Financial Literacy For Teens Test- 2nd Semester
A test on the book Financial Literacy for Teens.
Questions and Answers
- 1.
An average career will last approximately how many hours if you work for 43 years?
- A.
86,000 hours
- B.
1 million hours
- C.
8,600 hours
- D.
860 hours
Correct Answer
A. 86,000 hoursExplanation
If an average career lasts for 43 years, and there are 365 days in a year, then the total number of days worked in a career would be 43 multiplied by 365. Since there are 24 hours in a day, the total number of hours worked in a career would be 43 multiplied by 365 multiplied by 24, which equals 86,280 hours. Therefore, the correct answer is 86,000 hours.Rate this question:
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- 2.
Sometimes the U.S. government is known by what nickname?
- A.
Uncle Fred.
- B.
Aunt Sally.
- C.
Uncle Sam.
- D.
Cousin Kathy.
Correct Answer
C. Uncle Sam.Explanation
The U.S. government is sometimes known by the nickname "Uncle Sam." This nickname originated from a personification of the United States, which is represented as a tall, bearded man dressed in red, white, and blue, similar to the colors of the American flag. The term "Uncle Sam" gained popularity during the War of 1812 and has since become a widely recognized symbol of the U.S. government and its authority.Rate this question:
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- 3.
When paying taxes in the U.S., the more money you make, ____________________.
- A.
The less taxes you pay
- B.
The more taxes you pay
- C.
Doesn't make a difference because everyone pays the same amount in taxes
- D.
The more you hate paying taxes
Correct Answer
B. The more taxes you payExplanation
As per the given question, the correct answer is "The more taxes you pay". This is because the U.S. tax system follows a progressive tax structure, where individuals with higher incomes are subject to higher tax rates. Therefore, as your income increases, you move into higher tax brackets and end up paying a larger amount of taxes.Rate this question:
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- 4.
A health insurance program for the elderly and disabled that is funded by some of your taxes and run by the federal government is known as?
- A.
FICA.
- B.
State tax.
- C.
Unemployment tax.
- D.
Medicare.
Correct Answer
D. Medicare.Explanation
Medicare is the correct answer because it is a health insurance program specifically designed for the elderly and disabled population. It is funded by taxes and administered by the federal government. FICA, state tax, and unemployment tax are not related to health insurance programs for the elderly and disabled, making them incorrect options.Rate this question:
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- 5.
One common thing of most financially successful people is that they?
- A.
Quit school before they were 18.
- B.
Always keep $500 in their pocket.
- C.
Started a business early in life.
- D.
Worked part-time when they were teenagers.
Correct Answer
D. Worked part-time when they were teenagers.Explanation
The correct answer is "worked part-time when they were teenagers." This is because many financially successful people often start working at a young age, which helps them develop important skills, work ethic, and financial responsibility. Part-time jobs during teenage years can provide valuable experience and teach individuals the value of money and hard work, setting them up for future success in their careers and financial endeavors.Rate this question:
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- 6.
People who do not understand the difference between ______________ usually struggle with financial problems.
- A.
Taxes and insurance
- B.
Needs and wants
- C.
Buying and renting
- D.
Food and shelter
Correct Answer
B. Needs and wantsExplanation
People who do not understand the difference between needs and wants usually struggle with financial problems. This is because they may prioritize their wants over their needs, leading to overspending and a lack of financial stability. Understanding the difference between needs (essential items for survival) and wants (non-essential items for comfort or luxury) is crucial for making wise financial decisions and managing one's budget effectively. Failing to distinguish between these two categories can result in poor financial choices and difficulties in meeting essential expenses.Rate this question:
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- 7.
One major problem with using credit cards is that people...
- A.
Lose them a lot.
- B.
Buy things they can't afford.
- C.
Have to pay to use them.
- D.
Forget to use them.
Correct Answer
B. Buy things they can't afford.Explanation
Using credit cards can lead people to buy things they can't afford. Credit cards provide a convenient way to make purchases without immediate payment, which can tempt individuals to overspend and accumulate debt. This behavior can result in financial difficulties and an inability to repay the borrowed money. Therefore, buying things they can't afford is a significant issue associated with credit card usage.Rate this question:
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- 8.
If you use a credit card, you should...
- A.
Pay the full balance of the credit card every month
- B.
Pay the minimum payment each month
- C.
Never pay the bill
- D.
