Finance Exam Review 1 - 15 - FINA 1307-002 PERSONAL FINANCE...

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FINA 1307-002 PERSONAL FINANCE Chapter 1 Review Questions True/False 1. Current consumption is spending for the necessities of life. T 2. The need for financial planning declines as your income increases. F 3. Your mutual funds would be real assets. F 4. Financial assets include investments such as stocks and bonds. T 5. Utility refers to the amount of satisfaction a person gets from buying certain items. T 6. The first step in the financial planning process is to develop financial plans and strategies to achieve goals. F 7. Debt is another word for liability. T 8. A personal computer can do your financial planning for you. F 9. GDP refers to the total earnings of American workers during a year. F 10. Inflation means price levels have declined. F Multiple Choice 1. Personal financial management is important because it a. controls inflation. b. limits consumption. c. uses money as an end. d. makes personal financial goals easier to achieve. e. lessens economic differences among individuals. 2. The term most closely associated with quality of life is a. wealth. d. standard of living. b. consumption. e. money. c. education. 3. The average propensity to consume refers to the a. dollars of income spent for current consumption. b. percentage of income saved. c. expenditures for the minimum necessities of life. d. percentage of income spent for current consumption.
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e. fact that people with higher incomes spend more for the necessities of life. 4. Generally, as income rises, the average propensity to consume a. stabilizes. d. becomes erratic. b. drops to zero. e. decreases. c. increases. 5. A is an example of a real asset. a. stock d. savings account b. bond e. stamp collection c. mutual fund 6. Family financial goals should be a. very general in nature. d. set once for a lifetime. b. realistically attainable. e. reserved for retirement planning. c. individually determined. 7. Utility refers to a. the satisfaction you receive from purchasing something. b. how much money you receive during the year. c. the total of your spending for the year. d. the value of your investments at any given time. e. none of these. 8. The most important financial planning for young people concerns a. career. d. taxes. b. insurance. e. retirement. c. investment. 9. Employee benefits may include a. retirement plans. d. tuition reimbursements. b. health insurance. e. all of the above. c. employee discounts. 10. Investments are distinguished from savings on the basis of a. length of time held. d. voting rights. b. initial dollar outlay. e. level of risk and expected return. c. depreciation. 11. The three key groups in the economic environment are a. government, regulation, and business. b.
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Finance Exam Review 1 - 15 - FINA 1307-002 PERSONAL FINANCE...

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