question

Standard of Living is defined as the necessities, comforts, and luxuries desired by an individual or group.

answer

True

question

Your average propensity to consume is the percentage of each dollar of income, on the average, that is spent for current needs rather than savings.

answer

True

question

A good financial plan completed when one is in there 30s will typically last a lifetime.

answer

False

question

Financial planning can improve your standard of living.

answer

True

question

Financial planning is a continuing, life-long process.

answer

True

question

Current consumption is inversely related to saving for the future.

answer

True

question

About 20% of Americans say retirement planning is their most pressing financial concern.

answer

False

question

The most effective way to achieve financials is through financial planning.

answer

True

question

Defining financial goals is an important first step in personal financial planning process.

answer

True

question

Two persons with equal average propensities to consume will not necessarily have equal standards of living because of differences in income.

answer

True

question

The need for financial planning declines as your income increases.

answer

False

question

Current consumption effects future consumption.

answer

True

question

A person who has $2,000 monthly income and spends $1,800 has an average propensity to consume of 90%.

answer

True

question

A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.

answer

False

question

Most Families find it difficult to discuss money matters.

answer

True

question

Average propensity to consume refers to how much of your money you plan to save in your financial plan.

answer

False

question

Tangible assets are earning assets that are held for the returns they promise.

answer

False

question

Financial assets are paper assets, such as savings account and securities.

answer

True

question

Mutual funds are examples of financial assets.

answer

True

question

Spending for your childs private-school education is an example of deferred consumption.

answer

False

question

Wealth can be defined as the total value of all the things you own.

answer

True

question

Wealth is the key consideration is establishing financial goals as it is the measure of value in financial transactions.

answer

False

question

Financial assests include investments such as stocks and bonds.

answer

True

question

Utility refers to the amount of satisfaction a person gets from buying certain items.

answer

True

question

A successful financial plan will be based on a person's goals.

answer

True

question

Your personal value system will shape your attitude toward money and wealth accumulation.

answer

True

question

It is possible to draw up one financial plan that will work for most people.

answer

False

question

Financial planning is a dynamic process.

answer

True

question

The first step in the financial planning process is to develope financial plans and strategies to achieve goals.

answer

False

question

Money can be an emotional factor that may affect a person's financial plans.

answer

True

question

Long-term goals are typically for periods of over 6 years.

answer

True

question

Saving $3,000 for a large, flat screen TV within the next 3 years is an example of a short-term goal.

answer

False

question

Short-term goals include things one wants to achieve in a year or less.

answer

True

question

Debt is another word for liability.

answer

True

question

Insurance provides a way to make money on unfortunate events.

answer

False

question

Employee benefits can typically be transferred to a new job when one changes employers.

answer

False

question

Your house is an example of tangible asset.

answer

True

question

For most people working in large firms, employee benefits are an important part of their financial planning.

answer

True

question

A personal computer can be very useful in assisting one with their financial planning.

answer

True

question

A financial goal that would be important in all stages of the life cycle is creating and maintianing an emergency fund.

answer

True

question

Government controls consumers and businesses by regulation and taxation.

answer

True

question

Businesses are a key part of the circular flow of income that sustains our free enterprise system.

answer

true

question

Consumer choices ultimately determine the kinds of goods and services businesses will provide.

answer

True

question

GDP refers to the total earnings of American workers during a year.

answer

False.

question

Consumers affect businesses by their choice of goods and services to purchase and by choosing whether they will spend or save their incomes.

answer

True

question

How long you invest is not nearly as important as the rate of interest you can earn on your investments.

answer

False

question

The longer you wait to begin retirement planning, the less you will likely have in your retirement fund.

answer

True

question

Inflation means price levels have declined.

answer

False

question

The consumer price index (CPI) is the amount of goods and services each dollar buys at a given point in time.

answer

False

question

Typically, higher levels of education are rewarded with higher income over the lifetime.

answer

True

question

Cities with higher costs of living also experience higher rates of inflation.

answer

False

question

Accumulating wealth for later years is called estate planning.

answer

False

question

High interest rates after the financial crisis of 2008-2009 reflect the federals reserve's efforts to tighten or reduce, the money supply.

answer

False

question

The government employs monetary and fiscal policy to ensure the economy always remains stable.

answer

False

question

A strong economy leads to higher levels of employment.

answer

True

question

An economic contraction usually begins after a trough is reached.

answer

False

question

Personal financial management is important because it?

answer

Makes personal financial goals easier to achieve.

question

financial planning can help us to

answer

spend wisely

question

the last step in the financial planning process is to

answer

redefine goals and revise plans and strategies as personal circumstances change

question

the term most closely associated with quality of life is

answer

standard of living

question

a primary determinant of your quality of life

answer

wealth

question

the average propensity to consume refers to the

answer

percentage of income spent for current consumption

question

becky graduated witha masters degree in personal financial planning. after working 2 years in a small FP firm becky earns 60,000 annually and saves 10,000 a year what is her average propensity to consume

answer

83.3

question

when setting financial goals one should typically start by setting

answer

long term goals

question

which of the following goals is stated in a way that is most useful for developing a financial plan

