TEST BANK PERSONAL FINANCIAL PLANNING, 13TH EDITION, BY GITMAN, JOEHNK, AND BILLINGSLEY ALL CHAPTERS COVERED GRADED A+ 100% VERIFIED |LATEST UPDATE| |2025|

,Chapter 1—Understanding the Financial Planning Process


TRUE/FALSE

1. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or group.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Knowledge

2. Your average propensity to consume is the percentage of each dollar of income, on the average, that is
spent for current needs rather than savings.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Knowledge

3. A good financial plan completed when one is in their 30s will typically last a lifetime.

ANS: F PTS: 1 DIF: Challenging OBJ: LO: 1-2
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Synthesis

,4. Financial planning is a continuing, life-long process.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-2
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Comprehension

5. Financial planning can improve your standard of living.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Comprehension

6. Current consumption is inversely related to saving for the future.

ANS: T PTS: 1 DIF: Challenging OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Analysis

7. About 20% of Americans say retirement planning is their most pressing financial concern.

, ANS: F PTS: 1 DIF: Moderate OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Knowledge

8. The most effective way to achieve financial objectives is through financial planning.

ANS: T PTS: 1 DIF: Moderate OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Comprehension

9. Defining financial goals is an important first step in personal financial planning process.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-2
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Comprehension

10. Two persons with equal average propensities to consume will not necessarily have equal standards of
living because of differences in income.

ANS: T PTS: 1 DIF: Challenging OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Evaluation

11. The need for financial planning declines as your income increases.

ANS: F PTS: 1 DIF: Moderate OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Synthesis

12. Current consumption effects future consumption.

ANS: T PTS: 1 DIF: Challenging OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Analysis

13. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to
consume of 90%.

ANS: T PTS: 1 DIF: Challenging OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Evaluation

14. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.

ANS: F PTS: 1 DIF: Challenging OBJ: LO: 1-1
NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates
KEY: Bloom's: Evaluation

15. Most families find it difficult to discuss money matters.

ANS: T PTS: 1 DIF: Easy OBJ: LO: 1-2