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2. Question 1 Human 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. All the members of a population who are able and available to work.

3. A population’s or an individual’s abilities and skills (especially those acquired through education and training) that enhance potential income earning and improve productivity are referred to as human capital. Next

4. Try again! Every person’s human capital is different and unique. One person’s human capital may be appropriate for a particular situation or job while another person’s may be better suited for another. Back

5. Try again! The labor force is all the members of a population who are able and available to work. Back

6. Question 2 Financing 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

7. Try again! There are many ways to finance your postsecondary education and many free resources available to help you plan your strategy. Back

8. Correct! Yes! Scholarships, grants, student loans, and work study arrangements are among the most common ways to finance an education. Next

9. Try again! While some financing options and tuition rates are more expensive than others, many options are available for students to consider so it is important to do your research and find the solution that best fits your budget and career goals. Back

10. Question 3 The first step in successfully creating and using a budget is: Developing the budget plan. A Determining income. B Identifying expenses and tracking spending. C

11. Try again! There are a few tasks you should complete before you begin to develop a budget. Back

12. Correct! Listing all of your income sources is the first step to developing a budget. You need to know how much money you have in order to make a realistic budget plan. Once you develop and implement a budget, monitor its usefulness and adjust it as needed. Next

13. Try again! Yes, one of the tasks you need to complete before you develop a budget is to identify your expenses. But there is something else you must do first. Back

14. Question 4 In general, an inverse relationship exists between: Education and earnings. A Education and unemployment. B Human capital and income. C

15. Try again! In general, the more education a person has, the greater his or her earning ability. Back

16. Correct! In general, the greater a person’s education, the higher the earning potential. Improving your human capital through education and training can improve your future earning potential and help you meet your financial goals. Next

17. Try again! You can invest in your human capital through education and training. The knowledge and skills that you gain through such an investment generally increase your earning power and lower your chance of becoming unemployed. Back

18. Question 5 The 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

19. Correct! Compound interest is calculated on the principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as “interest on interest.” It will make a deposit grow at a faster rate than simple interest, which is calculated only on the principal amount. Next

20. Try again! Simple interest is calculated and paid only on the principal amount of the deposit or loan. Back

21. Try again! Variable interest is an interest rate that changes up or down for a loan or deposit account according to the current cost of money. Back

22. Question 6 Increasing 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

23. Try again! Yes! Going to school, getting additional training, or gaining on-the-job experience are considered steps to increasing your human capital, but there’s more to it. Back

24. Try again! Yes! Increasing your human capital can increase your earning potential and decrease your unemployment risk, but there’s more to it. Back

25. Correct! Some of the ways to increase your human capital include going to school, getting additional training, or gaining on-the-job experience. These strategies can increase your human capital, which in turn may increase your earning potential and decrease your unemployment risk. Next

26. Question 7 Planning 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

27. Correct! Identifying your interests and goals makes it easier to focus your research on the best options for acquiring the education needed to reach your career goals. Once you know what institutions offer the degree or diploma program you want, you can plan your strategies for financing. Next

28. Try again! There is a tremendous amount of free, easily accessible information on courses of study and tuition costs for most education institutions online. Identifying your interests and setting some goals are ways to help keep you on track as you plan your postsecondary education. Back

29. Try again! Although student loans might be relatively easy to acquire, having debt from student loans can affect your future purchasing power. Consider your money values and your comfort level with taking on debt before you even start your career. A rule of thumb for student loans is that you should not borrow more money for all the years of your postsecondary education than you expect to make in your first year of employment. Planning for your postsecondary education can help you avoid the pitfall of eventually carrying a large amount of student debt. Back

30. Question 8 Who among the following would be counted as unemployed? A 20-year-old full-time college student A 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 work C

31. Try again! A 20-year-old full-time college student who chooses not to work while in school is out of the labor force and is not considered unemployed. Retirees and unpaid homemakers are other examples of people who are out of the labor force. However, if a full- time student is older than 16 and has a job or is actively looking for work then that student is counted as part of the labor force because the work situation trumps student status. Back

32. Try again! People who are working part time but would prefer full-time work are not counted as unemployed. Although they are working fewer hours than they would like, they are still working. Back

33. Correct! The Bureau of Labor Statistics’ official definition of someone who is unemployed is a person who does not have a job but is currently available and actively searching for work. Next

34. Question 9 What 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

35. Try again! While the Rule of 72 estimates the number of years for the principal to double, you do not calculate it by subtracting the rate of return (interest rate) from 72. Back

36. Try again! The Rule of 72 estimates the number of years for a principal amount (not the rate of return) to double. Dividing 72 by the length of time the principal amount is held on deposit will calculate the interest rate required to double the principal amount in that time period. Back

37. Correct! The Rule of 72 estimates the number of years it will take for a principal deposit to double. You calculated it by dividing 72 by the rate of return (interest rate). For example, to calculate how long it would take for a $5,000 principal deposit earning 9% interest to grow to $10,000, you would divide 72 by the interest rate. With the 9% interest rate, then, it would take eight years to double the original investment. Next

38. Question 10 For 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

39. Try again! The less frequently the interest compounds, the less money you earn. Back

40. Try again! The frequency of compounding has a significant effect on the total amount of money earned because with compound interest, you also earn interest on interest. Back

41. Correct! The more frequent the compounding is, the better the return on your savings because the money that you earn in interest gets added to the principal and is used to calculate the interest being paid. Next

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