TEST BANK FOR m m
Introduction to Personal Finance Beginning Your Financial Journey, 2nd Edition
m m m m m m m m m
mJohn E. Grable, Lance Palmer
m m m m
Chapter 1-10 m
Chapter 1 m Beginning Your Financial Journey: The Interior Finance Point of View
m m m m m m m m m
1) Which of the following refers to one's ability to understand and use personal
m m m m m m m m m m m m
finance information?
m m
A) Financial risk tolerance. m m
B) Financial well-being. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: C m
Explanation: Financial knowledge is the ability to understand personal finance information.
m m m m m m m m m m
mKnowing who you are, where you want to go, and what skills you currently possess are essential
m m m m m m m m m m m m m m m m
mfactors shaping your financial journey.
m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
2) People who believe that what happens to them is based on fate or luck might view their
m m m m m m m m m m m m m m m m
financial journey as being uncertain. This is an example of
m m m m m m m m m m
A) financial risk tolerance. m m
B) financial literacy. m
C) feelings of control. m m
D) financial ability. m
mAnswer: C m
Explanation: Feelings of control is the amount of control you feel you have when making
m m m m m m m m m m m m m m
mfinancial decisions. People who believe that what happens to them is based on luck or fate
m m m m m m m m m m m m m m m
might view their financial journey as uncertain.
m m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
1
,3) Internal finance includes your
m m m
A) financial knowledge. m
B) financial risk tolerance. m m
C) feelings of control. m m
D) All of the choices are
m m m m
correct. Answer: D
m m m
Explanation: Internal finance is essentially the combination of financial knowledge, financial
m m m m m m m m m m
mrisk tolerance, and feelings of control.
m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
4) Which of the following refers to your confidence and peace of mind regarding your
m m m m m m m m m m m m m
financial situation?
m m
A) Financial literacy. m
B) Financial well-being. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Financial well-being is your confidence and peace of mind regarding your
m m m m m m m m m m m
financial situation. Your financial well-being will increase as you apply your financial
m m m m m m m m m m m m
knowledge, develop skills, and organize your finances to achieve your personal goals.
m m m m m m m m m m m m
Diff: 2 m
LO: 1.1, Section 1.1
m m m
mBloom: C m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
5) In addition to financial knowledge, which of the following is important in shaping your view
m m m m m m m m m m m m m m
of the financial world?
m m m m
A) Financial risk tolerance, only. m m m
B) Feelings of control, only. m m m
C) Financial well-being only. m m
D) Financial risk tolerance and feelings of m m m m m
control. Answer: D
m m m
Explanation: Our financial decisions can be based on a biased view of the financial world,
m m m m m m m m m m m m m m
which is based on the combination of our financial knowledge, financial risk tolerance, and
m m m m m m m m m m m m m m
mfeelings of control. m mm
Diff: 2 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
2
,6) Which of the following refers to your willingness to engage in financial endeavors that
m m m m m m m m m m m m m
have uncertain outcomes?
m m m
A) Financial literacy. m
B) Financial risk tolerance. m m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Your financial risk tolerance is your willingness to engage in financial
m m m m m m m m m m m
endeavors that have uncertain outcomes.
m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
7) Which of the following is measured by adding up how much the United States produces
m m m m m m m m m m m m m m
in goods and services in a year?
m m m m m m m
A) Gross domestic product.
m m
B) The cost of goods sold.
m m m m
C) Financial literacy. m
D) Financial risk tolerance. m m
mAnswer: A m
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
m m m m m m m m m m m m m
mproduces in goods and services in a year.
m m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
8) How much of GDP consists of consumer spending?
m m m m m m m
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D m m
Explanation: In 2020, the U.S. GDP was $19.80 trillion and nearly two-thirds (66%) of GDP
m m m m m m m m m m m m m m
mconsists of consumer spending.
m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
3
, 9) Which of the following will help you outline exactly how to apply your financial knowledge
m m m m m m m m m m m m m m
to achieve your life vision?
