FCS 340 Test 1 Questions with Correct Answers

FCS 340 Test 1 Questions with Correct Answers Higher consumer prices are likely to be accompanied by _______ interest rate. - ANSWER higher What is the definition of economics? - ANSWER Study of how wealth is created and distributed What is the Fed? - ANSWER Federal Reserves What is the main responsibility of the Fed? - ANSWER Regulate national money supply The "obtaining" component of financial planning is defined - ANSWER Foundation of financial planning, resources used for all financial activities What is liquidity refer to? - ANSWER Be able to take financial resources and convert to cash What goals should be considered as a part of the saving component of financial planning? - ANSWER Emergency fund of $1,000 minimum Define financial plan - ANSWER Formalized report that summarizes your current financial situation, analyzes your financial needs and recommends future financial activities What determines the success or failure of a financial plan - ANSWER Successmust coordinate various components through an organized plan and wise decision making Short term, intermediate, and long term goals - ANSWER Short term- within next year intermediate- 2-5 years long term- 5+ years Smart Goals - ANSWER Specific, measurable, action oriented, realistic, time based What is opportunity cost? - ANSWER what a person gives up by making a choice What is the time value of money? - ANSWER Increase in an amount of money as a result of interest earned