance

84.

Deductible is

a)

Amount consumer pays before insurance

b)

Amount insurer pays first

c)

Tax

d)

Fee

85.

Premium is

a)

Monthly cost of insurance

b)

Deductible

c)

Copay

d)

Tax

86.

Why is it important to save money?

a)

To spend more on luxury items

b)

To have funds available for future needs or emergencies

c)

To lend money to friends

d)

To pay more taxes

87.
What is it that helps your 401(k) grow so much?
a)
Compound Interest
b)
Good Brokers
c)
Working Really Hard
88.

A person who is interested in earning investment income from stocks is generally advised to buy stocks that pay _____.

a)

dividends

b)

premiums

c)

interest

d)

awards

89.
What is a stock?
a)
Small portion of a company that an individual can purchase
b)
Another name for money
c)
A manager of a company
d)
A company that has gone bankrupt
90.

The form you fill out when you get a job to verify you can work is a ​​

a)

W4

b)

I-9

91.

All the money you earn before taxes are deducted.

a)

net income

b)

gross income

c)

taxes

d)

EFT

92.

Which of the following are included in FICA

a)

Federal Income Tax

b)

State Income State

c)

Social Security Tax

d)

Medicare Tax

93.
Which one of the following are financial institutions?
a)
bank and credit union
b)
library and hospital
c)
school and museum
d)
Starbucks and Wal-Mart
94.

What is a mutual fund?

a)

A single stock or bond

b)

A pool of money collected from many investors to invest in stocks, bonds, and other assets

c)

A government savings plan

d)

A type of insurance policy

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