Exam 1: Understanding the Financial Planning Process

High interest rates after the financial crisis of 2008-2009 reflect the Federal Reserve's efforts to tighten,or reduce,the money supply.

Professional financial planners

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -It is [fairly simple | impossible] to find a financial plan that will work for everyone.

The need for financial planning declines as your income increases.

Government controls consumers and businesses by regulation and taxation.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The Federal Reserve's actions after the financial crisis of 2008 and 2009 resulted in [reduced interest rate | higher interest rates].

What policies can the government utilize to help stabilize the economy?

A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to consume of 90%.

Employee benefits may include

Wealth is the key consideration is establishing financial goals as it is the measure of value in financial transactions.

The most important financial planning for young people concerns

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Inflation | Consumer Price Index] is the amount of goods and services each dollar buys at a given point in time.

Which of the following goals is stated in a way that is most useful for developing a financial plan?

Current consumption is inversely related to saving for the future.

Current consumption effects future consumption.

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -[Disney stock | Your car] would be considered a financial asset.

Government places controls on the personal financial environment by use of

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -During the expansion phase of the business cycle,the unemployment rate will [increase | decrease].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Following an economic trough,the economy will often enter a period of [expansion | contraction].

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The average income of household heads increase until age [55 | 65] then income starts decreasing.