Test Your KnowledgeLesson 4: Back to School

Click on the letter of your choice to test your

understanding.

A B C

Question 1Human capital is defined as:

• The knowledge, talent, and skills that people possess.A

• The common knowledge, talent, and skills that all people in the workforce need to have to be successful.

B• All the members of a

population who are able and available to work.C

Question 2Financing options for postsecondary education:

• Are limited for many students across the country.A

• Include scholarships, grants, student loans, and work study.B

• Are very expensive and outweigh the value of the education attained.

C

Question 3The first step in successfully creating and using a budget is:

• Developing the budget plan.A

• Determining income.B• Identifying expenses and

tracking spending.C

Question 4In general, an inverse relationship exists between:

• Education and earnings.A• Education and unemployment.B• Human capital and income. C

Question 5The type of interest earned on a deposit account that is calculated on both the principal deposit amount and on any previously earned interest is called:

• Compound interest.A• Simple interest.B• Variable interest.C

Question 6Increasing your human capital:

• Can be done by going to school, getting additional training, or gaining on-the-job experience.A

• Can increase your earning potential and decrease your unemployment risk.B

• Both A and B.C

Question 7Planning for postsecondary education:

• includes identifying interests and goals, researching options, determining financing strategies, and gathering necessary documents.

A• is very difficult because

information on courses of study and tuition costs is not readily available.B

• is not necessary because student loans are easy to get and cover all costs.C

Question 8Who among the following would be counted as unemployed?

• A 20-year-old full-time college studentA

• A person who would like to have a full-time job but is working part time due to economic reasons B

• A factory worker who was recently laid off and is seeking workC

Question 9What is the Rule of 72, and how do you calculate it?

• An estimate for the number of years it will take for an investment to double, calculated by subtracting the rate of return (interest rate) from 72.A

• An estimate for the number of years it will take for the rate of return to double, calculated by dividing 72 by the length of time the principal amount is held on deposit.

B• An estimate for the number of years

it will take for the principal deposit to double, calculated by dividing 72 by the rate of return.C

Question 10For a savings account, if all other factors are the same or equal (such as the principal amount, term, and so on), which of the following would be true?

• The less frequently the interest compounds, the more money you earn.A

• The frequency of compounding has no effect on the total amount of money you would earn.B

• The more frequently the interest compounds, the more money you would earn.C

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