Personal Finance Review 4.01-5.01 Study Guides Question Preview (ID: 47352)

Review Questions.

Income received through government programs is most likely funded by:
a) small fees proportional to the income of clients
b) fees that are charged to some, but not all, clients using the programs.
c) taxes at the local, state, and federal levels
d) donations from large corporations.

When taking advantage of the time value of money, which is most likely to result in the largest return?
a) donations from large corporations.
b) Invest as long as possible and at the highest interest rate possible.
c) fees that are charged to some, but not all, clients using the programs
d) small fees proportional to the income of clients.

How might a needy family find the right government program for their situation?
a) Call the Social Security Administration
b) Contact her local bank
c) Go to on the web.
d) Inquire at the local food pantry

In which of the situations below would the individual most likely be receiving Medicare funds?
a) Jim is a 37-year-old man who lost his job and is unable to afford health insurance for himself or his children.
b) Ivan is 60 years old and was injured at work. His employer needs to provide temporary income for him
c) seventeen-year-old high school student who is pregnant and needs assistance with her medical expenses.
d) Rosie is 67 years old and in need of a health insurance program

Which statement is true of government assistance programs?
a) Government programs were designed to provide permanent assistance to those in need.
b) The ultimate goal of government programs is to help individuals become self-sufficient and independent
c) Government programs were developed to help one specific socioeconomic group.
d) All government programs vary from state to state.

Which federal program assists low-income families in purchasing nutritious foods?
c) Social Security
d) Medicare

Alyssa’s friend, who is a stay‐at‐home mother, agrees to care for Alyssa’s son today so Alyssa can go to work. Alyssa has utilized:
a) family child carefamily child care
b) social capital
c) a non‐profit organization.
d) neighborhood watch

Which federal program will encourage taxpayers to file a tax return by offering a financial incentive to them?
a) Social security
d) Earned income tax credit

Which would qualify as a nonprofit?
a) An extracurricular activity in her school
b) The local private daycare center
c) Big Brothers/Big Sisters
d) Her elderly neighbor who needs yard work done

Steven is moving into his first apartment his parents have told him that he can take the furniture in his bedroom and his bedding when he moves out. His parents are providing him with which type of income?
a) Earned income
b) In‐home income
c) Gift income
d) In‐kind income

Which concept would be the best one to include in his presentation to show that he understands compounding interest?
a) Interest earned on the principal investment
b) Any form of interest earned from saving or investing
c) Earning interest on interest
d) The effect interest has on the total return on investment

Giving up food from the vending machine to achieve a savings goal is the:
a) opportunity cost.
b) interest.
c) specific part of the SMART goal
d) trade-off.

Which statement is the most correct description of liquidity?
a) How quickly and easily an asset can be converted into cash
b) The amount of savings available
c) A measurement of how much a person or household owns once all debts have been paid
d) The amount of money needed to pay for the necessities and comforts currently enjoyed

Compound interest is best defined as:
a) interest earned on the principal investment.
b) any form of interest earned from saving or investing.
c) earning interest on interest
d) the effect interest has on the total return on investment.

Which statement best reflects the philosophy of “pay yourself first”?
a) An individual should save whatever money is left over after paying monthly bills
b) An individual should pay all fixed expenses before paying flexible expenses
c) An individual should set aside a predetermined amount of money for saving before using any of that money for spending.
d) An individual should spend money on the items and activities enjoyed in life before paying any other expenses.

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