Question 1

Jordan has the following assets and liabilities: $$\begin{array} { l | r } 
\hline \text { Tuo cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 3,000 \
\hline \text { Checkire accourtbalarce } & \$ 2,000 \
\text { Credit card balarce } & \$ 1,000
\end{array}$$  
What is the value of Jordan's assets?
A)$109,000
B)$203,000
C)$213,000
D)$317,000

Accepted Answer

The value of Jordan's assets includes the two cars ($10,000), the house ($200,000), cash ($1,000), and checking account balance ($2,000), totaling $213,000.

Question 2

Wealth equals:
A)current income minus spending on current needs.
B)assets minus liabilities.
C)saving minus investment.
D)investment minus saving.

Accepted Answer

This is the definition of "wealth."

Question 3

The saving rate equals saving divided by:
A)wealth.
B)assets.
C)liabilities.
D)income.

Accepted Answer

This simple equation gives the rate of saving, which is saving as a percentage of income.

Question 4

Saving divided by income equals the _______ rate.
A)interest
B)wealth
C)saving
D)income

Accepted Answer

This simple equation gives the rate of saving, which is saving as a percentage of income.

Question 5

Taylor has the following assets and liabilities: $$\begin{array} { l | r } 
\text { Two cars } & \$ 15,000 \
\text { House } & \$ 400,000 \
\text { Mortgage } & \$ 300,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 5,000 \
\hline \text { Checkire accourtbalarce } & \$ 3,000 \
\text { Credit card balarce } & \$ 3,000
\end{array}$$  
What is the value of Taylor's assets?
A)$308,000
B)$416,000
C)$419,000
D)$422,000

Accepted Answer

The value of Taylor's assets is the sum of the value of the two cars, house, cash, and checking account balance: $15,000 + $400,000 + $1,000 + $3,000 = $419,000.

Question 6

Liabilities are:
A)current income minus spending on current needs.
B)the debts one owes.
C)saving minus investment.
D)anything of value one owns.

Accepted Answer

Liabilities are the debts one owes.

Question 7

Jordan has the following assets and liabilities: $$\begin{array} { l | r } 
\hline \text { Tuo cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 3,000 \
\hline \text { Checkire accourtbalarce } & \$ 2,000 \
\text { Credit card balarce } & \$ 1,000
\end{array}$$  
What is Jordan's wealth?
A)$107,000
B)$109,000
C)$111,000
D)$213,000

Accepted Answer

Jordan's wealth is calculated by subtracting total liabilities from total assets. Total assets are $10,000 (cars) + $200,000 (house) + $1,000 (cash) + $2,000 (checking account balance) = $213,000. Total liabilities are $100,000 (mortgage) + $3,000 (car loans) + $1,000 (credit card balance) = $104,000. Therefore, Jordan's wealth is $213,000 - $104,000 = $109,000.

Question 8

Assets minus liabilities equal:
A)saving.
B)investment.
C)wealth.
D)current income minus spending on current needs.

Accepted Answer

This is the definition of "wealth."

Question 9

Assets are:
A)current income minus spending on current needs.
B)stocks, bonds, and credit card balances.
C)saving minus investment.
D)anything of value one owns.

Accepted Answer

Assets are anything of value one owns.

Question 10

Taylor has the following assets and liabilities:  
$$\begin{array} { l | r } 
\text { Two cars } & \$ 15,000 \
\text { House } & \$ 400,000 \
\text { Mortgage } & \$ 300,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 5,000 \
\hline \text { Checkire accourtbalarce } & \$ 3,000 \
\text { Credit card balarce } & \$ 3,000
\end{array}$$  
What is Taylor's wealth?
A)$105,000
B)$107,000
C)$111,000
D)$419,000

Accepted Answer

The answer of Taylor has the following assets and liabilities:...

Question 11

Wealth is the same as:
A)net worth.
B)assets.
C)capital gains.
D)savings.

Accepted Answer

Wealth is another way of saying "net worth."

Question 12

Taylor has the following assets and liabilities: $$\begin{array} { l | r } 
\text { Two cars } & \$ 15,000 \
\text { House } & \$ 400,000 \
\text { Mortgage } & \$ 300,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 5,000 \
\hline \text { Checkire accourtbalarce } & \$ 3,000 \
\text { Credit card balarce } & \$ 3,000
\end{array}$$  
What is the value of Taylor's liabilities?
A)$300,000
B)$303,000
C)$308,000
D)$311,000

Accepted Answer

Taylor's liabilities include the mortgage ($300,000), car loans ($5,000), and credit card balance ($3,000), totaling $308,000.

