Personal Finance Summer 2019
Quiz 1. Value of College, Living Paycheck to Paycheck, Budgeting, Checking Accounts
- 1.
What value does college have for you other than dollar value? (check all that apply)
- A.
Exposure to new knowledge and ideas
- B.
You make new relationships with other students and with professors (also called "networking")
- C.
The classrooms all have internet access and are good places for streaming music
- D.
Experiencing a new place outside your immediate community
- E.
The libraries give away books for free
Correct Answer(s)
A. Exposure to new knowledge and ideas
B. You make new relationships with other students and with professors (also called "networking")
D. Experiencing a new place outside your immediate communityExplanation
College provides value beyond just monetary gain. It offers the opportunity to experience a new place outside of one's immediate community, allowing for personal growth and exposure to different cultures and perspectives. Additionally, college provides access to new knowledge and ideas through academic courses and resources such as libraries. It also facilitates the formation of new relationships with fellow students and professors, which can lead to networking opportunities and potential collaborations in the future.Rate this question:
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- 2.
Using the chart below, how much more per week does someone earn who has graduated with a Bachelor's degree (four year college) than someone who graduated with a high school diploma? (choose one)
- A.
The amounts are roughly the same
- B.
$464
- C.
$652
- D.
$188
Correct Answer
B. $464Explanation
The correct answer is $464. This means that someone who has graduated with a Bachelor's degree earns $464 more per week than someone who graduated with a high school diploma.Rate this question:
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- 3.
Roughly how much is a four year college degree worth over a 40 year career compared to having a high school diploma? (Remember, we calculated this value by calculating what 40 years of earnings would be for someone with a Bachelor's degree minus how much they would earn over 40 years if they only have a high school diploma.)
- A.
$2.4 million
- B.
Roughly $1 million ($965,120 to be precise)
- C.
There is no difference
- D.
$100,000
Correct Answer
B. Roughly $1 million ($965,120 to be precise)Explanation
The correct answer is roughly $1 million ($965,120 to be precise). This means that over a 40-year career, someone with a four-year college degree can expect to earn approximately $1 million more than someone with just a high school diploma. This value was calculated by subtracting the earnings of someone with a high school diploma from the earnings of someone with a Bachelor's degree over a 40-year period.Rate this question:
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- 4.
In the game "Spent," one of your choices was buying healthcare insurance. Which of the following is generally true with healthcare insurance. Check ALL that apply.
- A.
The more expensive your health insurance plan, the lower your copay will be (the amount you pay out of your pocket when you go to the doctor)--in other words, if you pay a higher amount on a monthly basis, you pay less out of pocket on each doctor visit
- B.
The more expensive your health insurance plan (ie, the higher your monthly health insurance payment), the higher your copay will be (the amount you pay out of your pocket when you go to the doctor)
- C.
More expensive healthcare insurance generally will cover a wider range of hospitals and geographic coverage areas than cheaper insurance plans
- D.
Most people will not need health insurance.
- E.
Everyone should have health insurance.
Correct Answer(s)
A. The more expensive your health insurance plan, the lower your copay will be (the amount you pay out of your pocket when you go to the doctor)--in other words, if you pay a higher amount on a monthly basis, you pay less out of pocket on each doctor visit
C. More expensive healthcare insurance generally will cover a wider range of hospitals and geographic coverage areas than cheaper insurance plans
E. Everyone should have health insurance.Explanation
The first statement is true because with a more expensive health insurance plan, the copay is lower, meaning you pay less out of pocket when visiting the doctor. The second statement is false because higher monthly payments for health insurance result in higher copays. The third statement is true because more expensive healthcare insurance plans often provide coverage for a wider range of hospitals and geographic areas. The fourth statement is false because most people will need health insurance at some point in their lives. The fifth statement is true because it is generally recommended that everyone should have health insurance for financial protection and access to necessary healthcare services.Rate this question:
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- 5.
In the game "Spent," you had to choose how far away from your job you would live. What was the relationship between home/apartment costs and travel costs?
- A.
The farther you moved from your job, the more expensive the housing costs, while travel costs stayed the same.
- B.
As you move farther from your job, housing costs went down, but travel costs went up.
- C.
The closer you are to your job, the lower the cost of housing and travel.
- D.
Housing and travel costs don't change regardless how far you live from your job.
Correct Answer
B. As you move farther from your job, housing costs went down, but travel costs went up.Explanation
The correct answer explains that as you move farther from your job, housing costs decrease, which means that you can find cheaper housing options. However, at the same time, travel costs increase because you have to commute a longer distance to reach your workplace. This relationship implies that there is a trade-off between housing costs and travel costs, where one decreases while the other increases as you choose to live farther away from your job.Rate this question:
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- 6.
