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Ch 1 - INTRODUCTION TO PERSONAL FINANCE Flashcards | StudBud
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Ch 1 - INTRODUCTION TO PERSONAL FINANCE
Ch 1 - INTRODUCTION TO PERSONAL FINANCE
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Questions
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Answers
1
Why should students learn about personal finance?
Can eliminate financial mistakes and promote benefits
To achieve a profitable career
Better learned through trial or error
Are highly complex and require a lot of time to learn
2
Which is NOT true?
Americans learned to borrow after WWII
The American Credit Industry has not changed since 1917
After 1970, consumer debt skyrocketed
Banks made more and were willing to lend more
3
Personal financial success is primarily the result of:
Managing your money behavior
Winning the lottery
Generous welfare and unemployment programs
inheriting money from your parents
4
What is NOT a factor in becoming money smart?
Have knowledge of basic math
Learn how to read your credit card statements
Manage your behavior with money
Learn the language of money
5
Having debt keeps you from building wealth.
False
True
6
When developing a financial plan, one of the first things you should do is assess your current financial situation...
True
False
7
Why was the use of credit uncommon prior to 1917?
Borrowing money was generally not socially acceptable
Lending money to others was not profitable
Laws prevented lenders from charging high interest rates
All
8
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.
The credit industry has become extremely profitable.
There is strong consumer demand for big-ticket items.
Since 1920, credit laws in the US have been relaxed.
9
True financial security is achieved when your money begins to generate an income for you.
True
False
10
Everyone should have the same financial plan.
False
True
11
Learning the language of money is not important because you have financial planners.
True
False
12
How are American's being outsmarted the BEST by banks?
We desire credit
We are driven by consumerism4
We are taught we can buy happiness
Buying things on credit is acceptable
13
What is NOT a benefit of understanding your own money personality?
You can develop a financial plan that works for you
Allows you to excuse excessive spending
None
Knowing who you are allows for opportunity to grow and learn
14
What is a consequence of spending more than you make?
Stress
All of the above7
Missed opportunity to save and invest
A cycle of debt
15
Most Americans avoid credit when it comes to buying cars or furniture.
True
False
16
A person or organization that uses a product or service
Consumer
Borrower
17
What is NOT a key component of financial planning?
Allow your financial planner to make all your decisions
Write out a detailed plan to accomplish your goals
Replace money myths with truths
Regularly monitor and reassess your plan
18
An obligation of repayment owed by one party to a second party
Debt
Ownership
19
Most Americans are wealthy and will have financial security when they retire.
True
False
20
A period of temporary economic decline where trade is reduced; identified by a fall in GDP
Recession
Market Economy
21
The credit system today is structured to accommodate uncertainty and instability.
True
False
22
New Deal policymakers came up with mortgage and consumer lending policies that convinced commercial banks that:
Consumers would not be willing to use credit,
Consumer credit was not a profitable industry
Consumer credit could be profitable
They would not be able to compete with the loan sharks
23
Expensive houses and new cars are a true indication of wealth.
False
True
24
Since you are a teenager, what you do now with money will have little effect on your financial future.
True
False
25
A system by which goods and services are produced and distributed
Econmomy
Assets
26
All of the decisions and activities of an individual or family regarding their money.
Personal Finance
Currency
27
The granting of a loan and the creating of debt; any form of deferred payment
Annual Fee
Credit
28
The widespread financial insecurity of Americans is because....
Government programs are unavailable to help those in need
The Saving rate is low and many borrow to spend more
Incomes are low
Save a high proportion of their income
29
A fee paid by a borrower to the lender for the use of borrowed money.
Interest
Bills
30
The knowledge and skillset necessary to be an informed consumer and manage finances effectively
Financial Literacy
Budgeting
31
A debt evidenced by a ʺnote,ʺ which specifies the principal amount, interest rate and date of repayment
Loan
Bank Fee
32
Why does income not determine wealth? (Pick the BEST)
Income alone does determine wealth
Only people who are savers become wealthy
Investing is the only factor that builds wealth
Income does not dictate spending and saving behavior
33
In personal finance, math is easy. What is challenging?
Income
Friends
Behavior
Bank Account
34
A person or business that offers loans at extremely high interest rates
Creditor
Loan Shark
35
Managing money successfully is ______% knowledge and ______% behavior.
60%, 40%
50%, 50%
20%, 80%
80%, 20%
