Question 1

Brad Johnson has a goal of "saving $50 a month for vacation." Brad's goal lacks:

Accepted Answer

A)  measurable terms.
B)  a realistic perspective.
C)  specific terms.
D)  the type of action to be taken.
E)  a time framE.F) B) and C)
G) A) and E)

Question 2

The study of how wealth is created and distributed is:

Accepted Answer

A)  financial planning.
B)  opportunity cost.
C)  inflation.
D)  economics.
E)  a market economy.F) A) and C)
G) C) and E)

Question 3

Financial planning has specific techniques that will be effective for every individual and household.

Accepted Answer

A) True 
 B)False

Question 4

Increased demand for a product or service will usually result in lower prices for the item.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would increase the risk of a loan?

Accepted Answer

A)  rising consumer prices
B)  a short time to maturity
C)  lower consumer prices
D)  constant interest rates
E)  a good credit ratingF) All of the above
G) C) and E)

Question 6

Lenders benefit more than borrowers in times of high inflation.

Accepted Answer

A) True 
 B)False

Question 7

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Accepted Answer

A) True 
 B)False

Question 8

The uncertainty associated with decision making is referred to as:

Accepted Answer

A)  opportunity cost.
B)  selection of alternatives.
C)  financial goals.
D)  personal values.
E)  risk.F) A) and D)
G) B) and C)

Question 9

Describe the S-M-A-R-T approach to financial planning goal setting.Give an example.

Accepted Answer

The answer of Describe the S-M-A-R-T approach to financial planning...

Question 10

The stages that an individual goes through based on age,financial needs,and family situation is called the:

Accepted Answer

A)  financial planning process.
B)  budgeting procedure.
C)  personal economic cycle.
D)  adult life cycle.
E)  tax planning process.F) C) and E)
G) D) and E)

Question 11

The main responsibility of The Fed is to:

Accepted Answer

A)  maintain an adequate supply of money.
B)  approve spending by Congress.
C)  set federal income tax rates.
D)  determine illegal business activities.
E)  maintain a balanced budget for the federal government.F) A) and E)
G) A) and C)

Question 12

Increased consumer spending will usually cause:

Accepted Answer

A)  lower consumer prices.
B)  reduced employment levels.
C)  lower tax revenues.
D)  lower interest rates.
E)  higher employment levels.F) C) and D)
G) A) and B)

Question 13

You are planning to buy a house in five years.How much do you need to deposit today to have a $10,000 down payment if your investment will make 6%?

Accepted Answer

A)  $6,000
B)  $6,590
C)  $7,470
D)  $9,400
E)  $10,000F) A) and D)
G) None of the above

Question 14

The risk premium you receive as a saver is based in part on:

Accepted Answer

A)  your credit rating.
B)  the amount of money you are borrowing.
C)  the uncertainty associated with getting your money back.
D)  the expected rate of inflation.
E)  C & D abovE.F) A) and D)
G) B) and E)

Question 15

The Fed refers to:

Accepted Answer

A)  government regulation of business.
B)  Congress.
C)  the Federal Reserve System.
D)  the Federal Deposit Insurance Corporation.
E)  spending by the federal government.F) B) and C)
G) C) and D)

Question 16

Melanie Walsh likes to go to the movies once a week.When she is at the movies,she generally gets large popcorn and a drink.Melanie wants to be sure that she sets aside money each week so she can continue going to the movies.What type of goal would this be for Melanie?

Accepted Answer

A)  Consumable-products goal
B)  Durable-products goal
C)  Intangible goal
D)  Intermediate goal
E)  Long term goalF) B) and C)
G) None of the above

Question 17

During __________,even though prices decline spending slows because consumers expect prices to continue to decline.

Accepted Answer

A)  deflation
B)  depreciation
C)  appreciation
D)  economic recovery
E)  inflationF) A) and B)
G) A) and C)

Question 18

Higher inflation usually results in lower interest rates.

Accepted Answer

A) True 
 B)False

Question 19

Attempts to increase income are part of the ____________ component of financial planning.

Accepted Answer

A)  planning
B)  obtaining
C)  saving
D)  sharing
E)  protectingF) A) and D)
G) A) and C)

Question 20

The future value of $1,000 deposited a year for 5 years earning 4 percent would be approximately

Accepted Answer

A)  $5,000
B)  $5,250
C)  $5,400
D)  $6,500
E)  $8,200F) A) and D)
G) A) and E)

Exam 1: Personal Finance Basics and the Time Value of Money

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Correct AnswerverifiedShow Answer

You are planning to buy a house in five years.How much do you need to deposit today to have a $10,000 down payment if your investment will make 6%?

Correct AnswerverifiedShow Answer

The main responsibility of The Fed is to:

Correct AnswerverifiedShow Answer

The stages that an individual goes through based on age,financial needs,and family situation is called the:

Correct AnswerverifiedShow Answer

Describe the S-M-A-R-T approach to financial planning goal setting.Give an example.

Correct AnswerverifiedShow Answer

Financial planning has specific techniques that will be effective for every individual and household.

Correct AnswerverifiedShow Answer

Higher inflation usually results in lower interest rates.

Correct AnswerverifiedShow Answer

The uncertainty associated with decision making is referred to as:

Correct AnswerverifiedShow Answer

Attempts to increase income are part of the ____________ component of financial planning.

Correct AnswerverifiedShow Answer

The study of how wealth is created and distributed is:

Correct AnswerverifiedShow Answer

The future value of $1,000 deposited a year for 5 years earning 4 percent would be approximately

Correct AnswerverifiedShow Answer

Increased consumer spending will usually cause:

Correct AnswerverifiedShow Answer

Which of the following would increase the risk of a loan?

Correct AnswerverifiedShow Answer

The Fed refers to:

Correct AnswerverifiedShow Answer

The risk premium you receive as a saver is based in part on:

Correct AnswerverifiedShow Answer

Increased demand for a product or service will usually result in lower prices for the item.

Correct AnswerverifiedShow Answer

Lenders benefit more than borrowers in times of high inflation.

Correct AnswerverifiedShow Answer

Brad Johnson has a goal of "saving $50 a month for vacation." Brad's goal lacks:

Correct AnswerverifiedShow Answer

During __________,even though prices decline spending slows because consumers expect prices to continue to decline.

Correct AnswerverifiedShow Answer

Melanie Walsh likes to go to the movies once a week.When she is at the movies,she generally gets large popcorn and a drink.Melanie wants to be sure that she sets aside money each week so she can continue going to the movies.What type of goal would this be for Melanie?

Correct AnswerverifiedShow Answer

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