NEDP Financial Literacy 2

Question 1

What is the purpose of an emergency fund?

Accepted Answer

To cover unexpected expenses without going into debt

Answer

An emergency fund provides a financial cushion for unplanned expenses like medical bills or job loss without borrowing.

Question 2

A credit card has an APR of 24%. If you carry a $500 balance for one month, approximately how much interest will you owe?

Accepted Answer

$10.00

Answer

Monthly interest rate = 24% ÷ 12 = 2%. Interest = $500 × 0.02 = $10.00.

Question 3

Which of the following best describes 'net income'?

Accepted Answer

Take-home pay after taxes and deductions are subtracted

Answer

Net income is gross pay minus taxes, Social Security, and other deductions — the amount you actually receive.

Question 4

What does FDIC insurance protect?

Accepted Answer

Bank deposits up to $250,000 per depositor per bank

Answer

The Federal Deposit Insurance Corporation (FDIC) insures eligible bank deposits up to $250,000 per depositor per institution.

Question 5

Which of the following is a fixed expense in a monthly budget?

Accepted Answer

Monthly rent payment

Answer

Fixed expenses stay the same every month, like rent or a car loan payment. Variable expenses change month to month.

NEDP - National External Diploma Program Practice Test