Be able to buy anything you want
Correct Answer
A. Pay the full balance of the credit card every monthExplanation
If you use a credit card, it is advisable to pay the full balance of the credit card every month. This is because carrying a balance and only paying the minimum payment each month can lead to accumulating high interest charges, which can be financially burdensome in the long run. By paying the full balance, you avoid paying unnecessary interest and maintain a good credit score. Additionally, paying the full balance ensures that you are living within your means and not overspending on credit.Rate this question:
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- 9.
A ___________ is a plan for how you will spend your money.
- A.
Paycheck
- B.
Cash journal
- C.
Credit card
- D.
Budget
Correct Answer
D. BudgetExplanation
A budget is a plan for how you will spend your money. It helps you allocate your income and expenses, allowing you to prioritize your spending and make informed financial decisions. By creating a budget, you can track your income, set savings goals, and control your expenses. It helps you manage your money effectively and ensure that you are living within your means.Rate this question:
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- 10.
Health insurance is...
- A.
Only for those who get sick.
- B.
An unnecessary expense because you may not need it.
- C.
A must buy item for your budget.
- D.
More important for women than for men.
Correct Answer
C. A must buy item for your budget.Explanation
Health insurance is a must buy item for your budget because it provides financial protection in case of unexpected medical expenses. Without health insurance, individuals may face significant financial burdens if they require medical treatment or hospitalization. It helps to cover the costs of doctor visits, medications, surgeries, and other healthcare services. Moreover, health insurance also offers preventive care and wellness programs, promoting overall well-being and early detection of potential health issues. Therefore, having health insurance is essential to ensure access to quality healthcare and to safeguard against the financial risks associated with medical emergencies.Rate this question:
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- 11.
Renter's insurance is very important to have because they will replace all of your belongings in case of a...
- A.
Fire, robbery, or if your little brother damanges something
- B.
Flood, robbery, or a car accident
- C.
Robbery, fire, or if you brake something
- D.
Fire, flood, or robbery
Correct Answer
D. Fire, flood, or robberyExplanation
Renter's insurance is important to have because it provides coverage for various situations such as fire, flood, or robbery. These events can cause significant damage to your belongings and having insurance ensures that you will be able to replace them. Fires can quickly destroy everything in your rented property, floods can damage your possessions beyond repair, and robberies can result in loss of valuable items. Renter's insurance offers financial protection and peace of mind in case any of these unfortunate events occur.Rate this question:
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- 12.
Which item below would certainly depreciate if you owned it?
- A.
A house
- B.
A car
- C.
Gold
- D.
All of the above
Correct Answer
B. A carExplanation
A car would certainly depreciate if you owned it. This is because cars are considered as assets that lose value over time due to wear and tear, usage, and technological advancements. As soon as a car is driven off the dealership, its value starts to decrease. Factors such as mileage, age, condition, and market demand also contribute to the depreciation of a car. Therefore, owning a car would result in a decrease in its value over time.Rate this question:
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- 13.
Chain mails involving money are?
- A.
Usually legal and ethical.
- B.
Legal if you are 21.
- C.
Completely illegal.
- D.
Partly legal and ethical.
Correct Answer
C. Completely illegal.Explanation
Chain mails involving money are completely illegal. This is because chain mails that require individuals to send money to others in order to participate are considered pyramid schemes, which are illegal in many countries. Pyramid schemes involve making money primarily through recruiting others rather than selling a legitimate product or service. These schemes are unsustainable and often result in financial loss for the majority of participants. Therefore, participating in chain mails involving money is not only illegal but also unethical.Rate this question:
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- 14.
How did Doodles (the waitress) have almost 2 million dollars?
- A.
Her parents gave her the money.
- B.
The banker gave her someone else's money.
- C.
She saved most of her money.
- D.
She won the lottery.
Correct Answer
C. She saved most of her money.Explanation
The correct answer is "She saved most of her money." This means that Doodles, the waitress, accumulated almost 2 million dollars by saving a significant portion of her earnings over time.Rate this question:
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- 15.
What are the two main reasons to save money?
- A.
For emergencies and to buy everything you want
- B.
For emergencies and major purchases
- C.
To pay off your credit cards and for major purchases
- D.
So you can invest it and donate it
Correct Answer
B. For emergencies and major purchasesExplanation
Saving money for emergencies is important because unexpected expenses can arise at any time, such as medical bills or car repairs. Having a financial safety net can provide peace of mind and prevent the need to go into debt. Saving for major purchases is also important as it allows individuals to afford expensive items or experiences without relying on credit or loans. By saving up for these purchases, individuals can avoid interest charges and have more control over their financial situation.Rate this question:
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- 16.
How can you make money while you sleep?
