BUSI 1307. CHAPTER 1-3 QUIZ. T/F

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False

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

True

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

True

A special tax provision reduced the social security portion for the individual taxpayer by 2% in 2011 and 2012.

True

An investment must be owned over one year in order to qualify for long-term capital gains treatment.

False

An investment must be owned over two years in order to qualify for long-term capital gains treatment.

True

Assets purchased on credit should be included on the asset side of the balance sheet.

True

Consumer choices ultimately determine the kinds of goods and services businesses will provide.

True

Current consumption is inversely related to saving for the future.

True

Financial assets are intangible assets acquired to achieve long-term personal financial goals.

False

Financial planning is necessary only if you earn a lot of money.

True

For most people working in large firms, employee benefits are an important part of their financial planning.

False

How long you invest is not nearly as important as the rate of interest you can earn on your investments.

True

If you earn less than $15,000, you probably pay more in social security taxes than in federal income taxes.

False

If you have any earned income, you are required to file a tax return.

True

If you listed your gross salary in the income portion of the budget, the expenditures section must include income taxes and social security.

True

Inability to reach short-term goals will significantly affect your ability to reach long-term goals.

False

Income shifting refers to the process of transferring income from the taxpayer to the IRS.

False

Inflation means price levels have declined.

True

Most families find it difficult to discuss money matters.

True

Personal financial software is widely available, much of which is free.

False

Portfolio-related expenses can be written off against passive income

True

Tax avoidance is legal, tax evasion is illegal.

True

The amount of one personal exemption in 2008 was $3,500

False

The best way to balance your budget is to increase borrowing.

True

The sale of your home will rarely result in a taxable capital gain

True

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

True

Using the future value calculations to estimate the funds needed to meet a goal takes compounding into account.

False

Using time value of money is most important when planning for short-term goals.

True

Utility refers to the amount of satisfaction a person gets from buying certain items.

True

You have a balanced budget when total income for the year equals or exceeds total expenditures for the year.


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