answer

make a 12,000 down payment on an automobile in a 4 years

question

generally as income rises the average propensity to consume

answer

decreases

question

the amount of money we set aside for future consumption will be determined by

answer

how much we currently earn and spend

question

money is

answer

a medium of exchange

question

family financial goals should be

answer

realistically attainable

question

utility refers to

answer

the satisfaction you receive from purchasing something

question

the main reason to do personal financial planning is to

answer

maximize overall utility

question

the most important financial planning for young people concerns

answer

career

question

martha is 80 and has a very high net worth her most important financial concern is probably her

answer

estate

question

sam and lele are in their late 20s with 3 young children. thier most important financial financial planning concerns would probably include all of the following except

answer

retirement and estate planning

question

employee benefints may include

answer

retirement plans health insurance employee discounts tuition reiembursments

question

tax planning is most commonly done to

answer

minimize taxes

question

investements are distinguished from savings on the basis of

answer

level of risk and expected return

question

estate planning involves

answer

considering how your wealth can be most effectively passed on to heirs

question

while your are still working you should be managing you finances for retirement planning. which of the following is not a goal of your retirement planning;

answer

effectively passing wealth on the heirs

question

the three key groups in the economic enviornment are

answer

government consumers business

question

government places controls on the personal financial enviornment by use of

answer

taxation and regulations

question

businesses provide

answer

goods and services

question

the individual consumer is

answer

the party around which the personal financial environment is centered

question

the four stages of an economic cycle would not include

answer

stagnation

question

inflation refers to

answer

rising prices

question

as the rate of inflation increases

answer

retirement plans have more difficulty meeting their goals

question

the amount of goods and services each dollar buys at a given point in time is

answer

purchasing power

question

this is a measure of inflation based on changes in the cost of a market basket of consumer goods and services

answer

consumer price index CPI

question

your income is directly related to your

answer

geofraphic location age education maritial status

question

typically people with the lowest income tend to be

answer

very young or very old

question

_______ tends to increase and then decrease over the life cycle

answer

debt and income

question

financial goals should be

answer

specific attainable prioritize

question

ideally retirement planning should begin

answer

?

question

apersonal computer could not be used to

answer

make financial decisions

question

_______ is the financial goal most people think is least important

answer

leaving a large estate

question

professional financial planners

answer

help by establishing personal financial goals

question

a ______ is a designation earned by financial planners after completing required courses of study

answer

CFP

question

Low interest rates after 2008 and 2009 reflect the federal reserves desire to

answer

stimulate ecomonic growth reduce unemployment

question

what policies can the government utilize to help stabize the economy

answer

monetary policy fiscal policy

question

a strong economy leads to

answer

higher employment

question

an economy will usually go into a ______ after a peak

answer

contraction

question

the financial crisis of 2008 and 2009 is best characterized as a _______

answer

recession

question

the best way to achieve your financial objectives is to

answer

develop a sound financial plan

question

financial planning _______ guarantee a sound financial future

answer

does not

question

_____________ would be an example of current consumption

answer

putting money into a retirement fund

question

_____________ would be considered a necessity of life

answer

neither

question

the average _______household has higher income

answer

self employed

question

the average______ household has higher levels of assets

answer

self emplyed

question

the average americans _______ is higher

answer

home mortgage

question

________ the majority of americans believe that money cannot buy happiness

answer

more than

question

__________ would be considered a financial asset

answer

disney stock

question

_______would be considered to be real property

answer

your house

question

________ is the common denominator for gauging all financial transactions

answer

money

question

_______ is the amount of goods and services each dollar buys at a given pont in time

answer

neither

question

______ refers to the satisfaction you receive from buying certain items

answer

utility

question

is is ______ to find a financial plan that will work for everyone

answer

impossible

question

most families find is _________ to discuss money matters

answer

difficult

question

i want to accumulate a comforatble retirement fund _________ be a specific financial goal

answer

would not

question

income tends to ______ between the ages of 55 and 75

answer

decrease

question

your level of formal education is a ________ factor that has a considerable effect of your income

answer

controllable

question

for most people, debts ________ during their lifetimes

answer

increase and then decrease

question

most people graduate from college with ______ debt

answer

some

question

the two principal contraints which government places upon us are regulation and _______

answer

taxes

question

the consumer price index is a measure of

answer

inflation

question

two key indicators of economic activity in the US are production levels and _______

answer

employment levels

question

a decrease in the gross domestic product would indicate that or economy is is ______

answer

stagnating

question

______ planning is introduced early in the life cycle

answer

liability and insurance

question

during the expansion phase of the business cycle the unemployment rate will

answer

decrease

question

as the rate of inflation increases the purchasing power of your dollars will

answer

decrease

question

the primary determinant of your standard of living is your

answer

wealth

question

your ______ will usually have no effects on your earning capacity

answer

none of the above

question

after reaching adulthood your financial goals will

answer

continue to change

question

for most people employee benefits are _______ importance

answer

major

question

typically your salary will be ____ if you live in a large metropolitan area rather than a small town or rural area

answer

higher

question

___________ is the total of all goods and services produced by workers located within the country

answer

GDP

question

THE AVERAGE INCOME OF HOUSEHOLD HEADS INCREASE UNTIL AGE ______ then income stats decreasing

answer

55

question

the federal reserve action after the financial crisis of 2008 and 2009 resulted in ______

answer

reduced interest rate

question

the government employs monetary and fiscal policy to help foster a ______

answer

neither

question

a stronger economy leads to _______

answer

higher employment

question

following an economic trough the economy will often enter a period of _________

answer

expansion

question

the financial crisis of 2008 and 2009 is best characterized as a ______

answer

recession

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