Carina Storm
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Level 2 PERSONAL FINANCE (CeFF) Quiz on Specimen Paper A - Unit 1 – Finance, the Individual and Society (FIS), created by Carina Storm on 13/10/2018.

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Carina Storm
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Specimen Paper A - Unit 1 – Finance, the Individual and Society (FIS)

Question 1 of 35

1

The most popular country for British people wanting to emigrate to is:

Select one of the following:

  • Australia

  • Germany

  • the Netherlands

  • the Philippines

Explanation

Question 2 of 35

1

Low inflation results in:

Select one of the following:

  • greater levels of savings

  • greater unemployment

  • low interest rates

  • more expensive houses

Explanation

Question 3 of 35

1

The decimalisation of British currency occurred in the:

Select one of the following:

  • 1950s

  • 1960s

  • 1970s

  • 1980s

Explanation

Question 4 of 35

1

The main source of a full-time teacher's income is most likely to be:

Select one of the following:

  • pension income

  • salary

  • savings income

  • state benefits

Explanation

Question 5 of 35

1

Which of the following is exempt from value added tax?

Select one of the following:

  • Adults' clothing

  • Biscuits

  • Furniture

  • Postage stamps

Explanation

Question 6 of 35

1

The system under which employees pay tax is known as Pay As You:

Select one of the following:

  • Earn

  • Go

  • Save

  • Work

Explanation

Question 7 of 35

1

A decrease in income tax is likely to have which of the following effects?

Select one of the following:

  • People are likely to borrow more

  • People are likely to make spending cuts

  • People are likely to save more

  • Work is likely to become less attractive

Explanation

Question 8 of 35

1

Which of the following statements relating to the third sector is correct?

Select one of the following:

  • It exists to make a profit

  • It has no economic impact

  • It includes charities and social enterprises

  • Social enterprises are not permitted to make a profit

Explanation

Question 9 of 35

1

A term used by the regulator to describe good financial management is financial:

Select one of the following:

  • capability

  • capacity

  • competence

  • know-how

Explanation

Question 10 of 35

1

Poor financial choices can lead to:

Select one of the following:

  • falling prices

  • low levels of personal debt

  • overspending

  • people saving more money

Explanation

Question 11 of 35

1

Over time, the value of money:

Select one of the following:

  • accumulates

  • appreciates

  • depreciates

  • stabilises

Explanation

Question 12 of 35

1

The UK government's inflation target is:

Select one of the following:

  • 1%

  • 2%

  • 3%

  • 4%

Explanation

Question 13 of 35

1

The amount of interest paid by a savings account before taking inflation into account is known as:

Select one of the following:

  • gross interest

  • net interest

  • nominal interest

  • simple interest

Explanation

Question 14 of 35

1

Interest that is calculated only on the principal amount is known as:

Select one of the following:

  • compound interest

  • gross interest

  • net interest

  • simple interest

Explanation

Question 15 of 35

1

If the real interest rate on a savings account is 5% and inflation is running at 3%, what is the nominal rate of return on the account?

Select one of the following:

  • 2%

  • 3%

  • 5%

  • 8%

Explanation

Question 16 of 35

1

The term for people moving from one town or city in the UK to another is:

Select one of the following:

  • emigration

  • internal migration

  • immigration

  • urbanisation

Explanation

Question 17 of 35

1

Japan's currency is:

Select one of the following:

  • Dollars

  • Euros

  • Pound Sterling

  • Yen

Explanation

Question 18 of 35

1

Weak currencies can mean:

Select one of the following:

  • higher interest rates

  • higher rates of unemployment

  • lower export levels

  • more tourists

Explanation

Question 19 of 35

1

Which of the following groups of people is likely to have the most irregular income pattern?

Select one of the following:

  • Children

  • The employed

  • The retired

  • The self-employed

Explanation

Question 20 of 35

1

Which of the following insurance products protects against damage to a family's personal belongings?

Select one of the following:

  • Buildings

  • Car

  • Contents

  • Health

Explanation

Question 21 of 35

1

Case Study 1
Chloe has been making hand-made cards using a variety of crafting methods for many years now. She has sold them to friends and family, donating any proceeds to a local mental health charity. However, having taken voluntary redundancy from her administrative job in a large financial services firm, she now plans to turn her hobby into a small business.
Chloe has just come to an agreement with her local library to run a craft stall in its foyer five mornings a week. She will give the library 15% of her profits instead of paying rent for the stall. Unfortunately, there are no ‘chip and PIN’ facilities at the library, but there is a local branch of Chloe's bank within walking distance where she can deposit her daily takings. Chloe’s only savings are held with this bank and amount to £7,500.