Question 13

Chris earns $1,500 per week and spends $1,000 per week on living expenses, puts $200 in a savings account, and buys $300 worth of shares in a stock mutual fund. Chris's saving is ________, and Chris's saving rate is ________.
A)$200; 13.3 percent
B)$200; 20.0 percent
C)$300; 20.0 percent
D)$500; 33.3 percent

Accepted Answer

Stocks and savings accounts are both considered savings. In this case, saving is $500 and the saving rate is $500/$1,500 = 0.33, or 33.3 percent.

Question 14

Pat earns $1,000 per week and spends $850 per week on living expenses, puts $50 in a savings account, and buys $100 worth of shares in a stock mutual fund. Pat's saving is ________, and Pat's saving rate is ________.
A)$50; 5.0 percent
B)$50; 5.9 percent
C)$100; 10 percent
D)$150; 15 percent

Accepted Answer

The savings rate is the amount saved divided by income. In this case, saving is $150, which is the income not spend on current needs, and the saving rate is $150/$1,000 = 0.15, or 15 percent.

Question 15

Taylor has the following assets and liabilities: $$\begin{array} { l | r } 
\text { Two cars } & \$ 15,000 \
\text { House } & \$ 400,000 \
\text { Mortgage } & \$ 300,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 5,000 \
\hline \text { Checkire accourtbalarce } & \$ 3,000 \
\text { Credit card balarce } & \$ 3,000
\end{array}$$  
Suppose that Taylor receives a $10,000 bonus from her employer. If she puts that money toward her mortgage, her wealth would ________; if she puts that money in her checking account, her wealth would ________.
A)increase to $121,000; decrease to $101,000
B)increase to $115,000; decrease to $95,000
C)increase to $121,000; increase to $121,000
D)increase to $115,000; increase to $115,000

Accepted Answer

Wealth is calculated as assets minus liabilities. Initially, Taylor's assets are $15,000 (cars) + $400,000 (house) + $1,000 (cash) + $3,000 (checking account) = $419,000. Her liabilities are $300,000 (mortgage) + $5,000 (car loans) + $3,000 (credit card balance) = $308,000. Thus, her initial wealth is $419,000 - $308,000 = $111,000. If she puts the $10,000 bonus towards her mortgage, her mortgage decreases to $290,000, making her new liabilities $290,000 + $5,000 + $3,000 = $298,000, and her wealth increases to $419,000 - $298,000 = $121,000. If she puts the $10,000 in her checking account, her assets increase to $429,000, and her wealth also increases to $429,000 - $308,000 = $121,000. Therefore, in both scenarios, her wealth increases to $121,000.

Question 16

Which of the following is a liability of a family?
A)Checking account balance
B)Share of stock
C)House
D)Mortgage

Accepted Answer

A mortgage is a promise to pay a future debt, secured by the deed to property. The mortgage is a liability to a family.

Question 17

Jordan has the following assets and liabilities: $$\begin{array} { l | r } 
\hline \text { Tuo cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 3,000 \
\hline \text { Checkire accourtbalarce } & \$ 2,000 \
\text { Credit card balarce } & \$ 1,000
\end{array}$$  
What is the value of Jordan's liabilities?
A)$100,000
B)$104,000
C)$213,000
D)$317,000

Accepted Answer

Jordan's liabilities include the mortgage ($100,000), car loans ($3,000), and credit card balance ($1,000), totaling $104,000.

Question 18

Current income minus spending on current needs equals:
A)saving.
B)wealth.
C)transfers.
D)investment.

Accepted Answer

Saving equals current income minus spending on current needs.

Question 19

Which of the following is an asset of a family?
A)Student loan
B)Mortgage
C)Unpaid credit card balance
D)Checking account balance

Accepted Answer

A checking account balance is something of value that one owns, so it is an asset.

Question 20

Saving equals:
A)current spending minus current income.
B)wealth minus assets.
C)assets minus liabilities.
D)current income minus spending on current needs.

Accepted Answer

Saving equals current income minus spending on current needs.

Quiz 21: Saving and Capital Formation

Wealth equals:

The saving rate equals saving divided by:

Saving divided by income equals the _______ rate.

Liabilities are:

Assets minus liabilities equal:

Assets are:

Wealth is the same as:

Chris earns $1,500 per week and spends $1,000 per week on living expenses, puts $200 in a savings account, and buys $300 worth of shares in a stock mutual fund. Chris's saving is , and Chris's saving rate is .

Pat earns $1,000 per week and spends $850 per week on living expenses, puts $50 in a savings account, and buys $100 worth of shares in a stock mutual fund. Pat's saving is , and Pat's saving rate is .

Which of the following is a liability of a family?

Current income minus spending on current needs equals:

Which of the following is an asset of a family?

Saving equals: