Finance: Ch.1- Test

When it comes to managing money, success is about ________% knowledge and ________% behavior.

20, 80

Key components of financial planning include all of the following except:

Allow someone else to make all of your financial decisions

When it comes to personal finance, the math is easy. Whatʹs challenging is managing your ________.

Behavior

A person or organization that uses a product or service

Consumer

During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

Consumer credit could be profitable

The granting of a loan and the creation of debt; any form of deferred payment

Credit

In what way are Americans are being outsmarted by banks and other lenders?

Credit cards are taking over and people are dismissing the fact that interest rates and fees continue to destroy their financial status.

An obligation of repayment owed by one party to a second party

Debt

A system by which goods and services are produced and distributed

Economy

Which of the following is NOT a benefit of understanding your own money personality?

Excuses excessive spending because it is simply part of your nature.

True _________________ security is achieved when your money begins to generate an income-your money starts working for you.

Financial

The knowledge and skillset necessary to be an informed consumer and manage finances effectively

Financial Literacy

Which of the following best explains why students should learn about personal finance?

Helps eliminate financial mistakes and promote huge financial benefits for the future.

Which of the following statements best explains why income alone does NOT determine wealth?

How much money a person MAKES does NOT decide their spending/saving behavior.

A fee paid by a borrower to the lender for the use of borrowed money.

Interest

Why was the use of credit uncommon prior to 1917?

Laws prevented lenders from charging high interest rates, NOT socially acceptable to borrow money, and NOT profitable.

Which of the following is NOT a factor in becoming money smart?

Learn how to read your credit card statements

A debt evidenced by a ʺnote,ʺ which specifies the principal amount, interest rate and date of repayment

Loan

A person or business that offers loans at extremely high interest rates

Loan Shark

Personal financial success is primarily the result of:

Managing your money behavior

Which of the following is a result of spending more than you make?

Missed opportunity to save/invest, stress, and/or a cycle of debt

Since you are a teenager, what you do now with ____________ will have an effect on your financial future.

Money

All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.

Personal Finance

A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in gross domestic product (GDP)

Recession

The widespread financial insecurity of Americans is primarily because:

The saving rate of Americans is LOW and many borrow in order to spend MORE than they earn

Which of the following is NOT a reason credit is marketed heavily to consumers in the United States?

The use of credit is NOT socially accepted in the United States.

When developing a personal financial plan, one of the first things you should do is ______________ your current financial situation. This includes your income, assets and liabilities.

assess

Most Americans use _______________ when it comes to buying big-ticket items like a car or furniture for their home.

credit

The ___________ industry in America has NOT changed much since 1917.

credit

Having ____________ keeps you from building wealth.

debt

Everyone should have a different _____________ plan. A budget that works for one person will be different for someone else.

financial

Most Americans today are _______________ and will NOT have financial security when they retire.

in debt

Expensive houses and new cars are a ___________ indication of wealth.

inaccurate

The credit system today is structured to accommodate a state of uncertain employment and income instability, utilizing high _______________ rates and fees to turn huge profits.

interest

Learning the language of money is important because you will be able to depend on _______________ to manage your money.

yourself