True or false: People in the US with only a high school diploma have about the same unemployment rate as people who have earned a Bachelor's degree (four year college degree). Remember, the unemployment rate is the percentage of people who cannot find a job.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false. People in the US with only a high school diploma generally have a higher unemployment rate compared to those who have earned a Bachelor's degree. This is because individuals with higher education qualifications are often more competitive in the job market and have a wider range of job opportunities available to them. On the other hand, individuals with only a high school diploma may face more challenges in finding employment, leading to a higher unemployment rate.Rate this question:
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- 7.
In the Bean Game, we talked about "wants" vs. "needs." Which of the following would be considered "wants?" (Choose ALL that apply)
- A.
Housing and utilities
- B.
Gifts you buy for family and friends
- C.
Auto insurance if you own a car
- D.
Eating meals out at restaurants most nights
- E.
Buying designer clothes
- F.
Going to concerts and taking expensive vacations
- G.
Basic products like soap, shampoo and toothpaste
Correct Answer(s)
B. Gifts you buy for family and friends
D. Eating meals out at restaurants most nights
E. Buying designer clothes
F. Going to concerts and taking expensive vacationsExplanation
"Wants" are things that are not necessary for survival but are desired for personal satisfaction or enjoyment. Gifts you buy for family and friends, eating meals out at restaurants most nights, buying designer clothes, and going to concerts and taking expensive vacations are all examples of wants because they are not essential for basic survival. Housing and utilities, auto insurance if you own a car, and basic products like soap, shampoo, and toothpaste are considered needs because they are necessary for daily living.Rate this question:
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- 8.
When budgeting, we like to say "pay yourself first," which means put money in savings as a top priority. What is a good amount to save each month?
- A.
1-2% of your salary
- B.
$10 per month
- C.
10% of your net salary, and more if you can.
- D.
Whatever you have available after you have met all your needs and wants.
Correct Answer
C. 10% of your net salary, and more if you can.Explanation
A good amount to save each month is 10% of your net salary, and more if you can. This ensures that you are consistently setting aside a portion of your income for savings, which can help you build a financial cushion and reach your long-term goals. Saving more than 10% if possible allows for even greater financial security and flexibility.Rate this question:
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- 9.
When we did Salary-based Budgeting, we looked at a gross salary amount, then we looked at how you have to pay taxes, medicare and social security (called FICA). The table below shows these calculations for an individual making $60,000 per year, which is $5,000 per month. In this case, the gross salary is $5,000 and the net salary is $3,659.50. Which amount would be deposited in your bank account (which amount is your "take home pay").
- A.
$5,000
- B.
$3,659.50
- C.
Neither, it is impossible to know what will be deposited in your bank account.
Correct Answer
B. $3,659.50Explanation
The amount that would be deposited in your bank account, or your "take home pay," is $3,659.50. This is because after considering taxes, medicare, and social security deductions from the gross salary of $5,000, the net salary is calculated to be $3,659.50.Rate this question:
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- 10.
What is the difference between "gross salary" and "net salary?" (Choose ALL that are correct)
- A.
Net salary is your pay after all "needs" are met
- B.
Net salary is your gross salary minus the amount the government takes out (taxes, social security and medicare)
- C.
"Gross" and "net" are basically the same thing
- D.
Gross refers to yearly salary and net means monthly
Correct Answer
B. Net salary is your gross salary minus the amount the government takes out (taxes, social security and medicare)Explanation
The correct answer is that net salary is the gross salary minus the amount the government takes out for taxes, social security, and medicare. This means that net salary is the amount of money you actually take home after all deductions have been made from your gross salary. Gross salary refers to the total amount of money you earn before any deductions are taken out.Rate this question:
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- 11.
When we did the budgeting exercise, we looked at apartment rentals in different cities. Select the answer below that best summarizes what we learned about apartment rentals. (Choose ALL that are correct)
- A.
The cost of a rental apartment is pretty similar in different cities across the US.
- B.
Different cities in the US have significantly different costs for apartment rentals.
- C.
It is always better to live alone, because finding a roommate, or multiple roommates, will cause you to pay more.
- D.
Having roommate (or more than one) generally will reduce your cost of apartment rent in any given city.
Correct Answer(s)
B. Different cities in the US have significantly different costs for apartment rentals.
D. Having roommate (or more than one) generally will reduce your cost of apartment rent in any given city.Explanation
The budgeting exercise revealed that apartment rental costs vary significantly across different cities in the US. Additionally, it was learned that having a roommate or multiple roommates generally reduces the cost of apartment rent in any given city.Rate this question:
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- 12.
When we did the budgeting exercise, we looked at apartment rentals in different cities. Select the answer below that best summarizes what we learned about apartment rentals. (Choose one answer)
- A.
Most apartment rentals will cost $300-600 per person, regardless of where you live.
- B.
