# Financial Literacy For Teens Test - Elliott

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A test on the book Financial Literacy for Teens.

• 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

A. 86,000 hours
Explanation
If you work for 43 years, the average career will last approximately 86,000 hours. This is calculated by multiplying the number of years (43) by the number of hours in a year (2,000, assuming a standard 40-hour work week).

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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.

C. Uncle Sam.
Explanation
The U.S. government is sometimes known by the nickname "Uncle Sam." This nickname originated during the War of 1812, when a meat packer named Samuel Wilson supplied barrels of beef to the U.S. Army. The barrels were stamped with "U.S." for United States, but soldiers began referring to the meat as coming from "Uncle Sam" Wilson. Over time, the nickname extended to represent the U.S. government as a whole.

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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

B. The more taxes you pay
Explanation
The correct answer is "The more taxes you pay." This is because the U.S. tax system operates on a progressive tax rate, which means that as your income increases, the percentage of taxes you owe also increases. Therefore, individuals with higher incomes will pay a higher amount of taxes compared to those with lower incomes.

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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.

D. Medicare.
Explanation
Medicare is the correct answer because it is a health insurance program specifically designed for the elderly and disabled individuals. 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.

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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.

D. Worked part-time when they were teenagers.
Explanation
Financially successful people often develop a strong work ethic and entrepreneurial mindset from a young age. Working part-time as teenagers allows them to gain valuable skills, experience, and a sense of responsibility. It teaches them the value of hard work, money management, and the importance of building a strong foundation for their future. This early exposure to work also helps them develop networking skills and learn from real-life experiences, which can contribute to their long-term financial success.

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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.

• D.

Food and shelter

B. Needs and wants
Explanation
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 and spend money on unnecessary things, leading to a lack of funds for essential items such as food, shelter, and other basic necessities. Understanding the distinction between needs (essential items required for survival) and wants (non-essential items that are desired but not necessary) is crucial for making wise financial decisions and managing one's finances effectively.

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• 7.

### One major problem with using credit cards is that people...

• A.

Lose them a lot.

• B.

• C.

Have to pay to use them.

• D.

Forget to use them.

B. Buy things they can't afford.
Explanation
Using credit cards can lead to people buying things that they can't afford. Credit cards provide a convenient way to make purchases, but they also allow individuals to spend money that they may not have readily available. This can lead to overspending and accumulating debt. People may be tempted to make impulsive purchases or buy items beyond their means, which can result in financial difficulties and the need to pay off large credit card balances over time.

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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

A. Pay the full balance of the credit card every month
Explanation
Using a credit card comes with the responsibility of paying off the balance every month. This is because carrying a balance and only paying the minimum payment can lead to high interest charges, which can accumulate over time and result in a significant debt. Paying the full balance ensures that you avoid interest charges and maintain a good credit score. It also helps in managing your finances effectively and prevents unnecessary debt.

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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

D. Budget
Explanation
A budget is a plan for how you will spend your money. It helps you allocate your income towards different expenses and allows you to track your spending and savings. By creating a budget, you can prioritize your financial goals, such as paying bills, saving for emergencies, or investing for the future. It helps you make informed decisions about your spending and ensures that you have enough money for your needs and wants while also avoiding overspending.

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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.

• D.

More important for women than for men.

Explanation
Health insurance is a must-buy item for your budget because it provides financial protection in case of unexpected medical expenses. It helps to cover the cost of medical treatments, hospitalizations, and medications, which can be very expensive without insurance. Having health insurance ensures that you have access to quality healthcare without worrying about the financial burden it may bring. It also provides preventive care and promotes regular check-ups, which can help detect and treat health issues early on. Therefore, it is essential to include health insurance as part of your budget to safeguard your health and financial well-being.

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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

D. Fire, flood, or robbery
Explanation
Renter's insurance is important to have because it provides coverage for your belongings in case of fire, flood, or robbery. These events can cause significant damage or loss to your personal property, and having insurance ensures that you will be able to replace your belongings without incurring a large financial burden.

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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

B. A car
Explanation
A car would certainly depreciate if you owned it. Unlike a house or gold, which can potentially appreciate in value over time, a car is a depreciating asset. This is because cars generally lose value as they age, due to factors such as wear and tear, technological advancements, and market demand. Therefore, owning a car would result in a decrease in its value over time, making it a certain depreciating item.

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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.

C. Completely illegal.
Explanation
Chain mails involving money are completely illegal. Chain mails typically involve promises of financial gain through a pyramid scheme or fraudulent activity. Engaging in such activities is against the law in most jurisdictions as it constitutes fraud and can lead to severe legal consequences. Additionally, participating in chain mails involving money is unethical as it often exploits and deceives individuals who may be unaware of the illegality and potential harm associated with these schemes.

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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.

C. She saved most of her money.
Explanation
The correct answer is "She saved most of her money." This means that Doodles accumulated almost 2 million dollars by saving most of her earnings over time.

