Money Sense Quiz 1

The question "Do I need it?" is the most important question to ask before purchasing an item. This question helps evaluate whether the item is necessary or if it can be considered a want or desire. By asking this question, one can determine if the item is essential for their needs or if it is an unnecessary expense. It encourages thoughtful and mindful purchasing decisions, preventing impulsive buying and potential regret.

Savings in the bank yield interest. When individuals deposit their savings in a bank, the bank uses those funds to provide loans and other financial services. In return for depositing their money, the bank pays interest to the account holders. This interest is a percentage of the amount deposited and serves as a reward for keeping the money in the bank. Therefore, savings in the bank generate interest earnings for the account holders.

When a person has no more savings and is unable to pay his debts, he is considered bankrupt. Bankruptcy is a legal status indicating that an individual or organization is unable to repay their debts to creditors. It is a financial state where one's liabilities exceed their assets and they are unable to meet their financial obligations. Being bankrupt often leads to severe financial consequences and may require legal intervention to resolve the debts.

Putting our total monthly savings in a bank is the recommended option because it offers several benefits. By depositing our savings in a bank, we can ensure the safety of our money as banks have security measures in place. Additionally, the money deposited in a bank earns interest, allowing it to grow over time. This can help us save more and achieve our financial goals in the long run. Moreover, keeping our savings in a bank makes it easily accessible whenever we need it, providing convenience and flexibility.

Inflation refers to the general increase in prices of goods and services over time. When inflation occurs, the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods and services. This is because as prices rise, the value of money decreases. Therefore, inflation causes money to fall in value.

Purchasing goods in bulk allows stores and supermarkets to get a lower price for their goods. This is because buying in large quantities often comes with discounts or wholesale prices from suppliers. By purchasing in bulk, stores can save money on the cost per unit and pass on those savings to customers. Additionally, buying in bulk helps to ensure that there is enough stock available to meet customer demand, reducing the risk of running out of popular items.

If the bank pays 0.1% annual interest on the savings account, it means that for every $100 deposited, the account will earn $0.10 in interest over the course of a year. Therefore, after one year, the $100 deposit will become $100.10.