Question

multiple choice

1. which of these costs would be the most difficult to adjust if you were looking to reduce your expenses?

a. dining out at local restaurants
b. loan payment on a new car
c. expenses for new clothes
d. postponing a purchase for a big - screen tv

1. you earn a salary of $40,000 per year and decide to save 20% of your gross pay. you set a goal of creating a $16,000 emergency fund. how long will it take for you to achieve your goal?

a. 6 months
b. 1 year
c. 2 years
d. 3 years

1. if you are trying to substantially reduce the amount you spend on food, you sh

a. cooking your own food at home for as many meals as possible
b. dining at restaurants more often so you dont waste water doing dish
c. eating more snacks on the go and way fewer meals at home
d. drinking more coffee and soda so you are not as hungry for food

Explanation:

Question 1

To determine the most difficult expense to adjust, we analyze each option:

• Option a (Dining out) and c (New clothes) are discretionary and can be reduced easily.
• Option d (Postponing a TV purchase) is also discretionary.
• Option b (Loan payment on a new car) is a fixed, mandatory expense (a liability with a legal obligation), making it the hardest to adjust as it involves a contractual commitment with penalties for non - payment.

Step 1: Calculate annual savings

First, find 20% of the $40,000 salary. The formula for calculating a percentage of a number is $Savings_{annual}=Salary\times Savings\ rate$. So, $Savings_{annual}=40000\times0.2 = 8000$ dollars per year.

Step 2: Calculate time to reach $16,000

We know the total amount needed is $16,000 and the annual savings is $8,000. The formula for time is $Time=\frac{Total\ amount\ needed}{Annual\ savings}$. So, $Time = \frac{16000}{8000}=2$ years.

To reduce food spending:

• Option a (Cooking at home) is cost - effective as home - cooked meals are generally cheaper than eating out or buying snacks/expensive beverages.
• Option b (Dining at restaurants more) increases food costs.
• Option c (Eating more snacks on the go) often leads to higher spending on convenience - priced snacks.
• Option d (Drinking more coffee/soda) doesn't reduce food spending and may add to beverage costs. So, cooking at home is the best way.

Answer:

b. Loan payment on a new car

Question 2