Personal Finance 12th Edition by E. Thomas Garman - Test Bank

,Chapter 1—Understanding Personal Finance
1. Financial literacy is your knowledge of facts, concepts, principles, and technological tools that are fundamental to be
smart about money.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: 1.1

2. Financial responsibility is your knowledge of facts, concepts, principles, and technological tools that are fundamental to
be smart about money.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: Financial responsibility means that you are accountable for your financial well-being and strive to
make good financial decisions
1.1

3. Personal finance is the study of personal and family resources considered important in achieving financial success.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: 1.1

4. Financial success is marked by having high wealth.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Understanding
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,Chapter 1—Understanding Personal Finance

OTHER: Analytic
NOTES: financial success is the achievement of financial aspirations that are desired, planned, or attempted.
1.1

5. Financial security is marked by having high income.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Understanding
OTHER: Analytic
NOTES: financial security provides the comfortable feeling that your financial resources will be adequate to
fulfill any needs you have as well as most of your wants.
1.1

6. By saving and investing, people are much more likely to have funds available for future consumption.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Understanding
OTHER: Analytic
NOTES: 1.1

7. One's standard of living comprises all his or her current consumption.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Understanding
OTHER: Analytic
NOTES: current consumption is one's level of living. Standard of living is what you aspire to achieve.
1.1

8. Your standard of living is where you would like to be and your level of living is where you actually are.
a. True
b. False
ANSWER: True
POINTS: 1
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, Chapter 1—Understanding Personal Finance

DIFFICULTY: Easy
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: 1.1

9. You cannot build financial security or wealth unless you spend less than you earn.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Recognize the Keys to Achieving Financial Success
KEYWORDS: Bloom’s:Understanding
OTHER: Analytic
NOTES: 1.1

10. A business cycle is a pattern of economic activity that includes an expansion, peak, contraction, and trough.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Understand How the Economy Affects Your Personal Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: 1.2

11. The preferred stage of the economic cycle is the contraction phase.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Understand How the Economy Affects Your Personal Financial Success
KEYWORDS: Bloom’s:Remembering
OTHER: Analytic
NOTES: it is the expansion phase.
1.2

12. Since it is impossible to make precise forecasts about economic trends, indicators such as inflation and interest rates
can be ignored when planning your finances.
a. True
b. False
ANSWER: False
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