International Baccalaureate (IB) Practice Exam

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Prepare for the International Baccalaureate Exam with comprehensive quizzes including multiple choice questions and detailed explanations to boost your confidence. Hone your skills with our expertly crafted materials!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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Why is interest earned not a significant factor for an emergency fund?

It isn't worthwhile to bank
Interest rates are always low
The emergency fund is not meant to grow wealth
Emergency funds must be liquid

The correct answer is: The emergency fund is not meant to grow wealth

The interest earned on an emergency fund is not a significant factor because the primary purpose of an emergency fund is to provide quick access to cash in times of need, rather than to grow wealth or generate significant returns. An emergency fund is specifically designed to cover unexpected expenses, such as medical bills or car repairs, where immediate liquidity is crucial. Thus, it is more important for the fund to be readily accessible without risk rather than to focus on accumulating high interest. While the other options touch on aspects related to interest and liquidity, they do not capture the core purpose of an emergency fund, which is to ensure financial stability during unforeseen circumstances. While interest rates may be low and liquidity is a factor, the essential goal remains centered around immediate access to funds rather than investment growth.