Test Bank For Personal Financial Planning 16th Edition 2025 by Randy Billingsley, Lawrence Gitman, Michael Joehnk Chapter 1-15

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Indicate whether the statement is true or false.

1. Living costs are constant throughout the country.
a. True
b. False

2. Two people with significantly different incomes can have equal average propensities to consume because of differences
in their standard of living.
a. True
b. False

3. Retirement planning includes taking advantage of and managing employer-sponsored benefits.
a. True
b. False

4. You should limit your spending to no more than 20 percent more than what you earn.
a. True
b. False

5. The need for financial planning declines as your income increases.
a. True
b. False

6. Tangible assets are earning assets that are held for the returns they promise.
a. True
b. False

7. It is easy to change your partner’s financial style, so there is no need for financial planning to resolve conflicts
regarding money matters.
a. True
b. False

8. When you get your first job, you should make a good financial plan that you can follow without making changes until
you retire.
a. True
b. False

9. Accumulating wealth for later years is called estate planning.
a. True
b. False

10. For employees of large firms, managing employee benefits is an important part of financial planning.
a. True
b. False

11. The support of philanthropic organizations is a material item that contributes to our quality of life.
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a. True
b. False

12. The most effective way to achieve financial objectives is through personal financial planning.
a. True
b. False

13. Marital status affects the income level of individuals.
a. True
b. False

14. Mike’s annual income is $45,000, and he spends $30,000 for current needs. Mike’s average propensity to consume is
80 percent.
a. True
b. False

15. Your purchase, saving, investment, and retirement plans and decisions are not influenced by the present state of the
economy.
a. True
b. False

16. Saving $400 for a large, flat-screen TV within the next 4 months is an example of a short-term goal.
a. True
b. False

17. The decisions you make in career planning are independent of the decisions you make in financial planning.
a. True
b. False

18. Financial planning takes place in a dynamic economic environment created by the actions of the government,
business, and consumers.
a. True
b. False

19. The longer you wait to begin retirement planning, the less you are likely to have in your retirement fund.
a. True
b. False

20. Tax plans are closely tied to investment plans.
a. True
b. False

21. Recessions and financial crises will always result in job loss.
a. True
b. False

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22. Commission-based financial planners charge fees for the financial products they sell.
a. True
b. False

23. Setting long- and short-term career goals helps in career planning.
a. True
b. False

24. Short-term planning should include creating and maintaining an emergency fund with at least 6 months’ worth of
income.
a. True
b. False

25. In the United States, salaries tend to be higher in the Northeast and West than in the South.
a. True
b. False

26. Career plans should not be changed after long- and short-term career goals are set.
a. True
b. False

27. Geographic factors affect your earning power.
a. True
b. False

28. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or a family.
a. True
b. False

29. Fee-only financial planners charge commissions for the products they sell.
a. True
b. False

30. The federal government delegates its regulation of economic activity function to businesses and consumers.
a. True
b. False

31. The average propensity to consume is commonly viewed as a key determinant of standard of living.
a. True
b. False

32. You should discuss your financial goals and attitudes toward money with your partner.
a. True
b. False

33. Financial planning can improve your standard of living.
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a. True
b. False

34. Most people tend to be more liberal about their expenditures during a recession or crisis.
a. True
b. False

Indicate the answer choice that best completes the statement or answers the question.

35. _____ is an important part of the conflict resolution process when there are disputes relating to money matters in
families.
a. Life-cycle analysis
b. Personality development
c. Financial planning
d. Personal counseling
e. Stress management

36. Which of the following are included in employee benefit plans?
a. Career plans
b. Retirement plans
c. Tax deferment plans
d. Personal asset plans
e. Bankruptcy recovery plans

37. Which of the following statements about businesses is true?
a. Businesses provide consumers with goods and services and receive payment in the form of money.
b. Businesses frame rules and regulations to maintain the law and order in a country.
c. Businesses determine the kinds of goods and services that a government will use.
d. Businesses do not interact with other players in the economy.
e. Businesses are seldom affected by economic cycles.

38. Which of the following is an example of a liquid asset?
a. A mutual fund
b. Stocks
c. An automobile
d. Land
e. A savings account

39. Following an economic trough, the economy will often enter:
a. an expansion.
b. a contraction.
c. deflation.
d. a peak.
e. another trough.

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