Question:
Given the location of her stall and the facilities available, what choice of payment methods is Chloe most likely to want to offer her customers?

Select one or more of the following:

  • Cash or cheque

  • Cash or credit card

  • Cash or debit card

  • Debit card or cheque

Explanation

Question 22 of 35

1

Case Study 1
Chloe has been making hand-made cards using a variety of crafting methods for many years now. She has sold them to friends and family, donating any proceeds to a local mental health charity. However, having taken voluntary redundancy from her administrative job in a large financial services firm, she now plans to turn her hobby into a small business.
Chloe has just come to an agreement with her local library to run a craft stall in its foyer five mornings a week. She will give the library 15% of her profits instead of paying rent for the stall. Unfortunately, there are no ‘chip and PIN’ facilities at the library, but there is a local branch of Chloe's bank within walking distance where she can deposit her daily takings. Chloe’s only savings are held with this bank and amount to £7,500.

Question:
Once her stall is up and running, Chloe's main source of income will be from:

Select one or more of the following:

  • Employment

  • Savings

  • Self-employment

  • The State

Explanation

Question 23 of 35

1

Case Study 1
Chloe has been making hand-made cards using a variety of crafting methods for many years now. She has sold them to friends and family, donating any proceeds to a local mental health charity. However, having taken voluntary redundancy from her administrative job in a large financial services firm, she now plans to turn her hobby into a small business.
Chloe has just come to an agreement with her local library to run a craft stall in its foyer five mornings a week. She will give the library 15% of her profits instead of paying rent for the stall. Unfortunately, there are no ‘chip and PIN’ facilities at the library, but there is a local branch of Chloe's bank within walking distance where she can deposit her daily takings. Chloe’s only savings are held with this bank and amount to £7,500.

Question:
In making her own goods and selling them on her stall, Chloe is contributing to the economy in the roles of both:

Select one or more of the following:

  • distributor and wholesaler

  • producer and consumer

  • producer and distributor

  • wholesaler and consumer

Explanation

Question 24 of 35

1

Case Study 2
Emily and Ed rent a one-bedroomed flat in Swansea. They both work at a distribution centre at the nearby business park, each earning £20,000 a year. They chose the flat because it is within walking distance of the business park, so they can manage without a car. The flat is also in a run-down area so the rent is cheaper than for similar flats elsewhere in the city.
Saving money is a priority for Emily and Ed because they want to buy a home of their own within the next year, preferably a two-bedroomed house with a small garden. Their savings outside their ISA were given a boost by Emily selling a portfolio of shares that she had acquired over the years and on which she had made a profit of just over £15,000. They have now saved up just enough money for a 10% deposit and to pay the legal costs involved.

Question:
At what rate does Ed pay income tax on his earnings?

Select one or more of the following:

  • Additional rate

  • Basic rate

  • Higher rate

  • Starting rate

Explanation

Question 25 of 35

1

Case Study 2
Emily and Ed rent a one-bedroomed flat in Swansea. They both work at a distribution centre at the nearby business park, each earning £20,000 a year. They chose the flat because it is within walking distance of the business park, so they can manage without a car. The flat is also in a run-down area so the rent is cheaper than for similar flats elsewhere in the city.
Saving money is a priority for Emily and Ed because they want to buy a home of their own within the next year, preferably a two-bedroomed house with a small garden. Their savings outside their ISA were given a boost by Emily selling a portfolio of shares that she had acquired over the years and on which she had made a profit of just over £15,000. They have now saved up just enough money for a 10% deposit and to pay the legal costs involved.

Question:
What tax would the profits from Emily's shares be liable to?

