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Chapter 1. Personal Finance Basics and the Time Value of Money
Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Long-term financial security can be achieved through frugal living and wise investing.
⊚ true
⊚ false
2) An opportunity fund is when money is set aside to expand ones income and net worth, or can
be used to invest in oneself through higher education.
⊚ true
⊚ false
3) The purpose of a tariff, also known as an import tax, is to decrease the trade deficit, which
always has the effect intended.
⊚ true
⊚ false
4) Increased demand for a product or service will usually result in lower prices for the item.
⊚ true
⊚ false
5) Inflation reduces the buying power of the dollar.
⊚ true
⊚ false
6) Lenders benefit more than borrowers in times of high inflation.
⊚ true
⊚ false
7) Economics is the study of using money to achieve financial goals.
⊚ true
⊚ false
8) Reduced consumer spending may be caused by unemployment due to a layoff.
⊚ true
⊚ false
9) A financial plan is another name for a budget.
⊚ true
⊚ false
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Chapter 1. Personal Finance Basics and the Time Value of Money
10) Developing and using a budget is part of the "obtaining" component of financial planning.
⊚ true
⊚ false
11) Planning to buy a car is an example of an intangible-purchase goal.
⊚ true
⊚ false
12) Opportunity costs refer to what a person gives up when making a choice.
⊚ true
⊚ false
13) Personal opportunity costs refer to time, effort, and health that are given up when a decision
is made.
⊚ true
⊚ false
14) Time value of money refers to changes in consumer spending when inflation occurs.
⊚ true
⊚ false
15) Interest on savings is calculated by multiplying the principal amount times the opportunity
cost times the annual interest rate.
⊚ true
⊚ false
16) Present value is often referred to as compounding.
⊚ true
⊚ false
17) Present value computations are used to determine how much you need to deposit now so that
you can withdraw a specified amount for a set number of years.
⊚ true
⊚ false
18) Opportunity costs are viewed only in terms of financial resources.
⊚ true
⊚ false
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Distribution of this document is illegal extra per year?
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Chapter 1. Personal Finance Basics and the Time Value of Money
19) Gross domestic product (GDP) measures the total value of goods and services produced
within a country's borders, excluding items produced with foreign resources.
⊚ true
⊚ false
20) Estate planning arranges for the transfer of finances and valuables to others when incapacity,
illness, or death occurs.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
21) Which of the following are benefits to financial literacy?
A. Increased effectiveness in obtaining, using, and protecting financial resources
B. Expanded control of financial activities
C. Excessive debt, bankruptcy, and dependence on others for financial security
A) Only A
B) Only B
C) Only C
D) Only A and B
E) Only B and C
22) Personal financial activities involve which three main decision areas?
A) Spending, operating, and sharing
B) Spending, using, and operating
C) Operating, using, and saving
D) Balancing, investing, and budgeting
E) Spending, saving, and sharing
23) The main goal of personal financial planning is managing your money to:
A) save and invest for future needs.
B) reduce a person's tax liability.
C) achieve personal economic satisfaction.
D) spend to achieve financial objectives.
E) save, spend, and borrow based on current needs.
. Downloaded by: 3Want to earn $1,500
Distribution of this document is illegal extra per year?
Test
Bank
Downloaded by: Want to earn $1,500
Distribution of this document is illegal extra per year?
, classmerit.com — The Marketplace to Buy and Sell Study Materials
Chapter 1. Personal Finance Basics and the Time Value of Money
Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Long-term financial security can be achieved through frugal living and wise investing.
⊚ true
⊚ false
2) An opportunity fund is when money is set aside to expand ones income and net worth, or can
be used to invest in oneself through higher education.
⊚ true
⊚ false
3) The purpose of a tariff, also known as an import tax, is to decrease the trade deficit, which
always has the effect intended.
⊚ true
⊚ false
4) Increased demand for a product or service will usually result in lower prices for the item.
⊚ true
⊚ false
5) Inflation reduces the buying power of the dollar.
⊚ true
⊚ false
6) Lenders benefit more than borrowers in times of high inflation.
⊚ true
⊚ false
7) Economics is the study of using money to achieve financial goals.
⊚ true
⊚ false
8) Reduced consumer spending may be caused by unemployment due to a layoff.
⊚ true
⊚ false
9) A financial plan is another name for a budget.
⊚ true
⊚ false
. Downloaded by: 1Want to earn $1,500
Distribution of this document is illegal extra per year?
, classmerit.com — The Marketplace to Buy and Sell Study Materials
Chapter 1. Personal Finance Basics and the Time Value of Money
10) Developing and using a budget is part of the "obtaining" component of financial planning.
⊚ true
⊚ false
11) Planning to buy a car is an example of an intangible-purchase goal.
⊚ true
⊚ false
12) Opportunity costs refer to what a person gives up when making a choice.
⊚ true
⊚ false
13) Personal opportunity costs refer to time, effort, and health that are given up when a decision
is made.
⊚ true
⊚ false
14) Time value of money refers to changes in consumer spending when inflation occurs.
⊚ true
⊚ false
15) Interest on savings is calculated by multiplying the principal amount times the opportunity
cost times the annual interest rate.
⊚ true
⊚ false
16) Present value is often referred to as compounding.
⊚ true
⊚ false
17) Present value computations are used to determine how much you need to deposit now so that
you can withdraw a specified amount for a set number of years.
⊚ true
⊚ false
18) Opportunity costs are viewed only in terms of financial resources.
⊚ true
⊚ false
. Downloaded by: 2Want to earn $1,500
Distribution of this document is illegal extra per year?
, classmerit.com — The Marketplace to Buy and Sell Study Materials
Chapter 1. Personal Finance Basics and the Time Value of Money
19) Gross domestic product (GDP) measures the total value of goods and services produced
within a country's borders, excluding items produced with foreign resources.
⊚ true
⊚ false
20) Estate planning arranges for the transfer of finances and valuables to others when incapacity,
illness, or death occurs.
⊚ true
⊚ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
21) Which of the following are benefits to financial literacy?
A. Increased effectiveness in obtaining, using, and protecting financial resources
B. Expanded control of financial activities
C. Excessive debt, bankruptcy, and dependence on others for financial security
A) Only A
B) Only B
C) Only C
D) Only A and B
E) Only B and C
22) Personal financial activities involve which three main decision areas?
A) Spending, operating, and sharing
B) Spending, using, and operating
C) Operating, using, and saving
D) Balancing, investing, and budgeting
E) Spending, saving, and sharing
23) The main goal of personal financial planning is managing your money to:
A) save and invest for future needs.
B) reduce a person's tax liability.
C) achieve personal economic satisfaction.
D) spend to achieve financial objectives.
E) save, spend, and borrow based on current needs.
. Downloaded by: 3Want to earn $1,500
Distribution of this document is illegal extra per year?
