Foundations in Personal Finance- Chapter 1 Study Guide

Key components of financial planning include all of the following except:a) Replace money myths with money truthsb) Regularly monitor and reassess your financial planc) Write out a detailed plan for accomplishing your goalsd) Allow your financial planner to make all of your major money decisions D
The widespread financial insecurity of Americans is primarily because:a) Most Americans save a high proportion of their incomeb) The saving rate of Americans is low and many borrow in order to spend more than they earnc) Government programs are unavailable to help people when they are disabled or experience unemployment d) The incomes of Americans are low B
Which of the following best explains why students should learn about personal finance?a) Personal finance skills are highly complex and require a great deal of time to learn.b) Learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.c) Personal finance skills are better learned through trial and error.d) Learning to manage money will help you achieve a profitable career. B
When it comes to personal finance, the math is easy. What’s challenging is managing your ____. behavior
When it comes to managing money, success is about _____% knowledge and _________% behavior. 20,80
Which of the following is not a reason credit is marketed heavily to consumers in the United States? The use of credit is not socially accepted in the United States
Which of the following is not a factor in becoming money smart? Learn how to read your credit card statements
Which of the following statements best describes how Americans are being outsmarted by banks and other lenders? Credit is marketed so well that we desire to have it while completely dismissing the fact of interest rates and fees continue to destroy our financial well-being.
Personal financial success is primarily the result of: Managing your money behavior
Which of the following is not a benefit of understanding your own money personality? Knowing your money personality allows you to excuse excessive spending because it is simply part of nature
During the Great Depression, New Deal policy makers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that: Consumer credit could be profitable
Which of the following is a consequence of spending more than you make?a) A cycle of Debtb) Missed opportunity to save and invest c) stressd) all the above D
Which of the following statements best explains why income alone does not determine wealth? How much money a person makes does not dictate his or her spending and saving behavior
Which of the following is not a true statement? The credit industry in America has not changed much since 1917.
Why was the use of credit uncommon prior to 1917?a). Laws prevented lenders from charging high interest ratesb). Borrowing money was generally not socially acceptablec). Lending money to other was not profitabled). All the above D
Having debt keeps you from building wealth. True
True financial security is achieved when your money begins to generate an income-your money starts working for you. True
Most Americans today are wealthy and will have financial security when they retire. False
The credit system today is structured to accommodate a state of uncertain employment and income stability, utilizing high interest rates and fees to turn huge profits. True
Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone. False
Learning the language of money is not that important because you will be able to depend on financial planners to manage your money. False
Expensive houses and new cars are a true indication of wealth. False
Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home. False
When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets and liabilities. True
Since you are a teenager, what you do now with money will have little effect on your financial future. False
An obligation of repayment owed by one party to a second party debt
A person or business that offers loans at extremely high interest rates loan shark
A fee paid by a borrower to the lender for the use of borrowed money interest
A person or organization that uses a product or service consumer
The granting of a loan and the creation of debt; any form of deferred payment credit
The knowledge and skillset necessary to be an informed consumer and manage finances effectively financial literacy
A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in a gross domestic product recession
A debt evidenced by a ╩║note,╩║ which specifies the principal amount, interest rate and date of repayment loan
A system by which goods and services are produced and distributed economy
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. personal finance

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