Test Bank For Personal Finance Chapter 1-6 Questions And Answers Rated A

Chapter 1 Personal Financial Planning: An Introduction True/False Questions T F 1. Financial planning has specific techniques that will be effective for every individual and household. Answer: Fal se Difficulty: Med LO: 1 Page: 4 T F 2. Opportunity costs refer to what a person gives up when making a decision. Answer: True Difficulty: Med LO: 1 Page: 6 T F 3. Most decisions have only a few alternatives from which to choose. Answer: False Difficulty: Easy LO: 1 Page: 6 T F 4. Risks associated with most financial decisions are fairly easy to measure. Answer: False Difficulty: Med LO: 1 Page: 7 T F 5. Developing financial goals is the first step in the financial planning process. Answer: False Difficulty: Med LO: 1 Page: 5 T F 6. Analyzing your current financial position is a part of the first stage of the financial planning process. Answer: True Difficulty: Easy LO: 1 Page: 4 T F 7. The financial planning process is complete once you implement your financial plan. Answer: False Difficulty: Med LO: 1 Page: 8 T F 8. Short-term goals are usually achieved within the next year or so. Answer: True Difficulty: Easy LO: 2 Page: 9 T F 9. Planning to buy a house is an example of an intangible goal. Answer: False Difficulty: Med LO: 2 Page: 10 T F 10. Household size is a major influence on personal financial planning decisions. Answer: True Difficulty: Easy LO: 3 Page: 13 T F 11. Increased demand for a product or service will usually result in lower prices for the item. Answer: False Difficulty: Med LO: 3 Page: 14 T F 12. Inflation reduces the buying power of money. Answer: True Difficulty: Easy LO: 3 Page: 14 T F 13. Lenders benefit more than borrowers in times of high inflation. Answer: False Difficulty: Hard LO: 3 Page: 14 T F 14. Economics is the study of using money to achieve financial goals. Answer: False Difficulty: Med LO: 3 Page: 13 T F 15. When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years. Answer: True Difficulty: Hard LO: 3 Page: 15 T F 16. A decrease in the demand for a product or service may result in a decrease in wages for people producing that item. Answer: True Difficulty: Med LO: 3 Page: 16 T F 17. Higher inflation usually results in lower interest rates. Answer: False Difficulty: Med LO: 3 Page: 17 T F 18. Opportunity costs refer to time, money, and other resources that are given up when a decision is made. Answer: True Difficulty: Med LO: 4 Page: 17 T F 19. Time value of money refers to changes in consumer spending when inflation occurs. Answer: False Difficulty: Med LO: 4 Page: 18 T F 20. Interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate. Answer: False Difficulty: Hard LO: 4 Page: 18 T F 21. Present value is also referred to as compounding. Answer: False Difficulty: Med LO: 4 Page: 19 T F 22. Liquidity is the ability to convert financial resources into usable cash with ease. Answer: True Difficulty: Easy LO: 5 Page: 22 T F 23. Developing and using a budget is part of the "obtaining" component of financial planning. Answer: False Difficulty: Easy LO: 5 Page: 22 T F 24. A financial plan is another name for a budget. Answer: False Difficulty: Med LO: 5 Page: 24 Show Less