You should reasonably expect that renting an apartment will cost between $500-$3,000, depending on where you live and how nice an apartment you get.
- C.
In places like San Francisco or New York City, most people pay $6,000 per month or more for an apartment.
Correct Answer
B. You should reasonably expect that renting an apartment will cost between $500-$3,000, depending on where you live and how nice an apartment you get.Explanation
The budgeting exercise revealed that the cost of renting an apartment varies depending on the location and the quality of the apartment. The range of $500-$3,000 was determined as a reasonable expectation for apartment rental costs, taking into account these factors.Rate this question:
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- 13.
If you want to own a car, which of the following costs should be in your budget? (Choose all that belong in the portion of your budget relating to a car)
- A.
The cost of the car only, including any loan payments. Other car-related items are "wants" not "needs" and do not belong in my budget.
- B.
The monthly loan payment if I borrowed money to buy the car
- C.
Car insurance
- D.
Gas (if I have a gas powered car) or extra electricity costs (if I have an electric car)
- E.
A new paint job once every three years
- F.
An estimate for average maintenance costs (for when things on the car need to be fixed or replaced when they wear out)
Correct Answer(s)
B. The monthly loan payment if I borrowed money to buy the car
C. Car insurance
D. Gas (if I have a gas powered car) or extra electricity costs (if I have an electric car)
F. An estimate for average maintenance costs (for when things on the car need to be fixed or replaced when they wear out)Explanation
The costs that should be in your budget when owning a car are the monthly loan payment if you borrowed money to buy the car, car insurance, an estimate for average maintenance costs, and gas or extra electricity costs depending on the type of car you have. These costs are essential for owning and maintaining a car, while other car-related items such as a new paint job are considered "wants" rather than "needs" and do not belong in the budget.Rate this question:
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- 14.
True or false: Basic car insurance is legally required in order to drive a car.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Basic car insurance is legally required in order to drive a car. This is because car insurance provides financial protection in case of accidents or damages caused by the insured driver. It ensures that the driver has the means to cover the costs of any injuries or property damage they may cause while driving. Without car insurance, drivers would be personally responsible for all expenses, which could lead to financial hardship and potential legal consequences. Therefore, it is necessary to have basic car insurance to legally operate a vehicle.Rate this question:
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- 15.
What are some advantages to having a checking account? (Check ALL that are correct)
- A.
No need to carry cash
- B.
Banks will often pay you to open an account
- C.
It is safer to carry a debit card and/or mobile phone than cash (less likely to be lost or stolen)
- D.
A checking account allows you to get cash from any ATM machine anywhere with no fees
- E.
It allows you to use online and mobile banking options
Correct Answer(s)
A. No need to carry cash
C. It is safer to carry a debit card and/or mobile phone than cash (less likely to be lost or stolen)
E. It allows you to use online and mobile banking optionsExplanation
Having a checking account offers several advantages. Firstly, there is no need to carry cash, as transactions can be easily made using a debit card or mobile phone. This reduces the risk of cash being lost or stolen. Additionally, a checking account allows access to online and mobile banking options, providing convenience and flexibility in managing finances.Rate this question:
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- 16.
When you make a purchase using a debit card, how much can you spend?
- A.
There is no limit on what you can spend using a debit card
- B.
The money can come from your friends’ accounts, so the more friends you have, the more you can spend
- C.
The money comes from the balance in your checking account, so you can spend up to the amount you have in your account, but no more than that
- D.
You can spend up to $20 per transaction
Correct Answer
C. The money comes from the balance in your checking account, so you can spend up to the amount you have in your account, but no more than thatExplanation
When you make a purchase using a debit card, the money comes directly from the balance in your checking account. Therefore, you can only spend up to the amount that you have in your account. This means that you cannot spend more than what is available in your account balance.Rate this question:
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- 17.
Which of the following is NOT a way you can DEPOSIT money into your checking account?
- A.
Going to a bank office and having a bank teller do it for you
- B.
Through an ATM machine
- C.
Direct deposit of your paycheck by your employer
- D.
When you are buying something at a store with a debit card, the checkout person can make a deposit for you
- E.
Electronic transfer from another account
Correct Answer
D. When you are buying something at a store with a debit card, the checkout person can make a deposit for youExplanation
When you are buying something at a store with a debit card, the checkout person cannot make a deposit for you. A debit card transaction is a form of payment, not a method of depositing money into your checking account.Rate this question:
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- 18.
Which of the following are ways you can WITHDRAW money from a checking account? (Note: remember, the word "withdraw" in this case means to take money our of your account or to pay others with money from your account.) Check ALL that are correct.
- A.
At a bank office
- B.
Online bill pay or electronic transfer
- C.
Call the bank and ask them to send you cash in the mail
- D.
Use a debit card to make a purchase at a store and get cash back
- E.
