Quiz 1 Finance
At an annual inflation rate of 4%, how long will it take for means prices to double?
18
The financial planning process has 6 specific steps. Step number ____ is to indentify alternative courses of action.
3
The stages in the family situation and financial needs of an adult is called.
Adult life cycle
A major activity in the planning component of financial planning is:
Allocating current resources for spending
A financial plan is another name for a budget.
F
Developing and using a budget is part of the "obtaining" component of financial planning.
F
Developing financial goals is the first step in the financial planning process.
F
Economics is the study of using money to achieve financial goals.
F
Financial planning has specific techniques that will be effective for every individual and household.
F
Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, excluding items produced with foreign resources.
F
Higher inflation usually results in lower interest rates.
F
Increased demand for a product or service will usually result in lower prices for the item.
F
Interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate.
F
Lenders benefit more than borrowers in times of high inflation.
F
Most decisions have only a few alternatives from which to choose
F
Time value of money refers to changes in consumer spending when inflation occurs.
F
If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?
Future value of a series of deposits
Principal x annual interest rate x time period =
Interest
The ability to readily convert financial resources into cash without a loss in value is called
Liquidity
Financial goals should take the SMART approach where M stands for
Measurable
The dollars available for spending in our economy
Money supply
What a person gives up by making a choice is called
Opportunity cost
In order to calculate the time value of your savings, you need to know the annual interest rate, the length of time your money will be in an account, and the
Principal
A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.
T
Analyzing your current financial position is a part of the first stage of the financial planning process.
T
Inflation reduces the buying power of money.
T
Opportunity costs refer to time, money, and other resources that are given up when a decision is made.
T
Opportunity costs refer to what a person gives up when making a decision.
T
Present value is also referred to as compounding
T
Risks associated with most financial decisions are fairly easy to measure.
T
Trade balance is defined as the difference between a country's exports and its imports.
T
The difference between a country's export and its imports is called
Trade balance
Ideas and principles that a person considers correct, desirable, and important is called
Values
A set of federal laws that allow you to either restructure your debts or remove certain debts.
bankruptcy
The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.
borrowing
purchases that you make often and use up quickly.
consumable goods
A _____ is a person who purchases and uses goods or services
consumer
The first step of developing a financial plan is
determining your current financial situation
the study of the decisions that go into making, distributing, and using goods and services.
economics
The amount that your original deposit will be worth in the future, based on earning a specific interest rate over a specific period of time, is its
future value
Getting a college education, buying a car, and starting a business are examples of
goals
Increased consumer spending will usually cause:
higher employment levels
Higher consumer prices are likely to be accompanied by:
higher interest rates
The success of a financial plan will be determined by:
how resources are used
Which of the following would cause prices to drop?
increased production by business
Higher prices are likely to result from:
increased spending by consumers
All of the following are important factors that influence your day-to-day decisions about finances EXCEPT
location
Saving money to buy a house in ten years and putting money away for retirement are examples of
long-term goals
The main economic influence that determines prices is:
supply and demand
Your financial goals should be all of the following EXCEPT
unclear