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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

B. For emergencies and major purchases
Explanation
Saving money for emergencies is important because unexpected expenses can arise at any time, such as medical emergencies or car repairs. Having a financial safety net can help cover these costs without going 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. This can include buying a house, a car, or funding a dream vacation. By saving money for emergencies and major purchases, individuals can have greater financial security and achieve their long-term goals.

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• 16.

### How can you make money while you sleep?

• A.

• B.

• C.

• D.

Explanation
Investing your money is a way to make money while you sleep. 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 your money is working for you even when you are not actively involved. Over time, your investments can grow and generate additional income, allowing you to make money even while you are asleep.

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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.

Explanation
Having bad credit can prevent you from being able to move out because it can make it difficult to secure a rental property 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 not paying their bills on time or has a low credit score, it may be seen as a risk to rent or lend to them. Thus, having bad credit can limit one's options and make it challenging to move out.

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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

B. Car payment, insurance, gas, and maintenance/repairs
Explanation
The four main things you have to pay for every month when having a car are car payment, insurance, gas, and maintenance/repairs. Car payment refers to the monthly installment you need to pay if you have a car loan. Insurance is important for covering any damages or accidents. Gas is necessary for fueling the car. Maintenance/repairs include regular servicing, oil changes, and any repairs that may be required to keep the car in good condition.

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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

A. She was a victim of identity theft
Explanation
Shilo Puckett, a 9-year-old, became a victim of identity theft. This means that someone illegally obtained and used her personal information for fraudulent purposes. Identity theft can lead to various consequences, such as financial loss, damage to credit history, and potential legal issues. In Shilo's case, her personal information was likely used without her knowledge or consent, causing harm and potentially affecting her future financial well-being.

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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.

B. What you like to do and have a passion for.
Explanation
You should choose a career based on what you like to do and have a passion for. This is because when you enjoy what you do, you are more likely to be motivated, engaged, and successful in your career. Passion drives you to work hard, overcome challenges, and continuously improve. It also brings a sense of fulfillment and satisfaction, leading to a happier and more fulfilling professional life. Money, parental expectations, and peer influence may not necessarily align with your interests and strengths, and pursuing a career solely based on these factors may lead to dissatisfaction and burnout in the long run.

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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

B. One million dollars
Explanation
The question asks about the amount of money one is likely to earn before retiring. The correct answer is "One million dollars." This suggests that the expected earnings before retirement are estimated to be around one million dollars.

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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.

C. You should get a credit card and use it responsibly in order to build good credit.
Explanation
The correct answer is "You should get a credit card and use it responsibly in order to build good credit." This statement suggests that obtaining a credit card can be beneficial if used responsibly. It implies that having a credit card and managing it properly can help individuals establish a positive credit history, which can be advantageous when applying for loans or other financial opportunities in the future.

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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

D. Automobiles
Explanation
Automobiles are not considered an example of an investment because they are typically 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. Therefore, investing in automobiles is not a common practice for generating returns or building wealth in the same way as the other options listed.

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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.

C. So you will have money to live off of when you retire.
Explanation
The most important reason to invest is to have money to live off of when you retire. Investing allows individuals to grow their wealth over time and generate income that can sustain them during their retirement years when they may no longer have a regular source of income. By investing wisely, individuals can build a nest egg that will provide financial security and support their lifestyle in retirement.

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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.

A. Because there is always someone less fortunate than you that needs it.
Explanation
Donating money is a selfless act that can help those who are less fortunate. By giving your money to those in need, you can make a positive impact on their lives and provide them with the support they require. This act of kindness can bring about a sense of fulfillment and satisfaction, knowing that you have helped someone in need. Additionally, it promotes empathy and compassion, as it acknowledges the existence of others who may be struggling and encourages a sense of community and support.

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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.

B. You will have to pay for all the medical bills yourself.
Explanation
If you don't have health insurance and you need to undergo an emergency surgery, you will have to pay for all the medical bills yourself. Without insurance coverage, the hospital and healthcare providers will not be able to bill an insurance company for the services rendered, leaving you responsible for covering the costs. The government does not automatically pay for medical bills in this situation, and the hospital is unlikely to perform the surgery for free.

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• 27.

### Its extremely important to do what before buying a car?

• A.

Pay off all your credit cards

• B.

• C.

• D.

Explanation
Before buying a car, it is extremely important to do car buying research/homework. This involves gathering information about different car models, their prices, features, and reviews. By doing thorough research, one can make an informed decision and choose a car that suits their needs and budget. It also helps in understanding the market value of the car and negotiating a better deal with the seller. Additionally, car buying research helps in avoiding potential scams or buying a car with hidden issues.

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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.

C. If you have a roommate move in later, they don't need to sign the lease.
• 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

D. People selling their things on Ebay
Explanation
People selling their things on Ebay is not an example of a scam because it is a legitimate and common practice of buying and selling goods online. Scams typically involve deceptive or fraudulent activities, such as identity theft, phishing emails, or chain-mail schemes that aim to deceive or defraud individuals.

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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%)