Finance and Business- Chapter 1

____________________________ are purchases that you make often and use up quickly.

Consumable goods

A set of federal laws that allow you to either restructure your debts or remove certain debts. _____

Bankruptcy

At an annual inflation rate of 6%, how long will it take for the means prices to double?

12 years

The financial planning process has 6 specific steps. Step number ___ is to identify alternative courses of action.

3

What does the A in SMART stand for?

Action

_______ is the study of the decisions that go into making, distributing, and using goods and services.

Economics

True or False: Developing and using a budget is part of the obtaining component of financial planning

False

True or False: Developing financial goals is the first step in the financial planning process

False

True or False: Economics is the study of using money to achieve financial goals

False

True or False: Financial planning has specific teach issues that will be effective for every individual

False

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

False

True or False: Interest on savings is calculated by multiplying the money amount times the opportunity cost times the annual interest rate

False

True or False: Time value of money refers to the changes in consumer spending when inflation occurs

False

True or False: higher inflation results in lower interest rates

False

True or False: lenders benefit more than the borrowers

False

Principal X annual interest rate X time period = _________

Interest rate

What does the M in SMART stand for?

Measurable

What does the R in SMART stand for?

Realistic

Financial goals should take the SMART approach where S stands for ______

Specific

What does the T in SMART stand for?

Time

The difference between a country's export and its imports is called ___________

Trade balance

True or False: A decrease in the demand for a product or service may result in a decrease in wages

True

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

True

True or False: A financial plan is another name for a budget

True

True or False: Analyzing your current financial position is part of the first stage of the financial process.

True

True or False: Inflation reduces the buying power of money

True

True or False: Opportunity costs refer to time, money and other resources that are given up when a decision is made

True

True or False: Opportunity costs refer to what a person gives up when making a decision

True

True or False: Trade balance is defined as the different between a country's exports and its imports

True

True or False: present value is also referred to as compound values

True

True or False: risks associated with most financial decisions are fairly easy to measure

True

Ideas and principles that a person considers correct, desirable, and important are called ______

Values

The stages in the family situation and financial needs of an adult is called ___________________

adult life cycle

A ________ is a person who purchases and uses goods or services

consumer

The first step of developing a personal financial plan is ____________________________

determining your current financial situation

When penny went to the bank there was a sign that says FDIC what does that mean and what is the cap of money?

federal deposit of insurance corporation and $250,000

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

Setting a college education, buying a car, and starting a business are examples of _____.

goals

The ability to readily convert financial resources into cash without a less in value is called ______

liquidity

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

What a person gives up by making a chance 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

Your financial goals should be all of the following EXCEPT ______

unclear