- A.
Put your money under your pillow for the tooth fairy
- B.
Dream about money
- C.
Invest your money
- D.
Donate your money
Correct Answer
C. Invest your moneyExplanation
Investing your money is a way to make money while you sleep because it allows your money to work for you. By investing in stocks, bonds, real estate, or other investment vehicles, you can earn passive income through dividends, interest, or capital appreciation. This means that even when you are not actively working, your investments can generate income and grow in value, providing you with a source of income without requiring your direct involvement.Rate this question:
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- 17.
You won't be able to move out if you have...
- A.
Too many friends
- B.
Pets
- C.
Protective parents
- D.
Bad credit
Correct Answer
D. Bad creditExplanation
Having bad credit can prevent someone from being able to move out because it can make it difficult to secure a rental agreement or obtain a mortgage. Landlords and lenders often consider an individual's credit history and score as an indicator of their financial responsibility. If someone has a history of late payments, defaults, or high levels of debt, it can make it challenging to find a place to live or obtain a loan. Therefore, having bad credit can be a significant barrier to moving out and achieving financial independence.Rate this question:
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- 18.
What are the four main things you have to pay for every month when having a car?
- A.
Car payment, gas, maintenance/repairs, and tires
- B.
Car payment, insurance, gas, and maintenance/repairs
- C.
Gas, insurance, credit cards, and oil changes
- D.
Insurance, maintenance/repairs, car payment, and car washes
Correct Answer
B. Car payment, insurance, gas, and maintenance/repairsExplanation
The correct answer is car payment, insurance, gas, and maintenance/repairs. When having a car, you have to make monthly car payments to pay off the loan or lease. Insurance is necessary to protect yourself and your vehicle in case of accidents or damages. Gas is required to fuel the car and keep it running. Maintenance and repairs are essential to ensure the car's proper functioning and longevity.Rate this question:
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- 19.
What happened to 9 year old Shilo Puckett?
- A.
She was a victim of identity theft
- B.
She made $71,000 through a chain e-mail
- C.
She lost $50,000 worth of her stuff when her apartment burned down
- D.
She lost her toy
Correct Answer
A. She was a victim of identity theftExplanation
Shilo Puckett was a victim of identity theft. This means that someone stole her personal information and used it without her consent, potentially causing financial and legal problems for her.Rate this question:
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- 20.
You should choose a career based on...
- A.
How much money you want to make.
- B.
What you like to do and have a passion for.
- C.
What will make your parents happy.
- D.
What your friends tell you to do.
Correct Answer
B. What you like to do and have a passion for.Explanation
The correct answer is "What you like to do and have a passion for." This is because choosing a career based on personal interests and passion ensures job satisfaction and fulfillment. When individuals enjoy what they do, they are more likely to excel in their chosen field and achieve success. Money, parental expectations, and peer influence may not guarantee job satisfaction and may lead to a lack of motivation and unhappiness in the long run. Therefore, it is important to prioritize personal interests and passion when making career choices.Rate this question:
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- 21.
You will likely earn over how much money before you retire?
- A.
One hundred thousand dollars
- B.
One million dollars
- C.
Five billion dollars
- D.
Fifty thousand dollars
Correct Answer
B. One million dollarsExplanation
This question is asking about the amount of money that one is likely to earn before they retire. The correct answer is "One million dollars" because it is a significant amount of money that is commonly associated with a successful and financially stable retirement. It implies that the person will have accumulated a substantial amount of savings and investments over their working years, which is generally considered a desirable financial goal for retirement.Rate this question:
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- 22.
Which of the following is a true statement about credit cards?
- A.
You should never get a credit card.
- B.
If you get a credit card, you will go into debt.
- C.
You should get a credit card and use it responsibly in order to build good credit.
- D.
The credit card companies don't charge you anything to borrow money from them.
Correct Answer
C. You should get a credit card and use it responsibly in order to build good credit.Explanation
The answer suggests that getting a credit card and using it responsibly can help in building good credit. This implies that having a credit card is not inherently negative, but rather it depends on how it is managed. By using a credit card responsibly, such as making timely payments and keeping the credit utilization low, individuals can establish a positive credit history, which can be beneficial for future financial endeavors like applying for loans or mortgages.Rate this question:
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- 23.
Which of the following is NOT an example of an investment?
- A.
Stocks
- B.
Mutual Fund
- C.
Real Estate
- D.