Select one or more of the following:

  • Capital gains tax

  • Income tax

  • Inheritance tax

  • Stamp duty

Explanation

Question 26 of 35

1

Case Study 2
Emily and Ed rent a one-bedroomed flat in Swansea. They both work at a distribution centre at the nearby business park, each earning £20,000 a year. They chose the flat because it is within walking distance of the business park, so they can manage without a car. The flat is also in a run-down area so the rent is cheaper than for similar flats elsewhere in the city.
Saving money is a priority for Emily and Ed because they want to buy a home of their own within the next year, preferably a two-bedroomed house with a small garden. Their savings outside their ISA were given a boost by Emily selling a portfolio of shares that she had acquired over the years and on which she had made a profit of just over £15,000. They have now saved up just enough money for a 10% deposit and to pay the legal costs involved.

Question:
An increase in which of the following taxes would cause Emily and Ed's future plans to suffer?

Select one or more of the following:

  • Corporation tax

  • Fuel duty

  • Inheritance tax

  • Stamp duty

Explanation

Question 27 of 35

1

Case Study 3
Craig is a builder by trade and drives around the UK in order to get enough work to bring in sufficient money to meet his family’s needs. Last year, he was unfortunate enough to witness his tools being stolen from his van and the case is now being brought to court.
His partner, Nicky, stays at home and looks after their two pre-school children. She has heard that she can get some free childcare for the children. The family will be better off financially if she can find some part-time work to do while the children are being looked after. Nicky is in charge of the family’s budget and works hard to make their money go as far as possible.
Neither Craig nor Nicky like to get into debt although Nicky has a credit card which she uses only if absolutely has to. If the credit card is used, Craig usually works more hours the following month so that it can be paid off in full. Nicky tries to save a little each month for their children’s future.

Question:
By virtue of Craig being a witness to a crime, he now has a legal responsibility to:

Select one or more of the following:

  • be a member of the jury when the case comes to court

  • be protected from crime

  • ensure the defendant has a fair trial

  • tell the truth in court

Explanation

Question 28 of 35

1

Case Study 3
Craig is a builder by trade and drives around the UK in order to get enough work to bring in sufficient money to meet his family’s needs. Last year, he was unfortunate enough to witness his tools being stolen from his van and the case is now being brought to court.
His partner, Nicky, stays at home and looks after their two pre-school children. She has heard that she can get some free childcare for the children. The family will be better off financially if she can find some part-time work to do while the children are being looked after. Nicky is in charge of the family’s budget and works hard to make their money go as far as possible.
Neither Craig nor Nicky like to get into debt although Nicky has a credit card which she uses only if absolutely has to. If the credit card is used, Craig usually works more hours the following month so that it can be paid off in full. Nicky tries to save a little each month for their children’s future.

Question:
Changes in which of the following government policies could have an impact on Nicky's plans for her immediate future?

Select one or more of the following:

  • Availability of free childcare for pre-schoolers

  • Capping of long-term care costs for the elderly

  • Introduction of Universal Credit

  • Raising of tuition fees

Explanation

Question 29 of 35

1

Case Study 3
Craig is a builder by trade and drives around the UK in order to get enough work to bring in sufficient money to meet his family’s needs. Last year, he was unfortunate enough to witness his tools being stolen from his van and the case is now being brought to court.
His partner, Nicky, stays at home and looks after their two pre-school children. She has heard that she can get some free childcare for the children. The family will be better off financially if she can find some part-time work to do while the children are being looked after. Nicky is in charge of the family’s budget and works hard to make their money go as far as possible.
Neither Craig nor Nicky like to get into debt although Nicky has a credit card which she uses only if absolutely has to. If the credit card is used, Craig usually works more hours the following month so that it can be paid off in full. Nicky tries to save a little each month for their children’s future.

Question:
Which of the following attitudes reflects Craig and Nicky's view of money? People should:

Select one or more of the following:

  • borrow money whenever they need to

  • live within their means

  • spend for today, worry tomorrow

  • use their credit card whenever possible

Explanation

Question 30 of 35

1

Case Study 4
Joshua currently earns a good salary, but prior to his current job he was unemployed for three years. During that time he accumulated lots of debt. Once Joshua started his new job, he took out a fixed-rate loan at a rate of 8.49%, repayable over ten years, to tackle his debt problem.
Joshua's new job has meant him incurring additional costs, such as new clothes that he bought by taking out a new store card. He also bought an annual season ticket for the train using his credit card.
All of this means that Joshua cannot afford to go on nights out with his new colleagues. He feels that he is missing out on the opportunity to get to know them outside of work.

Question:
Which of the following is an example of a social impact of Joshua's poor financial decision-making?

