How is your knowledge when it comes to basic economics and personal finance?
Magazine - posted on 10/5/2010
How is your knowledge when it comes to basic economics and personal finance? The following questions are from an assessment developed for high school students by the Jump$tart Coalition for Personal Financial Literacy.
1. Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?
- a.) Older, working couples saving for retirement.
- b.) Older people living on fixed retirement income.
- c.) Young couples with no children who both work.
- d.) Young working couples with children.
2. Rebecca has saved $12,000 for her college expenses by working part-time. Her plan is to start college next year and she needs all of the money she saved. Which of the following is the safest place for her college money?
- a.) Locked in her closet at home.
- b.) Stocks.
- c.) Corporate bonds.
- d.) A bank savings account.
3. Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?
- a.) When you need to buy a car to get a much better paying job.
- b.) When you really need a week vacation.
- c.) When some clothes you like go on sale.
- d.) When the interest on the loan is greater than the interest you get on your savings.
4. Scott and Eric are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Scott has borrowed $6,000 to take a foreign vacation. Eric has borrowed $6,000 to buy a car. Who is likely to pay the lowest finance charge?
- a.) Eric will pay less because the car is collateral for the loan.
- b.) They will both pay the same because the rate is set by law.
- c.) Scott will pay less because people who travel overseas are better risks.
- d.) They will both pay the same because they have almost identical financial backgrounds.
5. If you went to college and earned a four-year degree, how much more money could you expect to earn than if you only had a high school diploma?
- a.) About 10 times as much.
- b.) No more; I would make about the same either way.
- c.) A little more; about 20% more.
- d.) A lot more; about 70% more.
6. Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year, if they all charge the same amount per year on their cards?
Click here for the answers
- a.) Jessica, who pays at least the minimum amount each month and more, when she has the money.
- b.) Vera, who generally pays off her credit card in full but, occasionally, will pay the minimum when she is short of cash.
- c.) Megan, who always pays off her credit card bill in full shortly after she receives it.
- d.) Erin, who only pays the minimum amount each month.
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