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Financial Literacy EXAM Questions with Correct Answers
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  • Course
  • Financial Literacy
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  • Financial Literacy

Economics is the study of how individuals and societies satisfy their unlimited wants with limited resources. a. True b. False - Answer-a. True When rising interest rates make borrowing more costly, how does it affect the business cycle? a. It causes consumers to consume more and increase...

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  • October 12, 2024
  • 17
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • financial literacy exam questions with correct ans
  • economics is the study of how individuals and soci

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  • Financial Literacy

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Financial Literacy EXAM Questions with
Correct Answers

Economics is the study of how individuals and societies satisfy their unlimited wants
with limited resources.

a. True
b. False - Answer-a. True

When rising interest rates make borrowing more costly, how does it affect the business
cycle?

a. It causes consumers to consume more and increases demand.
b. It lowers demand, decreases household purchases, and promotes contraction.
c. It causes conflicts overseas and reduces a nation's ability to import goods.
d. It increases productivity, raises employment, and leads to expansion. - Answer-b. It
lowers demand, decreases household purchases, and promotes contraction.

Marissa makes jewelry and sells it at local jewelry shops. She usually provides 15
pieces of jewelry per store and sells them for $10. However, she finds out that the store
owners, due to popular demand, want to start selling her jewelry for $20. According to
the law of supply, what will Marissa do?

a. She will provide the same amount of jewelry for each store to sell.
b. She will start providing more pieces of jewelry for each store to sell.
c. She will start creating carvings for each store to sell along with her jewelry.
d. She will start providing less pieces of jewelry for each store to sell. - Answer-b. She
will start providing more pieces of jewelry for each store to sell.

The Postal Service is an example of a geographic monopoly.

a. True
b. False - Answer-b. False

What is gross domestic product (GDP)?

the average rate of production that is used predict future uses of resources
b. the market value of final goods and services produced during a set time period
the statistical measures of income, spending, and output that are used to help people
understand information about a nation's economy
the study of a nation's economy as a whole - Answer-b. the market value of final goods
and services produced during a set time period

,An economic system in which people make economic decisions based on customs and
beliefs that have been handed down from one generation to the next is a _____
economy.

command
market
c. traditional
mixed - Answer-c. traditional

Gross domestic product (GDP) is the market value of all final goods and services
produced __________ in a given time period.

within a franchise
globally
between two nations
d. within a nation - Answer-d. within a nation

Which of the following is one of the six factors that can cause a change in demand?

a. labor productivity
b. number of producers
c. input costs
d. income - Answer-d. income

Drake has arranged his budget so that he has $30 to spend on comic books this month,
and he is planning on buying three new ones for $10 each. However, when he gets to
the store, he sees that the comic books he wants cost $15 each. According to the law of
demand, what will Drake do?

a. leave without buying any comic books
b. decide to borrow the comic books from a friend
c. buy two of the comic books he wants
d. ignore his budget and buy all three comic books - Answer-c. buy two of the comic
books he wants

If Brazil produces a product and then sells it to Peru, then that product is part of Brazil's
_____ goods.

a. imported
b. unneeded
c. exported
d. marketed - Answer-c. exported

Your friend Joan's college savings are such that she is planning to live off of a fixed
income of $3,000 each year she is in school. She feels that this is enough money for
her to live on while in college and is going to turn down a job offer to work the summer

, before she starts classes. However, you've read in a reliable financial source that
inflation is going to impact the economy over the next couple years. What should you
tell your friend Joan to do?

a. to refuse the job because the value of the dollar will increase and her savings will be
worth more in the future than they are now
b. to take the job because interest rates will decrease and she won't earn as much
interest on her savings
c. to take the job because the value of the dollar will decrease and she won't be able to
purchase as much with $3,000 as she thinks she will
d. to refuse the job because inflation will decrease minimum wage and she won't earn a
- Answer-c. to take the job because the value of the dollar will decrease and she won't
be able to purchase as much with $3,000 as she thinks she will

If you were to examine the costs and profits of businesses, you'd be studying
__________.

a. macroeconomics
b. command economies
c. recessions
d. microeconomics - Answer-d. microeconomics

Which of the following are examples of incentives? (Select all that apply.)


a. An electronics company decides to stop developing cell phones because the price of
most cell phones has dropped dramatically and the company isn't making much profit.

b. A customer decides to buy gas at a gas station because its prices are a few cents
cheaper than other gas stations.

c. A customer's preferred toothpaste has risen in price, so he decides to find a different
brand of toothpaste.

d. A jewelry company decides to sell wedding rings at a lower price than its competitors
so that it can have a bigger market share and sell more rings. - Answer-a. An
electronics company decides to stop developing cell phones because the price of most
cell phones has dropped dramatically and the company isn't making much profit.

b. A customer decides to buy gas at a gas station because its prices are a few cents
cheaper than other gas stations.

c. A customer's preferred toothpaste has risen in price, so he decides to find a different
brand of toothpaste.

A(n) __________ is the end of a contraction in the economy.

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