Personal Finance Chapter 1

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A career plan should take into account your:

Abilities, skills, lifestyle & work style

Inflation in personal finance is:

An increase in a general level in prices

Real GDP is decreasing during

Contraction

Which of the following would not be considered an asset?

Credit card balance

contraction

Expansion

What are the upsides and downsides of the business cycle called?

Expansion and Contraction

A person with a master's degree will likely earn more income than a person with a professional degree.

False

Businesses ultimately determine the kinds of goods and services to provide to consumers.

False

Career planning and personal financial planning are distinct, unrelated activities.

False

Economic growth in America is measured by changes in the consumer price index (CPI).

False

Financial plans are not influenced by the economic environment.

False

In financial planning, adequate insurance coverage is essential only after you have attained sizeable wealth.

False

Personal financial planning will not help you if your income seems to be inadequate to meet your most basic needs.

False

Retirement planning optimally begins when people are in their 40s or 50s.

False

The first step in the financial planning process is to develop financial plans and strategies

False

Typically, people with low incomes fall into the middle age and older age groups, with the lowest earnings generally occurring between the ages of 55 and 64.

False

You are more likely to attain your financial goals if you set them higher than you are currently able to achieve.

False

The first step in career planning is to set long- and short-term career goals.

False This is the second step; the first step is to identify your interests, skills, needs, and values.

A career plan is NOT:

Finding a job right now

Who should you include in your financial goals?

Friends, family and significant others

How long does a business cycle last?

It can vary - 4 to 5 years for expansion and 6 months to a year for contraction

Career networking is:

Making use of contacts to exchange career information and opportunities

Inflation relates to:

Prices

Financial goals should be:

Specific, realistic and attainable

Career networking is NOT:

The way of the past - only old people use networking to find jobs

In financial planning, it is important to consider the tax implications of various investments.

True

Learning to communicate with your partner about money is a critical step in developing effective financial plans.

True

Unless you attain your short-term goals, you probably will not be able to achieve your intermediate- or long-term goals.

True

"Financial shocks" that can drastically change one's financial circumstances include

a. divorce. b. death of a spouse. c. supporting elderly parents while paying for your children's college educations

The average American starting a career today can expect to have

at least ten jobs with five or more employers.

When applying for a job within a large nationwide company, you notice that salaries for the same position differ based on geographic region. In which of the following regions would you most likely receive the highest salary?

c. Metropolitan area in the Northeast

The federal government's monetary policy

controls the amount of money in circulation.

Higher rates of inflation usually cause

higher interest rates

The federal government

plays a major role in regulating the level of economic activity. is both a customer of businesses and an employer of consumers.

If your salary increased 4% last year and inflation averaged 4%, your purchasing power would

stayed the same


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