Chapter 1 questions

According to the text, what are two main reasons Americans have financial problems?

-Poor planning, weak management of money habits -Advertising efforts and availability of goods encourage overspending

The Fed had indirect control over interest rates. The Fed attempts to make adequate funds available for which of the following

-business growth -consumer spending

What is the current value of a future amount based on a particular interest rate and a certain time period?

present value

The _____ ____ System is the central bank of the United States and has significant economic responsibility

Federal Reserve

A series of equal deposits or payment is called

annuity

Interest rates represent the true cost of ____

money

The ____ premium represents the "extra" amount that you can expect to receive for investing in a n instrument due to the uncertainty of getting your money back

risk

The amount to which current savings will increase based on a certain interest rate and a certain time period is called:

-future value

Planning for retirement, purchasing life and health insurance, obtaining appropriate career training is...

common financial goals and actives

Which of the following is true regarding global influence of American consumption?

-American consumers provide foreign companies with a market -American businesses compete against foreign companies for the spending dollars of American consumers.

Common financial goals and activities

-Purchasing life insurance -Purchasing health insurance -Planning for retirement

The risk premium includes the following factors

-expected inflation -length of time -interest rates -uncertainty of getting money back

Deflation is a decline in prices, which often results in consumers _____ heir spending as they expect the price to go even lower

Decreasing

American consumers spend dollars on goods and services. The goods and services are manufactured or offered by American companies and companies from other countries. This is and example of:

A global economy and foreign competition

Which of the following is not true

CPI is a totally accurate measure of inflation in the U.S.

The measure of the average change in price urban consumers pay for a fixed "basket" of goods and services is called the:

Consumer price index

Interest rate represent the:

Cost of borrowing money

Another name used for calculating present value is ____.Compounding is the other term for value.

Discounting

What type of financial goal is the infrequent purchases of things, suck as a car or kitchen appliances?

Durable-product goals

People in their 50s spend money exactly like people in their 20s

False

How do personal values affect financial plans?

Personal values define a person and also what that person thinks is important, your personal values also determine how you plan your financies

Another name used for discounting is:

Present value computations

Which of the following is true?

The consumer price index is based on items calculated in predetermined manner