#1
1. What is the primary purpose of budgeting in personal finance?
To increase debt
To track and control spending
To avoid earning money
To ignore financial goals
#2
6. What is the purpose of an emergency fund in personal finance?
To invest in high-risk assets
To cover unexpected expenses
To fund luxury purchases
To pay off long-term debts
#3
11. In personal finance, what does the term 'credit score' represent?
Total income of an individual
Ability to repay borrowed money
Number of credit cards owned
Total savings in a bank account
#4
16. What is the purpose of a 401(k) retirement account?
To fund emergency expenses
To provide health insurance
To save for retirement with pre-tax dollars
To invest in real estate
#5
21. What is the term for a financial instrument representing ownership in a company?
Bond
Certificate of Deposit (CD)
Stock
Mutual Fund
#6
2. Which of the following is considered a tax-deductible expense?
Luxury vacation expenses
Medical expenses within certain limits
Impulse shopping bills
Entertainment expenses
#7
3. What is the term for the interest rate the Federal Reserve charges banks for short-term loans?
Inflation rate
Prime rate
Discount rate
Federal funds rate
#8
7. Which tax form is commonly used to report personal income in the United States?
Form 1040EZ
Form W-2
Form 1099-MISC
Form 1040X
#9
8. What is the term for the percentage of income deducted from an employee's salary for Social Security and Medicare?
Income tax
Sales tax
Payroll tax
Excise tax
#10
12. Which of the following is an example of a regressive tax?
Sales tax
Income tax
Property tax
Excise tax
#11
13. What is the purpose of diversification in investment portfolios?
Concentrating investments in a single asset
Minimizing risk by spreading investments
Maximizing short-term gains
Avoiding all forms of investment
#12
4. Which investment option is typically considered the least risky?
Stocks
Bonds
Real estate
Cryptocurrencies
#13
5. In the context of taxes, what does the acronym IRA stand for?
Individual Retirement Account
Internal Revenue Assessment
Investment Return Agreement
International Revenue Allocation
#14
9. When it comes to investing, what does the acronym ROI stand for?
Return on Investment
Risk of Inflation
Rate of Interest
Revenue from Operations
#15
10. What is the key characteristic of a Roth IRA compared to a Traditional IRA?
Contributions are tax-deductible
Earnings are tax-free upon withdrawal
No contribution limits
Requires mandatory withdrawals at a certain age
#16
14. Which tax form is commonly used by self-employed individuals to report income and expenses?
Form 1040
Form 1099-MISC
Form W-2
Form 1040EZ
#17
15. What is the role of a financial advisor in personal finance?
Guaranteeing high returns on investments
Providing personalized financial guidance
Managing daily expenses
Offering tax evasion strategies