Chapter 1—Understanding the Financial Planning Process
c
Moderate
PFIN.BILL.17.1-4 – LO: 1-4
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Analyzing
103. An economy will usually go into a(n) _________ after a peak.
a.
convolution
b.
expansion
c.
contraction
d.
recession
e.
depression
c
Easy
PFIN.BILL.17.1-4 – LO: 1-4
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Remembering
104. The financial crisis of 2008 and 2009 is best characterized as a
a.
recession.
b.
depression.
c.
downturn.
d.
business trough.
e.
meltdown.
a
Moderate
PFIN.BILL.17.1-4 – LO: 1-4
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Investments
Bloom’s: Creating
item, B for the second item, and C if neither item will correctly complete the statement.
105. The best way to achieve your financial objectives is to [save every extra dollar you can | develop a sound financial
plan].
Chapter 1—Understanding the Financial Planning Process
106. Financial planning [does | does not] guarantee a sound financial future.
107. [Putting money into a retirement fund | Buying a car] would be an example of current consumption.
108. [Vacations | Education] would be considered a necessity of life.
109. The average [self employed | retired] household has higher income.
Chapter 1—Understanding the Financial Planning Process
110. The average American has [$59,000 | $81,000] in retirement accounts.
111. About [50% | 75%] of married adults share all their money with their mate.
112. The net total value of all the items an individual owns is known as [wealth | assets].
113. [Disney stock | Your car] would be considered a financial asset.
Chapter 1—Understanding the Financial Planning Process
114. [A savings account | Your car] would be considered a tangible asset.
115. [Money | Inflation] is the common denominator for gauging all financial transactions.
116. [Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.
117. [Utility | Propensity to consume] refers to the satisfaction you receive from buying certain items.
Chapter 1—Understanding the Financial Planning Process
118. An adequate emergency fund should last [2-3 months | 6-9 months].
119. Having numerous credit cards can [improve | hurt] your credit score.
120. “1 want to accumulate a comfortable retirement fund” [would | would not] be a specific financial goal.
121. Money can be withdrawn from tax-deferred retirement accounts without penalty beginning at age [59 1/2 | 62 1/2].
122. Your level of formal education is a [controllable | noncontrollable] factor that has a considerable effect on your
income.
Chapter 1—Understanding the Financial Planning Process
123. For most people, debts [increase constantly | increase and then decrease] during their lifetimes.
124. When investing, you should try to time the market [to buy when it’s low | to sell when it’s high].
125. The two principal constraints which government places upon us are regulations and [tariffs | taxes].
126. The Consumer Price Index is a measure of [unemployment | inflation].
Chapter 1—Understanding the Financial Planning Process
127. Two key indicators of economic activity in the United States are production levels and [employment levels | cost of
living].
128. The federal government’s [fiscal | monetary] policy is used to stimulate or moderate economic growth.
129. [Tax | Liability and insurance] planning is introduced early in the life cycle.
130. During the expansion phase of the business cycle, the unemployment rate will [increase | decrease].
Chapter 1—Understanding the Financial Planning Process
131. As the rate of inflation increases, the purchasing power of your dollars will [increase | decrease].
132. The primary determinant of your standard of living is your [wealth | propensity to consume].
133. The average American starting a career today can expect to have at least [seven | ten] jobs during his/her lifetime..
134. After reaching adulthood, your financial goals will [stabilize | continue to change].
Chapter 1—Understanding the Financial Planning Process
135. For most people, employee benefits are of [little | major] importance.
136. Typically, your salary will be [higher | lower] if you live in a large metropolitan area rather than a small town or rural
area.
137. [GDP | CPI] is the total of all goods and services produced by workers located within the country.
138. The average income of household heads increases until age [55 | 65] then income starts decreasing.
Chapter 1—Understanding the Financial Planning Process
139. The Federal Reserve’s actions after the financial crisis of 2008 and 2009 resulted in [reduced interest rates | higher
interest rates].
140. The government employs monetary and fiscal policy to help foster a [fast growing economy | no growth economy].
141. A stronger economy leads to [higher employment | lower employment].
142. Following an economic trough, the economy will often enter a period of [expansion | contraction].
143. The financial crisis of 2008 and 2009 is best characterized as a [recession | depression].
Chapter 1—Understanding the Financial Planning Process