Chapter 7: Saving and Emergency Funds Quiz

1 point(s)

Which type of account typically offers higher interest rates but requires a higher minimum balance and limits on transactions?

Checking Account

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Savings Account

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Money Market Account

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Certificate of Deposit

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1 point(s)

What is the primary purpose of an emergency fund?

To invest in stocks

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To cover unexpected expenses

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To pay for vacations

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To purchase luxury items

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1 point(s)

What is the real interest rate if the nominal interest rate is 5% and the inflation rate is 3%?

2%

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8%

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3%

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5%

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1 point(s)

Inflation increases the purchasing power of money over time.

True

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False

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1 point(s)

Certificates of Deposit (CDs) offer higher interest rates compared to regular savings accounts but come with penalties for early withdrawal.

True

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False

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3 point(s)

Definition

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Used for daily transactions, usually comes with a debit card
Aimed at short-term savings, offers interest on the stored funds
Fixed-term savings account with a guaranteed interest rate

Checking Account

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Savings Account

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Certificate of Deposit (CD)

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3 point(s)

Definition

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Total earnings before any deductions
Earnings after taxes and other deductions
Charges incurred when withdrawals exceed the available balance in an account

Gross Pay

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Net Pay

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Overdraft Fees

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1 point(s)

Arrange these steps in the process of building an emergency fund in the correct order: Assess monthly expenses, Calculate emergency fund target, Create a savings plan, Implement the plan. (put the first step at the top)

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1 point(s)

Rank the following savings goals from short-term to long-term: Emergency fund, Vacation savings, Retirement savings. (put the shortest-term goal at the top)

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1 point(s)

How can understanding the impact of inflation on savings influence your financial planning?

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Chapter 7: Saving and Emergency Funds Quiz