Savings, Budgeting And The Value Of College

25 Questions | Total Attempts: 122

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Savings, Budgeting And The Value Of College

A review of savings and budgeting concepts for Eastside Prep Personal Finance course. Good luck!


Questions and Answers
  • 1. 
    What is the correct order of the steps needed to make good financial decisions?
    • A. 

      Set Goal, Collect Info., Compare alternatives, Determine criteria, Decide

    • B. 

      Decide, Determine criteria, Collect Info., Compare alternatives, Set Goal

    • C. 

      Set Goal, Compare alternatives, Determine criteria, Collect info., Decide

    • D. 

      Set Goal, Collect Info., Determine criteria, Compare alternatives, Decide

    • E. 

      None of the above

  • 2. 
    A budget surplus occurs when income is greater than expenses.  
    • A. 

      True

    • B. 

      False

  • 3. 
    Based on your reading of the Wall Street Journal, which of the fees listed below IS NOT charged by banks?  
    • A. 

      Lost debit card fee

    • B. 

      Monthly service fee

    • C. 

      Direct deposit fee

    • D. 

      Out of network ATM fees

    • E. 

      Fee if customer wants a paper statement

  • 4. 
    If you deposit $200 into a savings account with an interest rate of 1% for 3 years, how much simple interest can you brag that you will earn after three years?
    • A. 

      $1

    • B. 

      $5

    • C. 

      $6

    • D. 

      $25

  • 5. 
    A student completing their college education at a four-year college rather than dropping out of high school can expect to earn how much more over their working lifetime?
    • A. 

      $200,000

    • B. 

      $500,000

    • C. 

      $750,000

    • D. 

      $1,200,000

  • 6. 
    What is interest?
    • A. 

      When prices increase as time goes by

    • B. 

      The money you pay as a fee when you use a debit card

    • C. 

      The money that a bank pays you for depositing your money in their bank

    • D. 

      Total amount of money in a bank

  • 7. 
    Which of these savings vehicles would work best today if you didn't need to access the money for a number of years AND wanted the highest interest rate possible AND expected that interest rates would fall in the future
    • A. 

      Money Market Savings Account

    • B. 

      Certificate of Deposit (CD)

    • C. 

      Simple Savings Account

    • D. 

      None of the above

  • 8. 
    Which combination of interest rates and fees are the better deal assuming you open a $500 savings account?
    • A. 

      An account with 10% annual interest rate and $5/month in fees

    • B. 

      An account with 2% annual interest rate and no fees

    • C. 

      The two deals listed above are equivalent

  • 9. 
    The FDIC (Federal Depository Insurance Corporation) protects bank accounts up to what amount?  
    • A. 

      $100,000

    • B. 

      $250,000

    • C. 

      $1,000,000

    • D. 

      $5,000,0000

  • 10. 
    The principal reason that Federal Reserve Chairman Ben Bernanke has seen his popularity decline since 2009:
    • A. 

      Interest rates on savings accounts are too high

    • B. 

      Unemployment remains stubbornly high at close to 9%

    • C. 

      The cost to borrow money is too high

    • D. 

      Inability to end the NFL strike

  • 11. 
    Chris works part-time at the Jamba Juice.  He gets paid $8/hour and plans to work 10 hours per week throughout the year (assume he works for 50 weeks) as well as a free smoothie for every shift.  He pays federal and state taxes equal to 20%.  His GROSS PAY for the year is equal to (do not include value of the smoothies):   
    • A. 

      $80

    • B. 

      $3,000

    • C. 

      $3,200

    • D. 

      $4,000

  • 12. 
    Indicate which of the following costs are considered fixed expenses (may be more than one answer):  
    • A. 

      Monthly rent

    • B. 

      Food

    • C. 

      Electricity

    • D. 

      Car payment

    • E. 

      Auto insurance

  • 13. 
    True or False.  It always makes sense to select the savings account with the highest interest rate.  
    • A. 

      True

    • B. 

      False

  • 14. 
    Which of the following factors would NOT be considered in selecting a simple savings account?
    • A. 

      Interest Rate

    • B. 

      Term

    • C. 

      Fees

    • D. 

      Minimum balance

  • 15. 
    When interest rates are as low as they are now (recall that Bank of America is offering a 0.05% interest rate): 
    • A. 

      It is bad for savers and borrowers

    • B. 

      It is good for savers and bad for borrowers

    • C. 

      It is bad for borrowers and good for savers

    • D. 

      It is good for borrowers and bad for savers

  • 16. 
    Based on the rule of 72, a savings account earning 6% per year would double after...
    • A. 

      6 years

    • B. 

      8 years

    • C. 

      12 years

    • D. 

      18 years

  • 17. 
    When it comes to collecting information to make a decision about a specific financial product, watching commercials and listening to your friend's recommendations are all that you need to know.  
    • A. 

      True

    • B. 

      False

  • 18. 
    What would be the BALANCE of your savings account after three months if the savings account had an annual interest rate of 6% and you started with principal of $500?  
    • A. 

      $30

    • B. 

      $15

    • C. 

      $507.50

    • D. 

      $530.00

  • 19. 
    Which of the following items would be considered as income (CHECK ALL THE BOXES THAT APPLY)?
    • A. 

      Money received as birthday gifts from relatives

    • B. 

      Money spent on school supplies

    • C. 

      Money spent to go to the movies

    • D. 

      Money earned from a part-time job

    • E. 

      Allowance

  • 20. 
    Which of the following is a "want" not a need?
    • A. 

      Food

    • B. 

      Medicine

    • C. 

      Housing

    • D. 

      Car

    • E. 

      Utilities

  • 21. 
    To successfully open a savings account, which ONE of the items below are NOT required:
    • A. 

      State issued ID (Driver's license or State ID)

    • B. 

      Evidence of a Job

    • C. 

      Your Social Security number

    • D. 

      If under 18, you must have a guardian sign with you

    • E. 

      A deposit to open the account

  • 22. 
    In the video that we watched where Ben Bernanke answers a question about financial literacy, who does he say is responsible for a consumer's financial security?  
    • A. 

      The Government

    • B. 

      Banks or other financial service providers

    • C. 

      Regulators (the people who make the rules that banks must follow)

    • D. 

      The Consumer (You)

  • 23. 
    When putting together your personal budget, you find that your budget is in deficit.  Indicate the actions that you need to take to balance your budget.  
    • A. 

      Increase your income and expenses by the same amount

    • B. 

      Increase your income by an amount greater than your deficit

    • C. 

      Increase your expenses by an amount greater than your deficit

    • D. 

      Increase the spending on your wants

  • 24. 
    A(n) ___________________ expense does not change on a month-to-month basis while a(n) _____________________ expense will change from month to month.  A(n) ____________________  expense is one that is unanticipated and will occur generally without warning
    • A. 

      Fixed, variable, emergency

    • B. 

      Variable, fixed, emergency

    • C. 

      Emergency, fixed, variable

    • D. 

      Variable, emergency, fixed

  • 25. 
    The Ally Bank Pony commercial is a good example of why it is so important to ask questions when making a decision about a bank's products.  
    • A. 

      True

    • B. 

      False

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