Automobiles
Correct Answer
D. AutomobilesExplanation
Automobiles are not considered as an example of an investment because they are depreciating assets. Unlike stocks, mutual funds, and real estate, which have the potential to increase in value over time, automobiles generally lose value as they age and are used. Investments are typically made with the intention of generating a profit or return on the initial investment, which is not the case with automobiles.Rate this question:
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- 24.
What is the most important reason to invest?
- A.
To get rich quick.
- B.
So you can buy a new car.
- C.
So you will have money to live off of when you retire.
- D.
To help other businesses.
Correct Answer
C. So you will have money to live off of when you retire.Explanation
Investing is important primarily to secure financial stability during retirement. By investing, individuals can accumulate wealth over time, ensuring they have enough money to sustain their lifestyle once they stop working. Investing allows for the growth of funds through various avenues such as stocks, bonds, and real estate, providing a reliable source of income in retirement. Unlike the other options mentioned, investing for retirement focuses on long-term financial security rather than short-term gains or material possessions.Rate this question:
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- 25.
Why should you donate your money?
- A.
Because there is always someone less fortunate than you that needs it.
- B.
Because you don't need all of your money.
- C.
To get a tax break.
- D.
So your parents will be proud of you.
Correct Answer
A. Because there is always someone less fortunate than you that needs it.Explanation
Donating money is important because there are always people who are less fortunate and in need of financial assistance. By donating, we can help improve the lives of those who are struggling and make a positive impact on society. It is a selfless act that demonstrates empathy and compassion towards others.Rate this question:
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- 26.
If you don't have health insurance and you must have an emergency surgery...
- A.
They will tell you to leave the hospital.
- B.
You will have to pay for all the medical bills yourself.
- C.
The government will pay for all of your medical bills.
- D.
The hospital will do the surgery for free.
Correct Answer
B. You will have to pay for all the medical bills yourself.Explanation
If you don't have health insurance and you must have an emergency surgery, you will have to pay for all the medical bills yourself. This is because without health insurance, you are responsible for covering the costs of your medical treatment. The hospital is not obligated to provide free surgery or cover the expenses on your behalf.Rate this question:
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- 27.
Its extremely important to do what before buying a car?
- A.
Pay off all your credit cards
- B.
Do car buying research/homework
- C.
Get a driver's license
- D.
Ask your parents for permission
Correct Answer
B. Do car buying research/homeworkExplanation
Before buying a car, it is extremely important to do car buying research or homework. This involves gathering information about different car models, their prices, features, and reviews. By conducting research, potential buyers can make an informed decision and choose a car that best fits their needs and budget. It also helps in understanding the market, comparing prices, and identifying any potential issues or scams. Doing car buying research or homework ensures that individuals make a wise investment and avoid any regrets or financial difficulties in the future.Rate this question:
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- 28.
When you rent an apartment or house you have to sign a lease. Which of the following is NOT true with a lease?
- A.
It is a legal document.
- B.
You are agreeing to pay rent every month on time for the length of the lease.
- C.
If you have a roommate move in later, they don't need to sign the lease.
- D.
You are agreeing to take care of the place you are renting.
Correct Answer
C. If you have a roommate move in later, they don't need to sign the lease.Explanation
When you rent an apartment or house and sign a lease, it is a legal document that outlines the terms and conditions of the rental agreement. By signing the lease, you are agreeing to pay rent on time for the duration of the lease and to take care of the rented property. However, if you have a roommate move in later, they also need to sign the lease to legally bind them to the terms and responsibilities outlined in the lease agreement. Therefore, the statement "If you have a roommate move in later, they don't need to sign the lease" is not true.Rate this question:
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- 29.
Which of the following is NOT an example of a scam?
- A.
Identity theft
- B.
Phishing e-mails
- C.
Chain-mail involving money
- D.
People selling their things on Ebay
Correct Answer
D. People selling their things on EbayExplanation
People selling their things on Ebay is not an example of a scam because it is a legitimate platform for individuals to sell their products or belongings. Scams typically involve fraudulent activities aimed at deceiving or tricking people for personal gain. Identity theft, phishing e-mails, and chain-mail involving money are all examples of scams as they involve illegal or dishonest practices to obtain personal information or money from unsuspecting individuals.Rate this question:
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- 30.
If you make $40,000 per year, Uncle Sam is going to take how much from you for taxes?
- A.
$1,000 (2.5%)
- B.
$20,000 (50%)
- C.
$10,000 (25%)
- D.
$200 (.5%)
Correct Answer
C. $10,000 (25%)Explanation
If you make $40,000 per year, Uncle Sam is going to take $10,000 from you for taxes, which is 25% of your income.Rate this question:
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