Test bank, Mock questions : Personal Finance,Kapoor,9e [2026 Update]

Chapter 001 Personal Finance Basics and the Time Value of Money


True / False Questions


1. (p. 2) Financial planning has specific tеchniques that will be effective for every individual
and household.
FALSE


Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 1-1



2. (p. 2) Personal financial planning is the process of managing one's money to achieve personal
economic satisfaction.
TRUE


Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1-1



3. (p. 11-12) Household size is a major influence on personal financial planning decisions.
TRUE


Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1-3



4. (p. 13) Increased demand for a product or service will usually result in lower prices for the
item.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-3




1-1

, Chapter 001 Personal Finance Basics and the Time Value of Money



5. (p. 14) Inflation reduces the buying power of money.
TRUE


Bloom's: Knowledge
Difficulty: Easy
Lеarning Objective: 1-3



6. (p. 4) Lenders benefit more than borrowers in times of high inflation.
.
FALSE


Bloom's: Cоmprehension
Difficulty: Hard
Learning Objective: 1-1



7. (p. 12) Economics is the study of using money to achieve financial goals.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-3



8. (p. 16) When prices are increasing at a rate оf 6 percent, the cost of products would double in
about 12 years.
TRUE


Bloom's: Apрlication
Difficulty: Hard
Learning Objective: 1-4



9. (p. 4) A decrease in the demand for a product or service may result in a decrease in wages for
people producing that item.
TRUE


Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 1-1




1-2

, Chapter 001 Personal Finance Basics and the Time Value of Money



10. (p. 5) Higher inflation usually results in lower interest rates.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-1



11. (p. 20) Developing and using a budget is pаrt of the "obtaining" component of financial
planning.
FALSE


Bloom's: Knowledge
Difficulty: Easy
Learning Objеctive: 1-5



12. (p. 23) A financial plan is another name for a budget.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-5



13. (p. 8) Short-term goals are usually achieved within the next year or so.
TRUE


Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1-2



14. (p. 8) Planning to buy a house is an example of an intangible goal.
FALSE


Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 1-2




1-3

, Chapter 001 Personal Finance Basics and the Time Value of Money



15. (p. 15) Opportunity costs refer to what a person gives up when making a decision.
TRUE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-4



16. (p. 15-16) Oppоrtunity costs refer to time, money, and other resources that are given up when
a decision is made.
TRUE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-4



17. (p. 16) Time value of money refers to changes in consumer spending when inflation occurs.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-4



18. (p. 16) Interest on savings is calculated by multiplying the money amount times the
opportunity cost times the annual interest rate.
FALSE


Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 1-4



19. (p. 16) Present value is also referred to as compounding.
FALSE


Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 1-4




1-4