Personal Finance Quiz 1 Study Guide True+False Section

A financial plan is another name for a budget.

False

Developing and using a budget is part of the "obtaining" component of financial planning.

False

Developing financial goals is the first step in the financial planning process.

False

Economics is the study of using money to achieve financial goals.

False

Financial planning has specific techniques that will be effective for every individual + household.

False

Gross Domestic Product (GDP) measures the total value of goods + services produced within a country's borders, excluding items produced with foreign resources.

False

Higher inflation usually results in lower interest rates.

False

Increased demand for a product or service will usually result in lower prices for the item

False

Intrest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest.

False

Lenders benefit more than borrowers in times of high inflation.

False

Most decisions have only a few alternatives from which to choose.

False

Time value of money refers to changes in consumer spending when inflation occurs.

False

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

True

Analyzing your current financial position is a part of the first stage of the financial planning process.

True

Inflation reduces the buying power of money.

True

Opportunity costs refer to time, money, and other resources that are given up when a decision is made.

True

Opportunity costs refer to what a person gives up when making a decision.

True

Present value is also referred to as compounding.

True

Risks associated with most financial decisions are fairly easy to measure.

True

Trade balance is defined as the difference between a country's exports and imports.

True