Financial Literacy Exam Flashcards

Financial Literacy Concepts

• Opportunity Cost: The next best alternative not chosen in decision-making.
• Human Resources: Refers to the physical, intellectual, and creative talents of individuals.
• Natural Resources: Resources gifted by nature such as water, forests, natural gas, oil, and climate conditions.
• Capital Resources: Goods utilized to produce other goods and services including tools, factories, and office buildings.
• Capital: Not just money, but items or assets that produce something else.

Importance of Education

• Reasons to Complete High School: Higher potential income, increased job opportunities, access to degrees, and pride for family.
• Consequences of Dropping Out: Lack of education leading to lower income, fewer job prospects, and inability to attend college.

Financial Management

• Saving Money: Critical to avoid debt and maintain financial stability.
• Decision-Making: Important process providing a structured method to evaluate preferences and choices.

Job Application Process

• Steps: Involves looking for job openings, writing application letters and resumes, completing applications, interviewing, and sending thank-you letters.

Entrepreneur Characteristics

• Traits of successful entrepreneurs include owning their business, being hardworking, risk-taking, independent, and confident.

Employment Elements

• Working for Others: Success is reliant on team efforts, salaries are limited within predetermined ranges, and responsibilities are defined by an employee handbook.
• Working for Yourself: Benefits include setting your own hours, rules, and pay.

Payroll Deductions

• Mandatory Deductions: State income tax, federal income tax, and social security tax are required from paychecks.

Income Types

• Human Capital: Intangible assets individuals bring to work, such as knowledge, skills, talent, and health.
• Income: Money received in exchange for work or property usage.
• Tips: Additional money given for good service.
• Direct Costs: Expenses like tuition and books incurred by students.
• Indirect Costs: Potential income lost while attending school.

Earnings Terminology

• Annual Income: Total money earned by an employee in a year.
• Commission: Earnings based on a percentage of total sales.

Educational Impact on Income

• Professional Degree: Level of education that typically results in the highest income, examples include lawyers or medical doctors.

Tax Types

• Federal Income Tax: Funds services provided by the federal government like defense and human services.
• State Income Tax: Supports state services like roads and public safety.
• Local Income Tax: Funds local government services like schools and emergency services.
• FICA Taxes: Include Social Security tax for old-age benefits and Medicare tax for hospital insurance for the elderly.

Pay Frequency

• Bi-weekly: 26 pay periods per year.
• Weekly: 52 pay periods per year.
• Monthly: 12 pay periods per year.
• Semi-monthly: 24 pay periods per year.
• Semiannually: 2 pay periods per year.
• Bimonthly: 6 pay periods per year.

Payroll Concepts

• Gross Pay: Total earnings before deductions.
• Net Pay: Amount remaining after all deductions have been applied.
• Life Insurance: Benefit payable to a designated beneficiary in the event of an employee's death.

Test your knowledge on financial literacy concepts with these flashcards. Understand critical terms such as opportunity cost and human resources. Perfect for students preparing for exams in financial education.