70% of Americans Can’t Answer These Three Questions Correctly

May 12, 2014

IF this is true, it’s very sad. According to Business Insider, 70% of Americans cannot answer all three of these questions correctly (not sure how they came up with that number, but we’ll go with it).

1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow?

A) more than $102
B) exactly $102
C) less than $102
D) do not know; refuse to answer

2. Imagine that the interest rate on your savings account is 1 percent per year and inflation is 2 percent per year. After one year, would you be able to buy

A) more than
B) exactly the same as
C) less than today with the money in this account
D) do not know; refuse to answer

3. Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

A) true
B) false
C) do not know; refuse to answer

I would hope all AFM readers could get these questions correct. I’m going to ask my kids when they get home from school. I suggest you do the same.

7 responses to 70% of Americans Can’t Answer These Three Questions Correctly

  1. Which is why people fall victim to Pamela Yellen.

  2. #3 cannot be answered incorrectly.

  3. My wife got all three correct, and she is a self-proclaimed financial illiterate.

    BTW: question #3 can be answered incorrectly, by either choosing wrong answer A, or wrong answer C. They key word in the question is “usually”.

  4. No, BG, because the question starts with “Do you think….”

    Whatever YOU think IS the correct answer to a question that starts with “Do you think….”

  5. “Do I think” Jack is wrong? Yes.

  6. D,D, and C – right?

  7. I think… BG doesn’t think!