m m m m m
A) Financial literacy. m
B) Financial roadmap. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Envisioning the future is not easy, but having a long-term life vision and a
m m m m m m m m m m m m m m
plan requires a financial roadmap, a course that will help you outline how to apply your
m m m m m m m m m m m m m m m m
mfinancial knowledge to achieve your life vision.
m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
10) An action item that should be a part of everyone's journey to financial well-being
m m m m m m m m m m m m m
includes which of the following?
m m m m m
A) Keeping good records. m m
B) Spending less than you earn. m m m m
C) Maintaining appropriate insurance. m m
D) All of the choices are
m m m m
correct. Answer: D
m m m
Explanation: The actions that can help you to manage your financial well-being include:
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keeping good records, earn money, manage taxes, spend less than you earn, save wisely,
m m m m m m m m m m m m m m
minvest strategically, maintain appropriate insurance, and plan for your future.
m m m m m m m m m
Diff: 2 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
11) How does consumer spending affect GDP?
m m m m m
A) If spending decreases, GDP increases.
m m m m
B) If spending increases, GDP decreases.
m m m m
C) If spending increases, GDP increases.
m m m m
D) Consumer spending doesn't affect m m m
GDP. Answer: C
m m m
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
m m m m m m m m m m m m m
mproduces in goods and services in a year. Everything from the value of cars to the value of
m m m m m m m m m m m m m m m m m
mthe shrubs and flowers purchased at a local store is included in GDP. Since nearly two-thirds
m m m m m m m m m m m m m m m
(66%) of GDP consists of consumer spending; the more consumers spend, the larger GDP
m m m m m m m m m m m m m m
mbecomes. On the other hand, if consumption slows down, GDP goes down.
m m m m m m m m m m m
Diff: 2 m
LO: 1.1, Section 1.1
m m m m
4
Introduction to Personal Finance Beginning Your Financial Journey, 2nd Edition
m m m m m m m m m
mJohn E. Grable, Lance Palmer
m m m m
Chapter 1-10 m
Chapter 1 m Beginning Your Financial Journey: The Interior Finance Point of View
m m m m m m m m m
1) Which of the following refers to one's ability to understand and use personal
m m m m m m m m m m m m
finance information?
m m
A) Financial risk tolerance. m m
B) Financial well-being. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: C m
Explanation: Financial knowledge is the ability to understand personal finance information.
m m m m m m m m m m
mKnowing who you are, where you want to go, and what skills you currently possess are essential
m m m m m m m m m m m m m m m m
mfactors shaping your financial journey.
m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
2) People who believe that what happens to them is based on fate or luck might view their
m m m m m m m m m m m m m m m m
financial journey as being uncertain. This is an example of
m m m m m m m m m m
A) financial risk tolerance. m m
B) financial literacy. m
C) feelings of control. m m
D) financial ability. m
mAnswer: C m
Explanation: Feelings of control is the amount of control you feel you have when making
m m m m m m m m m m m m m m
mfinancial decisions. People who believe that what happens to them is based on luck or fate
m m m m m m m m m m m m m m m
might view their financial journey as uncertain.
m m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
1
,3) Internal finance includes your
m m m
A) financial knowledge. m
B) financial risk tolerance. m m
C) feelings of control. m m
D) All of the choices are
m m m m
correct. Answer: D
m m m
Explanation: Internal finance is essentially the combination of financial knowledge, financial
m m m m m m m m m m
mrisk tolerance, and feelings of control.
m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
4) Which of the following refers to your confidence and peace of mind regarding your
m m m m m m m m m m m m m
financial situation?
m m
A) Financial literacy. m
B) Financial well-being. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Financial well-being is your confidence and peace of mind regarding your
m m m m m m m m m m m
financial situation. Your financial well-being will increase as you apply your financial
m m m m m m m m m m m m
knowledge, develop skills, and organize your finances to achieve your personal goals.