Select one or more of the following:

  • Being unable to meet more than the minimum repayments on his credit and store card

  • Being unable to spend time with his new colleagues outside of work

  • Having less disposable income

  • Needing to have an overdraft

Explanation

Question 31 of 35

1

Case Study 4
Joshua currently earns a good salary, but prior to his current job he was unemployed for three years. During that time he accumulated lots of debt. Once Joshua started his new job, he took out a fixed-rate loan at a rate of 8.49%, repayable over ten years, to tackle his debt problem.
Joshua's new job has meant him incurring additional costs, such as new clothes that he bought by taking out a new store card. He also bought an annual season ticket for the train using his credit card.
All of this means that Joshua cannot afford to go on nights out with his new colleagues. He feels that he is missing out on the opportunity to get to know them outside of work.

Question:
Which of Joshua's borrowing products would be unaffected by a rise in interest rates?

Select one or more of the following:

  • Credit card

  • Loan

  • Overdraft

  • Store card

Explanation

Question 32 of 35

1

Case Study 4
Joshua currently earns a good salary, but prior to his current job he was unemployed for three years. During that time he accumulated lots of debt. Once Joshua started his new job, he took out a fixed-rate loan at a rate of 8.49%, repayable over ten years, to tackle his debt problem.
Joshua's new job has meant him incurring additional costs, such as new clothes that he bought by taking out a new store card. He also bought an annual season ticket for the train using his credit card.
All of this means that Joshua cannot afford to go on nights out with his new colleagues. He feels that he is missing out on the opportunity to get to know them outside of work.

Question:
Given his financial circumstances, which of the following is likely to be Joshua's main concern in the event of a further recession taking place?

Select one or more of the following:

  • Increased corporate taxation

  • Inflation

  • Reduced government spending

  • Unemployment

Explanation

Question 33 of 35

1

Case Study 5
Karen and Wayne are both retired. They are both dog lovers and, in addition to having two rescue dogs of their own, they help to raise funds for their local dogs' home by recycling old postage stamps. They collect stamps in the local school, pharmacy and village shop and send them off in return for cash, which they donate to the dogs' home.
Karen and Wayne have always lived within their means. They have four financial priorities:
 paying their rent;
 paying their heating bills;
 buying food;
 saving for a cruise.
They intend to cruise around Norway, on a British cruise ship, to celebrate their 40th wedding anniversary in two years’ time.

Question:
In which of the following ways has Karen and Wayne's stamp-collecting enterprise contributed to their local economy? It has:

Select one or more of the following:

  • created local employment

  • improved social justice

  • provided an essential service

  • raised money for a local cause

Explanation

Question 34 of 35

1

Case Study 5
Karen and Wayne are both retired. They are both dog lovers and, in addition to having two rescue dogs of their own, they help to raise funds for their local dogs' home by recycling old postage stamps. They collect stamps in the local school, pharmacy and village shop and send them off in return for cash, which they donate to the dogs' home.
Karen and Wayne have always lived within their means. They have four financial priorities:
 paying their rent;
 paying their heating bills;
 buying food;
 saving for a cruise.
They intend to cruise around Norway, on a British cruise ship, to celebrate their 40th wedding anniversary in two years’ time.

Question:
Out of Karen and Wayne's four financial priorities, which of the following would be classified as a want rather than a need?

Select one or more of the following:

  • Cruise

  • Food

  • Heating

  • Rent

Explanation

Question 35 of 35

1

Case Study 5
Karen and Wayne are both retired. They are both dog lovers and, in addition to having two rescue dogs of their own, they help to raise funds for their local dogs' home by recycling old postage stamps. They collect stamps in the local school, pharmacy and village shop and send them off in return for cash, which they donate to the dogs' home.
Karen and Wayne have always lived within their means. They have four financial priorities:
 paying their rent;
 paying their heating bills;
 buying food;
 saving for a cruise.
They intend to cruise around Norway, on a British cruise ship, to celebrate their 40th wedding anniversary in two years’ time.

Question:
What will it mean for Karen and Wayne's cruise if the pound strengthens against the Norwegian krone?

Select one or more of the following:

  • It will cost them less to treat themselves to days out in Norway while they are away

  • It will cost them more to buy snacks in Norway while they are away

  • It will increase the cost of their cruise tickets

  • They will receive fewer krone at the bureau de change for their pound

Explanation

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