Test Bank for PFIN 7th Edition Billingsley 9780357033609

Understanding the Financial Process .1


1. The average propensity to consume is commonly viewed as a key determinant of standard of
living.
a. True
b. False
ANSWER: False
RATIONALE: Wealth is commonly viewed as a key determinant of standard of
living. See 1-1: The Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Remembering
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/13/2018 6:09 PM


2. Financial planning can improve your standard of living.
a. True
b. False
ANSWER: True
RATIONALE: Personal financial planning helps in improving your standard of
living by allowing you to gain more enjoyment from your
income. See 1-1: The Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Remembering
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/13/2018 6:09 PM


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, Understanding the Financial Process .1


3. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual
or a family.
a. True
b. False
ANSWER: True
RATIONALE: Standard of living is defined as the necessities, comforts, and
luxuries enjoyed or desired by an individual or family. See 1-1:
The Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Remembering
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/13/2018 6:09 PM


4. The support of philanthropic organizations is a material item that contributes to our quality of
life.
a. True
b. False
ANSWER: False
RATIONALE: Our quality of life is closely tied to our standard of living.
Material items include a house, car, and clothing. See 1-1: The
Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Moderate
Bloom's: Remembering
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM

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, Understanding the Financial Process .1



DATE MODIFIED: 9/13/2018 6:09 PM


5. The most effective way to achieve financial objectives is through personal financial planning.
a. True
b. False
ANSWER: True
RATIONALE: The best way to achieve financial objectives is through personal
financial planning, which helps define your financial goals and
develop appropriate strategies to reach them. See 1-1: The
Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Analyzing
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/27/2018 4:56 PM


6. Two persons with significantly different income can have equal average propensities to
consume because of differences in their standards of living.
a. True
b. False
ANSWER: True
RATIONALE: Two people with significantly different incomes could have the
same average propensity to consume because of differences in
their standards of living. See 1-1: The Rewards of Sound
Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Understanding
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
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, Understanding the Financial Process .1



ACCREDITING STANDARDS: 22785889 - Analytic
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/13/2018 6:09 PM


7. 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
ANSWER: False
RATIONALE: Your average propensity to consume is the percentage of each
dollar of income, on average, that is spent for current needs
rather than savings. Mike’s propensity to consume = $30,000 ÷
$45,000 = 67%. See 1-1: The Rewards of Sound Financial
Planning.
POINTS: 1
DIFFICULTY: Challenging
Bloom's: Applying
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial
Planning
ACCREDITING STANDARDS: 22785893 - Reflective Thinking
DATE CREATED: 7/25/2018 9:48 AM
DATE MODIFIED: 9/13/2018 6:09 PM


8. Tangible assets are earning assets that are held for the returns they promise.
a. True
b. False
ANSWER: False
RATIONALE: Tangible assets are either held for consumption or investment
purposes. See 1-1: The Rewards of Sound Financial Planning.
POINTS: 1
DIFFICULTY: Easy
Bloom's: Remembering
REFERENCES: Identify the benefits of using personal financial planning
techniques to manage your finances.
QUESTION TYPE: True / False
HAS VARIABLES: False

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