TEST BANK
Personal Financial Planning, 13th Edition,
by Gitman, Joehnk, and Billingsley.
All chapters covered.
,Chapter 1—Understanding the Financial Planning Process
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TRUE/FALSE
1. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or group.
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ANS: T hth t PTS: 1 hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Knowledge
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2. Your average propensity to consume is the percentage of each dollar of income, on the average, that is
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spent for current needs rather than savings.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Knowledge
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3. A good financial plan completed when one is in their 30s will typically last a lifetime.
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ANS: F PTS: 1
hth t hthth t DIF: Challenging OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Synthesis
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4. Financial planning is a continuing, life-long process.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension
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5. Financial planning can improve your standard of living.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension
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6. Current consumption is inversely related to saving for the future.
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ANS: T PTS: 1
hth t hthth t DIF: Challenging OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Analysis
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7. About 20% of Americans say retirement planning is their most pressing financial concern.
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, ANS: F PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Knowledge hth t ht
8. The most effective way to achieve financial objectives is through financial planning.
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ANS: T PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension hth t ht
9. Defining financial goals is an important first step in personal financial planning process.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Comprehension
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10. Two persons with equal average propensities to consume will not necessarily have equal standards of
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living because of differences in income.
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ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Evaluation hth t ht
11. The need for financial planning declines as your income increases.
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ANS: F PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Synthesis hth t ht
12. Current consumption effects future consumption.
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ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Analysis hth t ht
13. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to
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consume of 90%. ht ht
ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Evaluation hth t ht
14. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.
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tANS: F PTS: 1 hth t hthth t DIF: Challenging OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Evaluation hth t ht
15. Most families find it difficult to discuss money matters.
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, ANS: T
hth t PTS: 1
hthth t DIF: Easy OBJ: LO: 1-2
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Personal Financial Planning, 13th Edition,
by Gitman, Joehnk, and Billingsley.
All chapters covered.
,Chapter 1—Understanding the Financial Planning Process
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TRUE/FALSE
1. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or group.
ht ht ht ht ht ht ht ht ht ht ht ht ht ht ht ht h t
ANS: T hth t PTS: 1 hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Knowledge
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2. Your average propensity to consume is the percentage of each dollar of income, on the average, that is
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spent for current needs rather than savings.
ht ht ht ht ht ht
ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
hth t ht ht ht ht ht
h t KEY: Bloom's: Knowledge
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3. A good financial plan completed when one is in their 30s will typically last a lifetime.
ht ht ht ht ht ht ht ht ht ht ht ht ht ht ht h t
ANS: F PTS: 1
hth t hthth t DIF: Challenging OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Synthesis
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4. Financial planning is a continuing, life-long process.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension
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5. Financial planning can improve your standard of living.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension
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6. Current consumption is inversely related to saving for the future.
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ANS: T PTS: 1
hth t hthth t DIF: Challenging OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Analysis
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7. About 20% of Americans say retirement planning is their most pressing financial concern.
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, ANS: F PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Knowledge hth t ht
8. The most effective way to achieve financial objectives is through financial planning.
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ANS: T PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Comprehension hth t ht
9. Defining financial goals is an important first step in personal financial planning process.
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ANS: T PTS: 1
hth t hthth t DIF: Easy OBJ: LO: 1-2 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Comprehension
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10. Two persons with equal average propensities to consume will not necessarily have equal standards of
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living because of differences in income.
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ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Evaluation hth t ht
11. The need for financial planning declines as your income increases.
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ANS: F PTS: 1hth t hthth t DIF: Moderate OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
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STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Synthesis hth t ht
12. Current consumption effects future consumption.
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ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Analysis hth t ht
13. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to
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consume of 90%. ht ht
ANS: T PTS: 1hth t hthth t DIF: Challenging OBJ: LO: 1-1
hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht
STA: DISC: Financial Markets and Interest Rates
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h t KEY: Bloom's: Evaluation hth t ht
14. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.
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tANS: F PTS: 1 hth t hthth t DIF: Challenging OBJ: LO: 1-1 hthth t ht
NAT: BUSPROG: Reflective thinking
hth t ht ht STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Evaluation hth t ht
15. Most families find it difficult to discuss money matters.
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, ANS: T
hth t PTS: 1
hthth t DIF: Easy OBJ: LO: 1-2
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