Write a check
Correct Answer(s)
A. At a bank office
B. Online bill pay or electronic transfer
D. Use a debit card to make a purchase at a store and get cash back
E. Write a checkExplanation
You can withdraw money from a checking account by visiting a bank office, writing a check, using online bill pay or electronic transfer, and using a debit card to make a purchase at a store and get cash back. Calling the bank and asking them to send cash in the mail is not a valid way to withdraw money from a checking account.Rate this question:
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- 19.
Why is it a good idea to check your bank statements on a regular basis? (Check ALL that are correct)
- A.
You are able to monitor the fees you are being charged to make sure you can change what you are doing if you have fees you can avoid
- B.
It is required by law that you check your bank statements
- C.
The bank will often include offers for free meals with your monthly banks statement
- D.
You can catch any possible errors made by the bank, or identify any other mistakes
- E.
Checking your statements is the only way to know if your employer has given you a pay raise
Correct Answer(s)
A. You are able to monitor the fees you are being charged to make sure you can change what you are doing if you have fees you can avoid
D. You can catch any possible errors made by the bank, or identify any other mistakesExplanation
Checking your bank statements on a regular basis is a good idea because it allows you to monitor the fees you are being charged and make necessary changes to avoid unnecessary fees. Additionally, it helps you catch any errors made by the bank or identify any other mistakes that may have occurred.Rate this question:
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- 20.
On the statement below, what is the balance in the checking account on October 28, 2003?
- A.
$36.76
- B.
-$72.47
- C.
$731.57
- D.
$0.55
Correct Answer
C. $731.57Explanation
The correct answer is $731.57. This is the balance in the checking account on October 28, 2003.Rate this question:
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- 21.
On the statement below, what is the total amount deposited in the bank account for the month?
- A.
$694.81
- B.
$1,515.63
- C.
$1,442.61
- D.
-72.47
Correct Answer
C. $1,442.61Explanation
The correct answer is $1,442.61. This is the total amount deposited in the bank account for the month.Rate this question:
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- 22.
On the statement below, how might the "Out of Network ATM fee" be avoided?
- A.
By using the correct PIN number (passcode) when using your ATM card
- B.
By taking out over $100 in cash when making a cash withdrawal
- C.
By only using ATM machines from the specific bank in which you have a checking account
- D.
By selecting an option on the ATM keypad for “free withdrawals”
Correct Answer
C. By only using ATM machines from the specific bank in which you have a checking accountExplanation
The "Out of Network ATM fee" can be avoided by only using ATM machines from the specific bank in which you have a checking account. This means that if you use an ATM machine from a different bank, you may be charged a fee for the transaction. Therefore, to avoid this fee, it is recommended to use ATMs that are affiliated with your own bank.Rate this question:
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- 23.
Which account transactions REDUCE a checking account balance? (Check ALL that apply)
- A.
Paying your mortgage (home loan payment)
- B.
Depositing cash in an ATM
- C.
Paying a bill online
- D.
Using an ATM to withdraw cash from your account
- E.
Receiving your paycheck though a direct deposit
Correct Answer(s)
A. Paying your mortgage (home loan payment)
C. Paying a bill online
D. Using an ATM to withdraw cash from your accountExplanation
The transactions that reduce a checking account balance are paying your mortgage (home loan payment), paying a bill online, and using an ATM to withdraw cash from your account. Depositing cash in an ATM and receiving your paycheck through a direct deposit do not reduce the checking account balance as they add funds to the account.Rate this question:
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- 24.
Which of the following is true regarding John’s direct deposit (shown as "Payroll Deposit - HOTEL")? (Check ALL that apply)
- A.
Every time John receives a direct deposit he has to pay the bank fees
- B.
The direct deposit increases the balance in his account by the amount of the deposit
- C.
The direct deposit amount is the amount of John’s gross salary (before taxes are taken out)
- D.
The direct deposit is made every four weeks
Correct Answer
B. The direct deposit increases the balance in his account by the amount of the depositExplanation
The correct answer is that the direct deposit increases the balance in John's account by the amount of the deposit. This means that when John receives a direct deposit, the money is added to his account, increasing the total balance. This is a common feature of direct deposits, where the funds are electronically transferred into the recipient's account.Rate this question:
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- 25.
True or false: If the bank where you have an account is Wells Fargo and you go to another bank's ATM machine, say Bank of America, you will be able to withdraw cash BUT the other bank will charge you a fee.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
If you have an account with Wells Fargo and use another bank's ATM machine, such as Bank of America, you will be able to withdraw cash. However, since it is not your own bank's ATM, the other bank will charge you a fee for using their services. Therefore, the statement is true.Rate this question:
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Jan 30, 2023Quiz Edited by
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Jun 22, 2019Quiz Created by
Ben
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