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

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

Low inflation results in:

The decimalisation of British currency occurred in the:

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

Which of the following is exempt from value added tax?

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

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

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

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

Poor financial choices can lead to:

Over time, the value of money:

The UK government's inflation target is:

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

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

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?

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

Japan's currency is:

Weak currencies can mean:

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

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

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?

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:

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:

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?

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?

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?

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:

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?

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:

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?

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?

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?

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:

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?

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?