#1
Which of the following is an example of a liquid asset?
Savings account
ExplanationEasily convertible to cash without significant loss of value
#2
Which of the following is a characteristic of a recession?
Decrease in GDP for two consecutive quarters
ExplanationIndicator of economic contraction
#3
Which of the following is an example of a regressive tax?
Sales tax
ExplanationImposes a greater burden on lower-income individuals
#4
Which of the following is a characteristic of a market economy?
Private ownership of resources and means of production
ExplanationEconomic system based on private ownership and voluntary exchange
#5
What is the purpose of a credit score?
To measure your ability to repay borrowed money
ExplanationEvaluation of creditworthiness
#6
What is the rule of 72 used for in personal finance?
Estimating time to double an investment
ExplanationQuick estimation of how long it takes for an investment to double at a fixed annual rate of interest
#7
Which of the following is not a factor affecting credit score?
Level of education
ExplanationNot considered in credit scoring models
#8
What does the term 'budget deficit' mean in government finance?
Government expenditure exceeding government revenue
ExplanationShortfall when expenses exceed income
#9
What is the main function of the Federal Reserve System in the United States?
Regulating the nation's monetary policy
ExplanationCentral bank responsible for monetary policy and overseeing the banking system
#10
What is the key benefit of using a high-yield savings account?
Higher interest rates
ExplanationProvides better returns compared to traditional savings accounts
#11
What does the term 'opportunity cost' refer to in economics?
The cost of an economic decision in terms of the next best alternative foregone
ExplanationValue of the best alternative forgone when a choice is made
#12
What is the purpose of diversification in investment?
To minimize risk by spreading investments across different assets
ExplanationReduces the impact of poor performance of any single investment on the overall portfolio
#13
What is the difference between a Roth IRA and a Traditional IRA?
Earnings in a Roth IRA are tax-free upon withdrawal if certain conditions are met, while Traditional IRA withdrawals are taxed
ExplanationTax treatment of contributions and withdrawals
#14
What is the primary purpose of a 401(k) retirement account?
To save and invest for retirement
ExplanationTax-advantaged retirement savings account offered by employers
#15
What is the concept of 'time value of money' in finance?
Money has a different value at different points in time
ExplanationPrinciple that a dollar today is worth more than a dollar in the future