m m m m m m m m m m m m
Diff: 2 m
LO: 1.1, Section 1.1
m m m
mBloom: C m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
5) In addition to financial knowledge, which of the following is important in shaping your view
m m m m m m m m m m m m m m
of the financial world?
m m m m
A) Financial risk tolerance, only. m m m
B) Feelings of control, only. m m m
C) Financial well-being only. m m
D) Financial risk tolerance and feelings of m m m m m
control. Answer: D
m m m
Explanation: Our financial decisions can be based on a biased view of the financial world,
m m m m m m m m m m m m m m
which is based on the combination of our financial knowledge, financial risk tolerance, and
m m m m m m m m m m m m m m
mfeelings of control. m mm
Diff: 2 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
2
,6) Which of the following refers to your willingness to engage in financial endeavors that
m m m m m m m m m m m m m
have uncertain outcomes?
m m m
A) Financial literacy. m
B) Financial risk tolerance. m m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Your financial risk tolerance is your willingness to engage in financial
m m m m m m m m m m m
endeavors that have uncertain outcomes.
m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
7) Which of the following is measured by adding up how much the United States produces
m m m m m m m m m m m m m m
in goods and services in a year?
m m m m m m m
A) Gross domestic product.
m m
B) The cost of goods sold.
m m m m
C) Financial literacy. m
D) Financial risk tolerance. m m
mAnswer: A m
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
m m m m m m m m m m m m m
mproduces in goods and services in a year.
m m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
8) How much of GDP consists of consumer spending?
m m m m m m m
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D m m
Explanation: In 2020, the U.S. GDP was $19.80 trillion and nearly two-thirds (66%) of GDP
m m m m m m m m m m m m m m
mconsists of consumer spending.
m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
3
, 9) Which of the following will help you outline exactly how to apply your financial knowledge
m m m m m m m m m m m m m m
to achieve your life vision?
m m m m m
A) Financial literacy. m
B) Financial roadmap. m
C) Financial knowledge. m
D) Financial ability. m
mAnswer: B m
Explanation: Envisioning the future is not easy, but having a long-term life vision and a
m m m m m m m m m m m m m m
plan requires a financial roadmap, a course that will help you outline how to apply your
m m m m m m m m m m m m m m m m
mfinancial knowledge to achieve your life vision.
m m m m m m
Diff: 1 m
LO: 1.1, Section
m m
1.1 Bloom: K
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
10) An action item that should be a part of everyone's journey to financial well-being
m m m m m m m m m m m m m
includes which of the following?
m m m m m
A) Keeping good records. m m
B) Spending less than you earn. m m m m
C) Maintaining appropriate insurance. m m
D) All of the choices are
m m m m
correct. Answer: D
m m m
Explanation: The actions that can help you to manage your financial well-being include:
m m m m m m m m m m m m
keeping good records, earn money, manage taxes, spend less than you earn, save wisely,
m m m m m m m m m m m m m m
minvest strategically, maintain appropriate insurance, and plan for your future.
m m m m m m m m m
Diff: 2 m
LO: 1.1, Section
m m
1.1 Bloom: C
m m m
AACSB / IMA: none; m m m
none AICPA: FC: none
m m m m
Min: 1 m m
11) How does consumer spending affect GDP?
m m m m m
A) If spending decreases, GDP increases.
m m m m
B) If spending increases, GDP decreases.
m m m m
C) If spending increases, GDP increases.
m m m m
D) Consumer spending doesn't affect m m m
GDP. Answer: C
m m m
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
m m m m m m m m m m m m m
mproduces in goods and services in a year. Everything from the value of cars to the value of
m m m m m m m m m m m m m m m m m
mthe shrubs and flowers purchased at a local store is included in GDP. Since nearly two-thirds
m m m m m m m m m m m m m m m
(66%) of GDP consists of consumer spending; the more consumers spend, the larger GDP
m m m m m m m m m m m m m m
mbecomes. On the other hand, if consumption slows down, GDP goes down.
m m m m m m m m m m m
Diff: 2 m
LO: 1.1, Section 1.1
m m m m
4
